How to Qualify to Designated Zone?
In order to qualify to designated zone you need to meet some criteria given by article 51 in UAE. The criteria are described below.
- The zone has to be in a specific fenced area
- The area has tight security to monitor movement of the people, and good. For that a custom control is needed
- The area has to have control over storing goods
- The supervisor of the designated zone has to follow the procedures set by the Federal Tax Authority
If the above-mentioned criteria are followed thoroughly then you will enter into the designated zone in UAE. The requirements are all given in the article 51 in the UAE.
Idea about VAT Obligation
The businesses that are in the ambit of the designated zone are referred as onshore when it comes to VAT. Those businesses can become the member of the VAT group. Although you will have the obligation of VAT. In order to surpass the obligations you need to register under the designated zone, and then you need to file the VAT returns and then comes to payment under the VAT rules.
You will be able to be eligible for the member of VAT group. Once you become the member of the group you need to follow all the norms the UAE impose. The norms are actually for the recovery of VAT.
How to Apply for VAT for Trading?
You need to opt for the supply services to apply for the VAT. The designated zone deals with general provisions under the VAT law. The obligation for the business account for VAT follows the reverse charge mechanism.
However, the supply of the goods in the designated zone is considered as outside goods. The supply is consumed in the zone and you need to follow up the UAE rules. The rules are-
- According to the rules, the buying and sale transaction are made properly
- When it comes to supply of the goods, you need to attach the registration number otherwise the goods will not be considered as from the designated zone
- The production of the goods also need to be in other part of the designated zone
All the general rules and regulations are applicable when it comes to supply of the goods that is being done in the designated zone. The supply is done in the UAE VAT area by the UAE VAT law. According some experts, a term like ‘consumed’ needs to be interpreted; because, depending on it the employment and deployment is evaluated. In that case, the guide will provide an example for evaluating the VAT for trading.
Identification of the Goods
It is essential to identify the goods that are produced and consumed in the designated zone. You need the authority updated regarding the identification process. The suppliers are asked to identify the good that are sold in the designated zone. It is also need to keep in mind the no supplier should treat the inside supply as outside the zone. If the goods are identified, the seller will not be charged with VAT.
You need to keep in mind about the three scenarios, and that are monitoring the supply and indentify it, no supply that is coming from UAE to designated zone is considered exported item, transfer of goods should treated as VAT worthy. GCC Filings will help you out with company incorporation in designated zones along with other aspects like VAT registration, return filling and auditing.