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VAT SERVICES FOR FREE ZONE/DESIGNATED ZONE COMPANIES

Free Zone, denotes free trade areas which promote foreign enterprise ownership. The businesses in Free Zones must comply with the rules and regulations of the free zone authority for conducting any business in this region. As per UAE Law, free zones are called a Designated zone. The following conditions meet up the definition for designated zones as per the criteria of Article 51 of the Executive Regulations:


* It is a specific fenced geographic area

* It has security measures and customs controls in place to monitor the entry and exit of individuals and the movement of goods to and from the area

* It has internal procedures regarding the method of keeping, storing and processing of goods within the area

* The operator of the Designated Zone must comply with the procedures set out by the FTA


Therefore, any Free zone which fulfils the above conditions and is in the list of the cabinet will be treated and considered as Designated zones.

Free zone companies in light of Vat

Businesses within the designated zone are having similar rules of non-designated zones. According to the UAE VAT Law, the free zone companies need to undergo VAT registration. They are also eligible to register under the group VAT system. As per the VAT implementation rule, the transfer of any goods within these designated zones are tax-free. This rule includes:

  • Purchase and sales of goods, sometimes resale of goods.
  • Goods supplied or attached to, another good located in the same free zone area provided that another good is not consumed in the Designated Zone
  • Goods supplied to be used in the production of goods in a particular designated zone apart from consuming that good in the same designated zone.

These conditions are under UAE VAT law provisions. As the term consumption is overridden in the aspects of designated zones.

Some exceptions include:

  • Consumption-based tax at a standard rate for all the goods sold within the designated zones.
  • Energy costs inside the zones will be subjected to VAT.
  • DZ Companies to be VAT registered if their threshold limit goes high.

DESIGNATED FREE ZONE AREAS

Abu Dhabi

Free Trade Zone of Khalifa Port
Abu Dhabi Airport Free Zone
Khalifa Industrial Zone



Dubai

Jebel Ali Free Zone (North-South)
Dubai Cars and Automotive Zone (DUCAMZ)
Dubai Textile City
Free Zone Area in Al Quoz
Free Zone Area in Al Qusais
Dubai Aviation City
Dubai Airport Free Zone

Sharjah

Hamriyah Free Zone
Sharjah Airport International Free Zone

Ajman

Ajman Free Zone

Umm Al Quwain

Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road

Ras Al Khaimah

RAK Free Trade Zone
RAK Maritime City Free Zone
RAK Airport Free Zone

Fujairah

Fujairah Free Zone
FOIZ (Fujairah Oil Industry Zone)

How CDA helps you?

CDA offers quality accounting and VAT services for free zone companies in Dubai and UAE. As an auditing firm and tax experts, we help you to take further steps for tax-related purposes which include:

  • VAT Compliance and Registration
  • Timely submission for VAT return filings and refunds if necessary
  • Preparing FTA compliant books of accounts as per necessities
  • Analyse the VAT issues and prepare better solutions to appropriate your business based on its nature and the needs of the owner
  • Our Accountants help to prepare financial statements and records to fulfil business compliance with UAE VAT law
  • Deregistration services

Why Tax Audit and Tax Consultation is Important for Free Zone Companies?

The free zones offer companies a plethora of advantages including a tax-free environment and 100 per cent foreign ownership. Still, there is a requirement for tax services to ensure:

  • Compliance with tax laws and VAT regulations
  • Maintenance of the financial records and bookkeeping system
  • Audit services to generate audit reports which are mandatory at the time of trade license renewal
  • To track the import and export of goods from the mainland to designated zone and vice versa

CDA client portfolio

We provide accounting services and VAT services for free zone companies across the UAE. Our versatility in service providing often attracts new clients.

“The team is the best I could receive my requirements on time. I am totally happy with the service received planning to hold hand on-hand experience with CDA”

Amin Elhadi

Managing Director, MOS 5 Tel Trading LLC

Frequently Asked Questions [FAQ]

1. Do all the products and services in the designated zone are VAT free?

Yes, all products and services are VAT free if their import and supply are within the designated zone and outside the UAE.

2. How much do you charge for VAT Services?

VAT Service charges depend on the turnover and the number of transactions on supply.

3. How is VAT applicable if multiple trade licenses are available?

Under common control but not common ownership Group VAT registration is applicable at FTA.

4. Do FTA charge VAT for the transport of goods from the mainland to the designated zone?

Yes, tax to be charged at 5 % on goods as per the provisions of law.

5. What are the tax implications on the transport of goods within designated zones?

Goods are non-taxable if they are used by the buyer or third party for the production or sale of another good. Goods are taxable at 5% if they are not used by the buyer or third party for the production or sale of another good.

6. Does VAT deregistration demand any penalty?

Under mandatory deregistration, if the company fails to apply within 20 days of the timeframe from the occurrence of the supply, demands a penalty of AED 100,00.

7. If the company does not have a Mainland supply of goods, is it necessary to register for VAT?

No, it is not necessary to register for VAT if the company does not have a mainland supply.

8. What will be the VAT treatment of goods exported outside the UAE State, let’s say India?

Treatment of goods exported outside the UAE will be considered as zero-rated and VAT will not be applicable.

9. Are all Free Zones Designated Zones in UAE VAT?

No, only those Free Zones which are decided by the UAE Cabinet are considered as Designated Zones. To know the list of Designated Zones, please go through the above contents.

10. Is VAT applicable to the supply of services within the Designated Zone?

Yes, VAT is applicable at 5% on the supply of Services within Designated Zone and to the mainland.


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