For VAT purposes in the UAE, specified zones are treated as outside the state and outside the country of implementation. Although this zone is considered to be outside the state, movement of goods from any place within the state to the designated zone is not considered as export of goods. This means that the supply of goods from the mainland to the designated area will not be at zero rate, but will be subject to the normal HIS VAT rate.

On the other hand, goods imported into a designated area from a location outside the state are not considered imports. This means that imports of goods from other countries are not subject to tax and are considered outside the scope of his VAT in the UAE.

This article describes the VAT treatment of goods purchased in specified regions in the following scenarios:

Goods purchased in designated areas of the UAE, shipped from the mainland,
Goods shipped from abroad United Arab Emirates,

Goods purchased there Designated zones of the United Arab Emirates
Supply of goods between designated zones is not subject to VAT. For example, Rose Traders in Jebel Ali Free Zone purchased goods from A-One Traders in Dubai Airport Free Zone.

Supply of goods from mainland to designated areas
Movement of goods from a place within the state to a designated area shall not be considered as export of goods. Therefore, such purchases by a taxable person within a designated territory will be subject to his normal VAT rate. The input tax amount paid on such purchases can be recovered by adjusting the input tax amount.

Goods shipped to designated areas from outside the UAE.
Goods purchased within the designated territory from outside the UAE are not considered imports and are not subject to UAE VAT. Therefore, such purchases have no VAT implications for him.

Companies based in the UAE need to pay attention to the two important points outlined above. Firstly, purchasing goods from the mainland (within the UAE) is not considered an export. That is, such purchases are subject to his VAT of 5%. Secondly, purchases of goods from outside the state are not considered imports and are not subject to his VAT in the UAE. 

You can also register for VAT Registration on our website:

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