How VAT and Designated Zones are related ?

How VAT and Designated Zones are related ?

Designated Zones are areas where VAT is not applicable. These zones are recognized as excluded from the state of UAE for the purposes of VAT. Conditions for designated zone


> It must be a specific fenced geographical area.

> Entry and exit of movement of goods and individuals to and from must be under security measures and customs controls.

> Storing, keeping and processing of goods must be under internal procedures within the zone

> The procedures set by the authority must be obeyed by the operator of the designated zone

VAT-free supply can be made under the following conditions:


> During the transfer between the designated zones, the goods should not be released, altered or used.

> The rules under customs suspension according to GCC Common Customs Law must be followed while transferring goods.

The VAT on designated zones


> The VAT is applied upon the transfer of goods from a designated zone to the mainland and vice-versa.

> Supply of water or any other forms of energy will be subjected to VAT at the standard rate in designated zones.

> If the transfer of goods is made between designated zones and from a designated zone to oversea/GCC countries and vice-versa, VAT is not applicable.

> If the goods are being self-consumed or used by a third person a VAT of 5% will be charged. In case of exceptions like, if the goods are incorporated, attached or forms part of other goods and used for the sale or production of another good in the same designated zone VAT will not be charged.

List of designated zones


Abu Dhabi


Free Trade Zone of Khalifa Port


Abu Dhabi Airport Free Zone


Khalifa Industrial Zone




Jebel Ali Free Zone (North-South)


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




Hamriyah Free Zone


Sharjah Airport International Free Zone




Ajman Free Zone


Umm Al Quwain


Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port


Umm Al Quwain Free Trade Zone on Sheikh Monhammed Bin Zayed Road


Ras Al Khaimah


RAK Free Trade Zone


RAK Maritime City Free Zone


RAK Airport Free Zone




Fujairah Free Zone


FOIZ (Fujairah Oil Industry Zone)


If you have any doubt about the designated zones call us 04 443 1604