The Ministry of Finance has clarified some details on designated free zones for the purposes of VAT. According to the law and Cabinet decisions, a designated free zone is a specific fenced geographic area that has security measures and customs controls in place to monitor entry and exit of individuals and movement of goods to and from the area, the ministry said in a report carried by WAM. Although designated free zones are part of the UAE territory, for VAT purposes, they are to be treated as being outside the UAE. VAT is imposed on goods and services supplied or imported into the UAE. This means that if a supply is treated as not taking place in the UAE, then levies should not be charged. <strong>______________</strong> <strong>VAT and free zones</strong> <strong><a href="https://www.thenational.ae/uae/government/vat-in-uae-20-free-zones-told-they-are-exempt-from-levy-1.694376">VAT in UAE: 20 free zones told they are exempt from levy</a></strong> <strong><a href="https://www.thenational.ae/business/money/how-is-vat-applied-when-a-company-has-multiple-trade-licences-1.661737">David Daly: How is VAT applied when a company has multiple trade licences?</a></strong> <strong>______________</strong> The Ministry said the place of supply is generally determined by looking at the location of the goods, activities or the parties to a transaction. However the VAT Executive Regulation said certain types of supplies should be treated as if they are taking place in the UAE: Goods that arrive into a designated free zone from outside the UAE are not treated as imported into the UAE. Therefore, no VAT is charged on such arrival of the good, the ministry added. That said, a transfer or sale of goods into a Designated Zone from a place in the UAE which is not a Designated Zone is not an export for VAT purposes, and therefore will not give rise to zero-rated VAT treatment. <strong>Transfer and movement of goods</strong> The Ministry said the transfer of goods between designated zones will not be subject to VAT if both of the following conditions are met: Where goods are moved between Designated Zones, the Federal Tax Authority may request the owner of the goods to provide a guarantee in respect of the VAT in case the conditions for the movement of goods are not met. The sale of goods between designated free zones will be treated as outside the scope of the UAE VAT, if the goods are not for consumption. ______________ <strong>Read more: <a href="https://www.thenational.ae/uae/government/vat-in-uae-20-free-zones-told-they-are-exempt-from-levy-1.694376">20 free zones told they are exempt from levy</a></strong> <strong>The 20 Designated Zones</strong> <strong>Abu Dhabi</strong> Free Trade Zone of Khalifa Port Abu Dhabi Airport Free Zone Khalifa Industrial Zone <strong>Dubai</strong> Jebel Ali Free Zone 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 <strong>Sharjah</strong> Hamriyah Free Zone Sharjah Airport International Free Zone <strong>Ajman</strong> Ajman Free Zone <strong>Umm Al Quwain</strong> Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port Umm Al Quwain Free Trade Zone on Sheikh Mohammed bin Zayed Road <strong>Ras Al Khaimah</strong> RAK Free Trade Zone RAK Maritime City Free Zone RAK Airport Free Zone <strong>Fujairah</strong> Fujairah Free Zone Fujairah Oil Industry Zone (FOIZ)
