FTZ – VAT Free or Not?


Currently there are more than 40 Free Trade Zones (‘FTZ’) operating in UAE to¬†facilitate investors and business people to establish their business. Few benefits which are generally enjoyed by business enterprises includes – 100% ownership, 100% tax free import and export, 100% repayment of capital and profits and exemption from corporate tax.

The big question which many of our friends and clients are inquiring Рis whether VAT is applicable on companies or business enterprises operating in FTZ or not? 

Answer to the above question is No, FTZ are not a VAT free zone until and unless they are registered as Designated Zone, which means if you are business enterprise operating in FTZ, you must check whether you are eligible to be registered as Designated Zone or not?

a) If you are eligible to be registered as designated zone, you must get yourself registered as designated zone and then only you would be able to claim the benefit of VAT exemptions.

b) If you are not eligible to be registered as designated zone and you have taxable supply more than registration threshold in that case VAT is applicable on you, you must take registration and start preparing for UAE VAT compliance from 1st Jan 2018 onwards.

To know more about provisions of Designated Zones in UAE VAT law, keep following my blog !!!

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