Designated Zones in the UAE

In honor of the second anniversary of our office in Dubai, the international legal consulting company Antwort Law continues a series of articles about business in the UAE and our next article will tell about the designated zones of this country, created to further stimulate economic growth and attract foreign investment. We'll take a closer look at what gated zones are, the benefits they provide, and how your company can take advantage of these zones for your company.

Designated Zones in the UAE are unique economic territories with special tax regimes and conditions: they are considered to be outside the UAE for VAT purposes under certain conditions. Their emergence is associated with the UAE’s economic strategy to diversify the economy and reduce dependence on oil revenues. The first such zone was created in 1985 in Jebel Ali (JAFZA), which became one of the largest and most successful free zones in the world.

In order for an zone to be considered closed, it must meet the following criteria:

1. Limited and fenced zone;
2. Security and customs controls to monitor the movement of goods and people in and out of the zone;
3. Specific rules for storing, retrieving and handling goods within the zone;
4. The zone operator must comply with all rules and regulations set by the UAE Federal Tax Authority (FTA).

Benefits of designated zones

1. VAT Exemption: Supplies of goods taking place inside or outside a designated zone are exempt from VAT subject to certain conditions being met, which can significantly reduce costs for companies operating in these zones.
2. Simplified customs procedures: the movement of goods into and out of the designated zone is subject to simplified customs procedures, which speeds up and simplifies the import and export processes.

The list of designated zones is approved by the UAE Cabinet of Ministers and is subject to change. Recent changes in 2008 include the addition of new zones such as the International Humanitarian City in Jebel Ali, Al Ain International Airport Free Zone and Al Butain International Airport Free Zone.

Examples of designated zones in the UAE in Dubai:

- Jebel Ali (JAFZA) - PepsiCo has its production facilities in this zone and the largest oil services company Schlumberger also has its operations here;

- Dubai Airport Free Zone - Procter & Gamble (P&G) has a distribution center in this zone, which allows them to quickly and efficiently supply their products to the Middle East markets, taking advantage of tax incentives and simplified procedures;

- Dubai Silicon Oasis;

- Dubai Textile City.

Therefore, designated zones are ideal for companies involved in international trade and logistics, as they offer more favorable conditions specifically for these zones of activity.

Antwort Law offers a full range of services for entrepreneurs planning to open and operate a business in the UAE. We are always ready to help you in solving any legal and business issues:

• Company registration: we will help you choose a suitable designated zone and prepare all the necessary documents for company registration.
• Legal support: we will ensure full compliance of your business with local legislation and assistance in resolving any legal issues.
• Tax and financial consulting: we will provide recommendations on optimizing tax obligations and financial management.
• Visa support: we will help you obtain visas for your employees and their families, ensuring their legal stay and work in the UAE.

The UAE's designated zones offer many benefits to international companies looking to develop and expand their businesses. With the support of Antwort Law, you can effectively take advantage of all the opportunities that these zones provide and achieve success on the international stage.

Lidia Ivanova

International lawyer
Antwort Law