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| Designated Freezone and Non-Designated Freezone |
To begin with, we have straight forward direct Questions for you -
1. Are you registered as a Free-zone Entity in UAE in any Freezones?
2. Does your team or staff sits and operates from UAE physically ?
3. If not yet, are you planning to start operating from UAE physically in near future ?
4. Are you into Trading and Export Business ?
5. Does your item physically moves out of UAE specially from UAE seaports or airports or Land ?
6. Are you earning millions of profits from exports in your UAE Entity or projecting it to earn millions in the coming years ?
If the answer to all the questions is YES, then our last question is -
7. Do you know whether your entity is registered in a Designated Freezone or Non-Designated Freezone? & Do you know how does it impact to be an entity in Designated or Non-Designated Freezones?
If the answer to the Question No. 7 is No and you are not registered in a Designated Freezone, then you shall be liable to pay 9% corporate tax on your Millions of Profits.
What is a Designated Freezone ?
In general and simple language, if a freezone has its own Custom-Bonded warehouse, where in goods can physically come and go out inside and outside the freezone warehouse through proper security measures and custom controls put by Freezone, so such freezone is generally called as a Designated Freezone. Those freezones which doesnt have such facility, are considered as Non-Designated Freezones.
Designated Zones are Free Zones that appear in the attachment of Cabinet Decision No. 59/2017on Designated Zones (“Cabinet Decision”) for UAE Federal Decree Law No. 8/2017 on Value Added Tax.
Article 1 of the Cabinet reads as follows:
The zones, which are designated in the Table attached to the present Decision and which meet the requirements indicated in Cabinet Decision No. 52/2017 on the Implementing Regulation of the provisions of Federal Decree-Law No. 8/2017 on the value-added tax (the “VAT Law”), shall be considered as zones designated for the purposes of the implementation of Federal Decree-Law No. 8/2017 aforementioned.
Article 50 of the VAT Law reads as follows:
A “Designated Zone” that meets the conditions specified in the Executive Regulation of this Decree-Law shall be treated as being outside the State.
These requirements are the following:
The Designated Zone must be a specific fenced geographic area.
The Designated Zone must have security measures and Customs controls in place to monitor the entry and exit of individuals and movement of goods to and from the Designated Zone.
The Designated Zone must have internal procedures regarding the method of keeping, storing and processing of goods within the Designated Zone.
The operator of the Designated Zone must comply with the procedures set out by the FTA.
In Dubai, only 8 Free Zones are qualified as a Designated Zones -
JAFZA, DUCAMZ, Dubai Textile City, Al Quoz, Al Qusais, Dubai Aviation City, DAFZA, International Humanitarian City Jebel Ali.
Hamriyah Free Zone, Sharjah Airport International Free Zone
Ajman Free Zone.
Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port and Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road.
RAKEZ, RAK Airport Free Zone and RAK Maritime City Free Zone.
Fujairah Free Zone and FOIZ
Khalifa Port Free Trade Zone, Abu Dhabi Airport Free Zone, Khalifa Industrial Zone, Al Ain International Airport Free Zone and Al Butain International Airport Free Zone.
For Company Setup in Dubai, If you are not in the Designated Freezones and wish to move your entity to Designated Freezone from Non-Designated Freezone, feel free to connect us & discuss your queries.
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