Issue
In certain instances, Businesses may be established in a Free Zone in the UAE. Businesses operating in a Free Zone may be subject to specific rules and treatment under the Tax Laws (Corporate Tax, Excise Tax, and Value Added Tax) applicable in the UAE.
There are differences in the definition of a Free Zone or a Designated Zone for Corporate Tax, Excise Tax, and Value Added Tax.
Businesses must determine if they are located in an area that qualifies as a Free Zone and/or Designated Zone for each Tax Law separately in order to be compliant with the relevant rules and regulations.
This Public Clarification provides guidance on what constitutes a Free Zone or a Designated Zone for each Tax Law, and key differences in the definitions between these Laws.
It is important to understand and identify what is a Free Zone and a Designated Zone to ensure compliance with the relevant Tax Law:
Designated Zone for Corporate Tax purposes ("Corporate Tax Designated Zone").
Designated Zone for Excise Tax Purposes ("Excise...