The Federal Tax Authority of United Arab Emirates has already announced three VAT free zones that are being called Designated Zones under the VAT law. The declaration of these new VAT free zones has taken the sum of the designated zones to twenty-three now. There is no denying the fact that it is a great news for any business located in these zones. After all, five percent VAT will not be applicable to any transaction carried out in the Designated Zones.
Details of the New VAT free Zones in United Arab Emirates
The new Designated Zone added in Dubai is International Humanitarian City Jebel Ali, and the two zones included in Abu Dhabi are Al Butain International Airport Free Zone and Al Ain International Airport Free Zone.
All the three new VAT free zones came into effect from June 18, 2018. Thus, it was mandated that after June 18, 2018, all businesses operating in the VAT free zone would have to understand VAT regulations for the supplies they carry, assess the effect of VAT on the business, and plan accordingly.
The conditions levied for all Designated Zones
The new zones will also come under the existing regulations for Designated Zones. The Designated Zones outlined by the cabinet have to meet the given conditions for being considered to be outside the implementation of the states:
- The Zone has to be within a particularly demarcated geographical area
- It needs to have custom controls and security measures put in place for monitoring the exit and entry of the individuals and the goods movement from and to the area.
- It needs to contain internal processes regarding the methods of keeping, processing and storing goods within the Designated Zone
- The operate has to comply with the guidelines laid out by the Federal Tax Authority of UAE
The conditions mentioned above are the ones that a Designated Zone needs to mandatory comply. If there is any change in the manner of operations of a business or if a particular business fails to meet the criterions to qualify being a part of the Zone, it will be treated as being outside the Zone and inside the state, just as the other businesses that don’t operate in the VAT free zone are.
Important Benefits in Store for Businesses Operating in VAT free Zone
The declaration of the three VAT free zones offer important relief to all the businesses that have been operating in these zones. After all, a Designated Zone is held as outside the state of United Arab Emirates for VAT regulations. Thus, businesses can transfer any quantity of good between the Zones, and no VAT will be levied for that. So, businesses are entitled to the following benefits because of being a part of the VAT free zone.
- All transactions of goods within the Designated Zones are not taxable
- Goods exported from the Designated Zones to overseas countries are not taxable
- Goods supplied from the Designated Zones to GCC nations are not taxable
- Goods imported from other overseas or GCC countries are not taxable
Though the Designated Zones UAE provide some really amazing benefits, the businesses also need to keep in mind that they need to abide by a set of conditions that define their eligibility. Besides, there are supplies that are chargeable even within the Designated Zones.
It is important to consult with a well-reputed and experienced company like GCC Filings before considering to be a part of the new VAT free zones. The company is involved in VAT registrations, filings, auditing, and more for quite a while now, and they can guide you appropriately in the matter.