UAE VAT Free Zones, Imports & Exports – Terminology Guide

Free Zone

A free zone is a designated economic area in the UAE offering business incentives. VAT treatment depends on whether the free zone is classified as a designated zone and the nature of supplies made.

Designated Zone

A designated zone is a specific free zone treated as outside the UAE for VAT purposes under certain conditions. Supplies of goods within designated zones may not be subject to VAT if legal criteria are met.

Non-Designated Zone

A non-designated free zone is treated as part of mainland UAE for VAT purposes. Supplies made in such zones are generally subject to VAT at standard rates.

Supply within Designated Zone

Supplies of goods within a designated zone may fall outside VAT scope if conditions under UAE VAT law are satisfied, including restricted access and proper documentation.

Supply between Designated Zones

Supply of goods between designated zones may be VAT-free if conditions are met. Failure to meet requirements results in standard VAT application.

Free Zone VAT Registration

Businesses in free zones must register for VAT if they exceed registration thresholds, even if operating within designated zones.

Free Zone Establishment

A free zone establishment is a legal entity registered in a free zone. VAT treatment depends on supply type, customer location, and zone classification.

Mainland to Free Zone Supply

Supplies from mainland UAE to free zones are generally subject to VAT unless specific designated zone conditions apply.

Free Zone to Mainland Supply

Supplies from free zones to mainland UAE are typically treated as imports or taxable supplies and are subject to VAT.

Import of Goods

Import of goods refers to bringing goods into the UAE from outside the GCC. VAT is generally due at customs clearance or under reverse charge.

Import VAT

Import VAT is VAT charged on goods entering the UAE. Registered businesses may recover import VAT subject to compliance conditions.

Customs Clearance

Customs clearance is the process of declaring imported goods to customs authorities. VAT and customs duty are assessed during this process.

Customs Duty

Customs duty is a tax on imported goods, separate from VAT. VAT is calculated on the value including customs duty and other charges.

Import VAT Deferment

Import VAT deferment allows eligible businesses to account for VAT through VAT returns instead of paying at customs.

Import of Services

Import of services occurs when services are received from a non-UAE supplier. VAT is accounted for under the reverse charge mechanism.

Reverse Charge Mechanism

The reverse charge mechanism shifts VAT liability to the recipient for certain imports of goods and services.

Export of Goods

Export of goods involves supplying goods from the UAE to outside the GCC. Such supplies are generally zero-rated under UAE VAT law.

Export VAT

Export VAT refers to VAT applied at 0% on qualifying exports, provided documentary evidence is maintained.

Direct Export

Direct export occurs when goods are shipped directly from the UAE to a foreign customer. These are typically zero-rated.

Indirect Export

Indirect export involves goods supplied to a foreign customer but collected from the UAE. Specific conditions must be met for zero rating.

Proof of Export

Proof of export includes customs declarations and shipping documents required to apply zero-rated VAT on exports.

Place of Supply – Goods

Place of supply rules determine where goods are considered supplied for VAT purposes, impacting VAT applicability.

Place of Supply – Services

Place of supply for services depends on supplier location, customer location, and service type.

Cross-Border Supply

Cross-border supply refers to transactions involving parties in different countries, subject to specific VAT rules.

International Trade VAT

International trade VAT covers VAT treatment on imports, exports, and cross-border transactions.

Logistics VAT

Logistics VAT applies to transportation, warehousing, and freight services, often zero-rated for international transport.

International Transportation

International transportation of goods and passengers is generally zero-rated under UAE VAT law.

Freight Forwarding

Freight forwarding services may qualify for zero rating if directly linked to international transportation.

Warehousing Services

Warehousing services are generally standard-rated unless linked to international exports under qualifying conditions.

Sector VAT

Sector VAT refers to VAT rules applicable to specific industries such as real estate, healthcare, education, and oil & gas.

Real Estate VAT

Real estate VAT includes special rules for residential, commercial, and bare land supplies.

Residential Property VAT

Residential property leasing is generally VAT-exempt, while first supply of new residential buildings may be zero-rated.

Commercial Property VAT

Commercial property sales and leases are subject to VAT at the standard rate.

Bare Land

Bare land is exempt from VAT, provided no construction or development has occurred.

Healthcare VAT

Healthcare services are often zero-rated, subject to licensing and compliance with UAE VAT conditions.

Education VAT

Education services provided by recognized institutions are typically zero-rated.

Oil and Gas VAT

Oil and gas sector VAT involves complex rules for exploration, production, and international supplies.

Financial Services VAT

Most financial services are VAT-exempt, except where fees or commissions apply.

Insurance VAT

Life insurance is VAT-exempt, while other insurance services are generally subject to VAT.

E-Commerce VAT

E-commerce VAT applies to online supplies of goods and services, including cross-border digital transactions.

Digital Services VAT

Digital services supplied cross-border may be subject to VAT based on place of supply rules.

Telecommunications VAT

Telecommunication services are generally subject to VAT at standard rates.

Tourism VAT

Tourism VAT includes VAT on hotels, travel services, and hospitality supplies.

VAT on Hospitality

Hospitality services such as hotels and restaurants are subject to VAT at standard rates.

Manufacturing VAT

Manufacturing VAT involves VAT on raw materials, production, and sale of finished goods.

Trading VAT

Trading VAT applies to buying and selling goods domestically or internationally.

Supply Chain VAT

Supply chain VAT considers VAT implications at each stage of production and distribution.

Input VAT Recovery – Imports

Input VAT paid on imports may be recoverable if linked to taxable supplies.

VAT on Re-Exports

Re-exports from the UAE may qualify for zero rating if conditions are met.

VAT on Temporary Imports

Temporary imports may be VAT-exempt subject to customs procedures.

VAT on Consignment Stock

Consignment stock VAT depends on ownership transfer and place of supply rules.

VAT on Drop Shipping

Drop shipping VAT depends on supplier, customer location, and movement of goods.

GCC VAT Framework

The GCC VAT framework governs VAT principles among GCC member states.

Intra-GCC Supply

Intra-GCC supplies follow special VAT rules until full GCC VAT implementation.

Import VAT Accounting

Import VAT accounting involves reporting import VAT in VAT returns.

VAT on Customs Value

VAT is calculated on customs value plus duty and related costs.

Export Documentation

Export documentation supports zero-rating claims.

VAT on International Services

International services may be zero-rated depending on recipient location.

VAT on Freight Charges

Freight charges may be zero-rated if linked to exports.

VAT on Clearing Agents

Clearing agent services are subject to VAT at standard rates.

Free Zone Compliance

Free zone compliance ensures correct VAT treatment of supplies.

VAT Audit – Free Zones

FTA audits often review free zone transactions for correct VAT application.

VAT Registration – Importers

Importers must register for VAT if thresholds are exceeded.

VAT on Samples

Free samples may be treated as deemed supplies.

VAT on Promotional Goods

Promotional goods may attract VAT under deemed supply rules.

VAT on Storage

Storage services are generally taxable.

VAT on Distribution

Distribution services are subject to VAT.

VAT on Third-Party Logistics

3PL services attract VAT unless zero-rated.

VAT on Agency Services

Agency services are taxable at standard rates.

VAT on Commission

Commission income is subject to VAT.

VAT on Commission

Commission income is subject to VAT.

VAT on Brokerage

Brokerage services may be taxable or exempt depending on nature.

VAT on Import Refunds

Refunds may be claimed for excess import VAT.

VAT on Export Refunds

Zero-rated exports allow full VAT recovery.

VAT on International Contracts

Contracts must specify VAT treatment clearly.

VAT on Multinational Supply Chains

Complex rules apply to multinational operations.

VAT on Offshore Supplies

Offshore supplies may fall outside UAE VAT scope.

VAT on Transit Goods

Transit goods may be VAT-exempt.

VAT on Bonded Warehouses

Bonded warehouses have special VAT treatment.

VAT on Repackaging

Repackaging services are generally taxable.

VAT on Assembly Services

Assembly services may be taxable or zero-rated.

VAT on Installation Services VAT on Installation Services

Installation services are usually taxable.

VAT on After-Sales Services

After-sales services attract VAT.

VAT on Repairs

Repair services are subject to VAT.

VAT on Maintenance

Maintenance services are taxable.

VAT on Import Valuation

Correct valuation ensures accurate VAT.

VAT on Export Valuation

Export valuation supports zero-rating.

VAT on Sector Incentives

Sector incentives may affect VAT treatment.

VAT on Government Supplies

Certain government supplies may be exempt.

VAT on Public Sector

Public sector VAT follows special rules.

VAT on Energy Sector

Energy sector VAT involves complex compliance.

VAT on Construction Sector

Construction VAT includes staged supplies.

VAT on Infrastructure Projects

Infrastructure projects require VAT planning.

VAT on Free Zone Services

Services in free zones are usually taxable.

VAT on Export Compliance

Export compliance ensures zero-rating eligibility.

VAT on Import Compliance

Import compliance ensures correct VAT payment.

VAT on Trade Compliance

Trade compliance aligns VAT and customs rules.

VAT Risk – Free Zones

Incorrect treatment increases audit risk.

VAT Advisory – Trade

Advisory services help manage trade VAT.

VAT Planning – Imports & Exports

Planning optimizes VAT efficiency.

VAT Compliance – Free Zones

VAT compliance ensures adherence to UAE VAT law.