Inside, outside, or exempt? Tax implications of the movement of goods in UAE free zones

VAT Treatment in Free Zones: Goods moved within UAE designated free zones may be subject to VAT based on their use; items for internal consumption incur a 5% VAT, while goods for resale or production may fall outside VAT scope, requiring proper documentation.
Import VAT Implications: When goods are transferred from designated zones to the UAE mainland, they are treated as imports, subject to 5% VAT upon entry. Businesses can reclaim this import VAT if conditions are met, avoiding double taxation.
Compliance and Documentation: Understanding the VAT framework in designated zones is crucial for businesses, necessitating detailed record-keeping and awareness of transaction classifications to ensure compliance and smooth operations within the UAE’s VAT regime.

Taxable transaction