VAT is levied on supplies of goods and services in the UAE territory. Designated zones in UAE are areas that the UAE cabinet has specified to be outside the state for VAT purposes. These territories offer good incentives to businesses. The goods and services are not subject to the same taxes as the services and goods that are supplied in the main territory.
Designated zones encourage businesses to invest in these areas. For example, there are special economic zones and trade zones. Also, by providing certain incentives or tax breaks, the government attracts businesses to these areas.
The specific rules for designated zones can vary from country to country. However, there are some common characteristics that most designated zones share. Also, some designated zones are typically located in areas that are isolated from the main territory. Moreover, they may also have their own rules and regulations different from the main territory. In this blog, we will discuss the designated zones in UAE and how these are beneficial for business.
What are designated zones in UAE
Designated zones in UAE are also known as free zones. These are special economic zones that are considered to be outside of the mainland customs territory of the UAE. Businesses operating within these zones are subject to different rules and regulations. In addition, the purpose of the designated zones in UAE is to attract foreign investment and promote their trade.
Here are some of the benefits of using a designated zone:
Simplified customs procedures
Also, businesses operating in these designated zones do not have to pay customs duties on goods imported into the zone.
Tax breaks
Businesses operating in designated zones are exempt from corporate tax and personal income tax.
Streamlined business regulations
Businesses operating in designated zones are subject to a simpler set of business regulations than businesses operating on the mainland.
Also, there are over 40 designated zones in UAE in various emirates. Moreover, the most well-known designated zones include:
- Dubai Airport Free Zone (DAFZA)
- Dubai Silicon Oasis (DSO)
- Media City Dubai (DMC)
- Jebel Ali Free Zone (JAFZA)
- Dubai Knowledge Village (DKV)
How to identify a designated zone?
Free zones are not considered VAT-free and are subject to normal VAT for supplies of goods and services. Moreover, certain free zones fulfill the criteria specified in the Federal Decree-LAW on VAT for being considered a designated zone.
These designated zones are listed in a cabinet decision. If a zone is known as a designated zone, it still has to fulfill these criteria to be treated as being outside the UAE.
- The zone should be a fenced area.
- There must be defined regulations for retrieving, storing, and processing of goods within the zone.
- The zone should have its own customs control unit and measures for monitoring the movement of individuals or goods in and out of the zone.
List of designated zones in the UAE
Cabinet Decision No. 59 lists the following free zones as designated zones:
Abu Dhabi
- Free Trade Zone of Khalifa Port
- Al Ain International Airport Free Zone
- Abu Dhabi Airport Free Zone
- Al Butain International Airport Free Zone
- Khalifa Industrial Zone
Dubai
- Jebel Ali Free Zone (North-South)
- Dubai Cars and Automotive Zone (DUCAMZ)
- Free Zone Area in Al Quoz
- Dubai Aviation City
- Dubai Airport Free Zone
- Free Zone Area in Al Qusais
- Dubai Textile City
- International Humanitarian City – Jebel Ali
Ajman
- Ajman Free Zone
Sharjah
- Sharjah Airport International Free Zone
- Hamriyah Free Zone
Umm Al Quwain
- Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road
- Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
Fujairah
- Fujairah Oil Industry Zone (FOIZ)
- Fujairah Free Zone
Ras Al Khaimah
- RAK Airport Free Zone
- RAK Free Trade Zone
- RAK Maritime City Free Zone
Benefits to owning a company in designated zones
In 2020, the UAE amended its laws to allow businesses to have 100% foreign ownership of companies in designated zones. Also, this was a significant change in 2020, and this change has attracted more businesses to come to UAE. There are a number of benefits to owning a company in a designated zone in UAE.
- 100% foreign ownership
- Simplified customs procedures
- No corporate tax or personal tax
- Modern infrastructure
- Streamlined business regulations
- Cluster of various related industries
- Proximity to major markers
Conclusion
ebs is one of the best accounting and bookkeeping firms in UAE. ebs assists companies in establishing their operations in designated zones within the UAE. Moreover, we offer a wide range of services to streamline the company formation process and ensure compliance with UAE regulations.
Here are the key ebs services for company formation in designated zones:
- Company registration: ebs guides businesses through the company registration process in designated zones. We ensure accurate documents, adherence to local regulations, and fee payments. In addition, we handle the entire process, from the initial consultations to license issuance and seal delivery of the company.
- Visa processing: ebs assists companies in getting visas for their employees, including employment visas, residence visas, and dependent visas. Moreover, we provide guidance on visa requirements, status tracking, and application procedures. Also, we ensure a smooth process for employees to work in the designated zone.
- Corporate bank account opening: ebs facilitates the opening of corporate bank accounts for businesses operating in designated zones. Moreover, we connect businesses with relevant banks. And also provide proper guidance about documentation submission.
- Regulatory compliance guidance: Also, ebs provides comprehensive information and guidance on the regulatory requirements for operating a business in designated zones.
- Post-formation support: ebs offers ongoing support beyond company formation. Also, we provide assistance with tax registration, ongoing regulatory compliance, and immigration services.
ebs also provides other services that can be beneficial for your new start-up in the designated zones. Furthermore, we also provide other services such as accounting and bookkeeping services, Auditing, Due Diligence audit services, and many more. So, you should get in touch with our experts to discuss more about our services and contact us today.
Faqs
What is a designated zone in the UAE?
A designated zone in the UAE is a special economic zone that is known to be outside of the mainland customs territory of the UAE. Moreover, businesses have to follow different sets of rules in these zones.
What are the benefits of operating in a designated zone in the UAE?
Equally important, There are a number of benefits to operating in a designated zone in the UAE:
- Tax breaks
- Simplified customs procedures
- No customs duties
- Modern infrastructure
- Streamline business regulations
- Proximity to major markets
- A cluster of related industries
Can you own 100% of a company in UAE?
Yes, fortunately, now businesses can have 100% foreign ownership in the designated zones in UAE. Also, this facility is applicable as long as they abide by the rules set forth in a cabinet resolution that was approved by the UAE cabinet.
What is the free zone policy in the UAE?
The UAE offers investors more than 40 multidisciplinary free zones, also. Moreover, in these free zones, foreign investors can have 100% ownership of companies.