Have you ever wondered what makes some areas in the United Arab Emirates (UAE) ideal for business setups? Could it be their tax benefits, strategic locations, or tailored regulations? All these are some of the key contributors designed to support business growth in the region. Alongside, the introduction of designated zones in UAE has significantly contributed to the country’s global trade appeal.
Designated free zones in the UAE are specially crafted to offer businesses a competitive edge with value added tax (VAT) exemptions and streamlined operations. Continue reading this blog to learn more about these zones in the UAE.
Back to topOverview of Designated Zones
A designated zone is an area in the UAE that is treated as outside the country for tax purposes, making it exempt from VAT. This allows businesses to enjoy tax benefits and simpler regulations. However, it is important to remember that not all UAE free zones are considered designated zones. These zones are only found in the UAE and were established to divert the country’s focus from the oil and gas industry, paving the way for new industries. This economic diversification effort led to an increase in foreign investment and international trade within the country.
Back to topCharacteristics of UAE VAT Designated Zones
Designated zones in UAE can be identified by specific characteristics, including :
- The zone must be within a fenced area.
- A designated zone must have specific rules for storing, processing, and retrieving goods.
- It must have a security system, and customs control to monitor the movement of goods and people.
VAT Policy in Designated Free Zones in UAE
Let us have a look at the taxation policy in the UAE designated free zones:
- Goods supplied from one designated zone to another are non taxable.
- Goods supplied from a designated zone to the mainland and vice versa are charged 5 per cent VAT.
- Goods supplied from a designated free zone to an overseas or Gulf Cooperation Council (GCC) country and vice versa are not taxable.
List of Designated Zones in UAE
Check out the various designated free zones in the country. The information mentioned below is relevant as of 2021.
Emirates | Designated Zones |
Dubai |
|
Abu Dhabi |
|
Ras Al Khaimah |
|
Sharjah |
|
Umm Al Quwain |
|
Fujairah |
|
Ajman |
|
Setting up your business in designated zones in UAE can offer numerous growth opportunities for businesses. It can also provide access to strategic markets, tax incentives, and a business-friendly environment that fosters growth and innovation. Contact Commitbiz LLC to learn more about these designated zones in UAE and set up your business.
Follow this link to find out more about VAT Implementation in the UAE.
Back to topDo businesses in designated zones need to maintain accounting records?
Yes, businesses must maintain proper accounting records and comply with UAE VAT regulations.
Can companies in designated zones in UAE hire foreign workers?
Yes, businesses in designated zones are allowed to hire foreign workers.
Do I need a local sponsor to start a business in the UAE VAT designated zones?
No, businesses in designated zones do not require a local sponsor, as they are considered fully foreign-owned companies.
