VAT on services rendered in designated zones
The treatment of Value Added Tax (VAT) on services rendered in designated zones in the United Arab Emirates (UAE) follows specific rules outlined in the UAE VAT law. Please note that tax regulations are subject to change, and it’s essential to refer to the most recent and relevant sources or consult with tax professionals for the latest information.
Here are some key considerations regarding VAT on services rendered in designated zones in the UAE:
1. Supplies Within Designated Zones:
– Supplies of goods or services between entities within the same designated zone are generally treated as outside the scope of UAE VAT.
2. Criteria for Designated Zones:
– Designated zones must meet certain criteria as specified by the UAE Cabinet. These criteria include having defined security measures and Customs controls.
3. VAT Treatment of Services:
– Services provided within designated zones may be subject to specific VAT treatment, and the application of the reverse charge mechanism may depend on the nature of the services and the VAT status of the supplier and recipient.
4. Imported Services:
– If services are imported into a designated zone from a non-resident supplier, the reverse charge mechanism may apply, and the responsibility for reporting and paying VAT could shift to the recipient.
5. Documentation and Compliance:
– Proper documentation, including invoices and contractual agreements, is crucial for compliance with VAT regulations. Invoices should clearly indicate the applicable VAT treatment.
6. Verification of VAT Registration:
– Businesses operating in designated zones should verify the VAT registration status of their suppliers and ensure that proper compliance measures are in place.
It’s important to keep in mind that tax regulations can evolve, and any changes to VAT rules in designated zones or other aspects of the UAE VAT law may have occurred since my last update. Therefore, businesses are strongly advised to consult with the Federal Tax Authority (FTA) or seek advice from tax professionals to ensure compliance with the latest VAT regulations in the UAE.
Designated Zones
There are a total of 19 designated zones in the United Arab Emirates. They are listed as follows:
Abu Dhabi (3 zones)
1. Free Trade Zone of Khalifa Port
2. Abu Dhabi Airport Free Zone
3. Khalifa Industrial Zone
Dubai (7 zones)
1. Jebel Ali Free Zone (North-South)
2. Dubai Cars and Automotive Zone (DUCAMZ)
3. Dubai Textile City
4. Free Zone located in Al Quoz Area
5. Free Zone located in Al Qusais Area
6. Dubai Aviation City
7. Dubai Airport Free Zone (DAFZ)
Sharjah (2 zones)
1. Hamriya Free Zone
2. Sharjah Airport International Free Zone
Umm Al Quwain (2 zones)
1. Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
2. Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road
Ras Al Khaimah (3 zones)
1. RAK Free Trade Zone
2. RAK Maritime City Free Zone
3. RAK Airport Free Zone
Fujairah (2 zones)
1. Fujairah Free Zone
2. Fujairah Oil Industry Zone (FOIZ)