UAE VAT Myths Explained for Free Zone and Designated Zone Companies

• Not all Free Zone transactions are VAT-free; only certain goods transactions in designated fenced areas may be outside VAT under strict conditions.
• Designated Zone companies still must register for VAT if taxable supplies exceed AED 375,000.
• Only some Free Zones are Designated Zones: about 20 of 45+ qualify.
• Services in or between Free Zones and Designated Zones are generally subject to 5% VAT.
• Goods entering the mainland from a Designated Zone are subject to 5% VAT, and proper documentation is required.

Source: thevatconsultant.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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