2Oct
Free Zones and Designated Zones for Tax Purposes - TAXP010
- What it is
- The FTA's position on what counts as a Free Zone or a Designated Zone under Corporate Tax, VAT and Excise Tax. It does not change any law. It applies from the date each of those laws took effect.
- Who it affects
- Businesses set up or operating in a UAE free zone, most of all Qualifying Free Zone Persons that distribute goods.
- From when
- The date each law it explains took effect. It states the FTA's position and amends nothing.
- What changes
- A VAT Designated Zone is not automatically a Corporate Tax Designated Zone. It must be both a VAT Designated Zone and a Free Zone for Corporate Tax. Distribution earns the 0% rate only when carried out in or from a Corporate Tax Designated Zone, with the goods imported through it and supplied to a customer who resells or processes them for sale, or to a public benefit entity (Ministerial Decision No. 229 of 2025, Article 2(3)(l)). Failing a condition at any time in a Tax Period ends Qualifying Free Zone Person status from the start of that period and for the next four.
- How to confirm your zone
- Corporate Tax: ask your Free Zone authority. Excise Tax: ask your Free Zone authority or, for any other area, the Warehouse Keeper whether the FTA has approved it. VAT: check the FTA's List of Designated Zones, then confirm with your free zone authority that your area meets Article 51(1) of the VAT Executive Regulation.