Twenty free zones in the UAE will be exempt from VAT, bringing an end an anxious wait for businesses unsure if they they would be affected or not.
The Federal Tax Authority (FTA) published a document from the Cabinet on Tuesday January 9 - a week after the country saw the introduction of the five per cent levy on January 1.
Areas such as the Free Trade Zone of Khalifa Port and Jebel Ali Free Zone are among those that are exempt.
"Many businesses will have been waiting for confirmation as to which locations would be 'designated zones', especially given January 1 has come and gone," said David Daly a chartered accountant who leads a consultancy practice in the UAE.
"By backdating the application of designated zone status to the 1st January, there will be relief amongst import/export businesses that were unsure as to the VAT effect where none had been expected.
"One element I am curious about is whether these designated zones have now been issued VAT certificates. My understanding is that Customs require this. Many, many entities have not received theirs."
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The areas included are largely fenced free zones with special controls on goods, rather than areas such as Dubai Media City or those dealing in financial services.
The tax authority had suggested that VAT would be similar to excise tax in the free zones, but there was no confirmation until the Cabinet document, in the name of Sheikh Mohammed bin Rashid, Vice President, Prime Minister and Ruler of Dubai, was published.
Abu Dhabi
Free Trade Zone of Khalifa Port
Abu Dhabi Airport Free Zone
Khalifa Industrial Zone
Dubai
Jebel Ali Free Zone
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
Sharjah
Hamriyah Free Zone
Sharjah Airport International Free Zone
Ajman
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 Mohammed bin Zayed Road
Ras Al Khaimah
RAK Free Trade Zone
RAK Maritime City Free Zone
RAK Airport Free Zone
Fujairah
Fujairah Free Zone
Fujairah Oil Industry Zone (FOIZ)
