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What would be UAE VAT effect on supply of goods by a company based in Designated Zones in UAE?

17/1/2018

6 Comments

 
Designated Zone is an area specified by a decision of the UAE Cabinet upon the recommendation of the Minister of Finance, as a Designated Zone for the purpose of the UAE VAT Law and rules made there under. Currently there are 20 designated zones in UAE.  
​
  1. Supply of goods and services to outside implementing states (currently UAE and KSA) would attract 0% Vat. 
  2. Supply of goods to other designated zones would be out of the scope. But may require deposit of equivalent of vat tax on the value of the goods subject to such transfer while the goods are in transit from one designated zone to another. 
  3. Supply of goods to other companies based in UAE would be subject to 5% standard rate of vat.
  4. Supply of goods to other implementing states (now only KSA)
    1. Registered customers (under KSA VAT) would pay vat on reverse charge basis there is no need from our side to charge vat. But company must keep the record of such transfer like shipping documents, delivery notes and the Tax Registration Number of such customers.
    2. Un-Registered customers (under KSA VAT) would be treated as any other customers and company would have to charge vat tax at standard rate. 
Gupta Accountants competent team as Vat Consultants in Dubai, provides supports at all the stages of the Value Added Tax on good and services in UAE to local  companies, free zone based companies  and designated zone based companies of Dubai, Abu Dhabi Sharjah, Umm Al Quwain, Ajman, Ras Al Khaimah and Fujairah.
​  
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6 Comments
Jojimon Chacko
31/3/2018 09:31:31 am

Please refer Article (48) Clause 3 of the Cabinet Decision No. 52 of 2017

3. Where a Taxable Person who has a Place of Residence in the State receives a supply of Goods or Services with a Place of Supply in the State, from a supplier who does not have a Place of Residence in the State and does not charge Tax on that supply, the supply shall be treated as being of Concerned Goods or Concerned Services subject to Clause (1) of Article (48) of the Decree-Law.

Your Point No. 3 mention that - Supply of goods to other companies based in UAE would be subject to 5% standard rate of vat. Would you please refer Article 48 Clause 3 and comment? As we understand VAT should be 0% for the supply of Goods from Designated Zones to UAE mainland and importer on record needs to account for VAT under reverse charge mechanism. If the Designated zone can charge 5% VAT, would you please substantiate it with relevant VAT law - VAT Decree Law and Cabinet Decisions.

Thanks for your support..

Jojimon Chacko

Reply
Ramesh Kumar Gupta link
29/4/2018 09:23:05 pm

Dear Jojimon Chacko,

Thanks for visiting blog page of Gupta Accountants, UAE VAT Advisors & Consultants in Dubai.

Thanks for your valuable comment.

Yes. A designated zone company must charge 5% VAT on goods sold for the consumption in designated zone.

Regards.

Reply
Jojimon Chacko
30/4/2018 01:30:27 pm

Dear Sir,

Thanks for your response. But the answer is not on my question. My question is on the Sale by a Designated Zone company to a UAE main land company. Can the seller charge VAT?

Thanks & Regards,

Jojimon Chacko

Reply
Ramesh Gupta link
17/8/2018 10:46:02 am

Dear Jojimon Chacko,

Thanks for visiting blog page of Gupta Accountants, UAE VAT Advisors & Consultants in Dubai.

Seller based in designated zone would not charge vat for the sales made to mainland companies. 5% vat would be paid on reverse charge basis by the buyer as the goods would be cleared from the designated zone under buyers TRN.

Regards

Anna
9/7/2018 08:44:12 am

Hi Good Morning! Could you please advise, if we are designated zone company supply goods to Mainland (UAE) with transportation/Freight charges (DDP Dubai), what would be the VAT treatment? Is 5% applicable to total amount both goods & freight cost?
What if supply of goods from designated zone to GCC with transportation charges, what is the VAT treatment?
Appreciate your kind help on this matter.
Thank you

Reply
Ramesh Gupta link
17/8/2018 10:42:15 am

Dear Anna,

Thanks for visiting blog page of Gupta Accountants, UAE VAT Advisors & Consultants in Dubai.

We would request you to contact us on info@guptaaccountants as we would need additional details to reply on your query.

Regards

Reply

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    Ramesh Kumar Gupta is a young and dynamic Chartered Accountant and has 21 years of experience in assurance, accounting, audit and business management.  He is a member of the Institute of Chartered Accountants of India (ICAI).  He is the Managing Partner of Gupta Accountants an accounting and advisory firm in Dubai UAE

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We provide our periodic compliance services, like  FTA VAT  Return, FTA VAT Refund, FTA VDS Return, FTA Registration & Deregistration, Annual ESR Return & maintenance of statuary registers of UBO in UAE to the all the entities registered with  ​Ministry of Economy, Dubai Aviation City, Dubai South,  Hamriyah Free Zone Authority (HFZA),  Media Free Zone (Abu Dhabi), Central Bank of the UAE, Jebel Ali Free Zone (JAFZA) DP World,  Ajman Free Zone Authority, Abu Dhabi Airports Free Zone, Insurance Authority, Dubai World Trade center,  Ajman Media Free Zone Autority,  MASDAR, Security and Commodities Authority,  International Humanitarian City (IHC) ,Ras Al Khaimah International Corporate Centre (RAK ICC), Abu Dhabi Global Market (ADGM), Dubai Airport Free Zone , TECOM (Dubai Development Authority),  Ras Al Khaimah Economic Zone (RAKEZ), Abu Dhabi Ports, Dubai Healthcare City Authority, Dubai Multi Commodities Centre (DMCC), Fujairah Free Zone, Fujairah Creative City,  Dubai International Financial Centre (DIFC) Dubai Silicon Oasis Umm Al Quwain Free Zone (UAQ) Sharjah publishing city, Meydan Free zone, Sharjah Airport (SAIF) Zone, Khalifa Industrial Zone Abu Dhabi (KIZAD), Sharjah media city, International free zone authority Fujairah, RAK Maritime City, Sharjah Healthcare City, The Sharjah Research, Technology and Innovation Park  in addition to the assistance in the compliance with the annual audit requirements  and books of accounts. 
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  • HOME
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    • GUPTA ACCOUNTANTS
    • MANAGEMENT
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    • ACCOUNTING >
      • Accounting Dubai
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      • Accounting RAK
      • Accounting Fujairah
      • Accounting Ajman
      • Accounting UAQ
    • AUDIT COMPLIANCE >
      • Audit Dubai
      • Audit Sharjah
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    • AUDIT INTERNAL >
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    • VAT REGISTRATION >
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    • VAT COMPLIANCE >
      • Compliance Dubai
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    • VAT CONSULTING >
      • Consulting Dubai
      • Consulting AD
      • Consulting Sharjah
      • Consulting RAK
      • Consulting Fujairah
      • Consulting Ajman
      • Consulting UAQ
    • VAT REFUND >
      • Refund Dubai
      • Refund AD
      • Refund Sharjah
      • Refund RAK
      • Refund Ajman
      • Refund Fujairah
      • Refund UAQ
    • VAT VDS >
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    • UBO COMPLIANCE
  • BLOG
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  • RESOURCES
    • VALUE ADDED TAX - UAE >
      • VAT in UAE >
        • Introduction to VAT Laws in UAE
        • Frequently Used Terms in Indirect Tax System
      • VAT Registration >
        • VAT Registration in UAE
        • Who should register under VAT
        • How to apply for VAT registration in UAE
        • Tax Registration Number (TRN)
        • How to check TRN validity in UAE
        • VAT registration Deadlines in UAE
        • VAT Group Registration
        • VAT Registration Threshold Calculation in UAE
      • VAT De-Registration >
        • How to de-register under VAT in UAE
      • Recovery of Input Tax >
        • Input Tax Recovery under VAT in UAE
        • Supplies not eligible for input tax recovery under VAT in UAE
        • Supplies not eligible for input tax recovery under VAT in UAE
        • What is Capital Asset Scheme in UAE VAT ?
        • Input VAT Adjustments under Capital Assets Scheme
      • Place of Supply >
        • Place of supply of goods under VAT in UAE
        • Place of supply in case of export of goods
        • Place of supply of specific goods
        • Place of supply of services
        • Place of supply of services in special cases
        • Place of Supply of Telecommunication and Electronic Services
        • Place of Supply of Services Related to Real Estate
        • Place of Supply of Certain Transport Services