NEW FREE ZONES ADDED TO THE DESIGNATED ZONES LIST
As a part of the UAE VAT regime, a list of 20 free zones around the UAE was released by the UAE Federal Tax Authority in January 2018 as designated zones (DZs). Popular free zones like Jebel Ali free Zone (JAFZ), Dubai Airport Free Zone (DAFZ), Sharjah Airport International Free Zone (SAIFZ), Abu Dhabi Airport Free Zone (ADFZ), RAK Free Trade Zone (RAKFTZ)with fenced geographical areas and customs controls made the list.
Certain benefits were created by the distinction of DZs from the regular free zones:
- A DZ that meets conditions specified in the VAT Executive Regulations shall be treated as being outside the UAE.
- No VAT is chargeable for transfer of goods between DZs, subject to certain conditions.
- Transfer of goods from one entity to another within the same DZ, as long as, it part of a supply chain and not meant for final consumption by the receiving entity, will not be subject to VAT.
- For provision of services, being in a DZ offers no locational advantages, as VAT is chargeable at the standard rate on all services within the UAE.
Three new free zones have now been added to this DZ list from June 2018: International Humanitarian City, Al Ain International Airport Free Zone and Al Butain International Airport Free Zone
POSITIVE CHANGES IN DUBAI WORLD TRADE CENTRE FREE ZONE
The Dubai World Trade Centre (DWTC) Free Zone created quite a stir with a recent press release whereby it has slashed licence rates by 50% and also reduced charges for obtaining visas.
DTWC has also introduced the hot desk / virtual office concept with competitive rates that are probably the lowest among Dubai based free zones that offer virtual offices. DWTC has further incentivized setting up in their free zone by removing the requirement to deposit physical capital, if it is up to AED 300,000. A physical deposit accompanied by a bank letter is only required if the capital exceeds AED 300,000.
CAPITAL REQUIREMENT REMOVED IN MEYDAN FREE ZONE
The Meydan Free Zone which is probably the only free zone that only offers virtual offices, was behind in the pecking order due to the capital requirement of AED 100,000. Similar to DWTC and most of the top free zones in the UAE, Meydan free zone has also done away with the capital deposit requirement.
TECOM / DCCA – FREELANCE PERMITS
The initiative – Gofreelance – launched in partnership with Dubai Creative Cluster Authority (DCCA), offers freelancers in the education and media sectors the freedom of the ‘gig economy’ through licences for activities such as executive coaching, film director, scriptwriters and creative designers.
While there are five activities allowed in the education sector, the media category has nearly 50 activities, including acting, animation and journalism. The move aims to position the emirate as an innovation and talent hub. Currently, registration is open under two sectors: Media (Dubai Media City) and Education (Dubai Knowledge Park).
DUAL LICENSES IN ABU DHABI GLOBAL MARKET (ADGM)
Abu Dhabi’s financial centre – ADGM now follows a system allowing ADGM registered entities to apply for a licence issued by the Abu Dhabi DED (Department of Economic Development), which authorizes them to conduct business activities outside the borders of ADGM without the need to maintain additional office space in mainland Abu Dhabi.
Companies operating in free zones can bid for businesses in the mainland. This move will encourage more companies to set up businesses in Abu Dhabi based free zones.
SAIF ZONE – GOLD AND DIAMOND PARK
SAIF Zone recently launched a Gold, Diamond & Commodities Park. The Gold, Diamond and Commodities Park would be one of its kind with modern infrastructure for exclusively for the gold & diamond sector. The facility and services are currently in the process of being completed.
THE AUS RESEARCH, TECHNOLOGY AND INNOVATION (RTI) PARK
Sharjah is planning an entire free zone dedicated to research and development (R&D). The AUS Research, Technology and Innovation (RTI) Park, an initiative of AUS Enterprises which is a holding company established to develop projects for the American University of Sharjah (AUS), hopes to welcome 200 companies in its first phase of development, which is due for completion in 2018.
Formed as an economic free zone dedicated to research and development, the park will focus on six research areas: digitization, energy, environment, industrial design and architecture, transport and logistics, and water technology.
SHARJAH PUBLISHING CITY
Sharjah Publishing City is the world’s very first publishing Free Zone offering those in the book industry the opportunity to capitalize on tax free privileges while benefiting from being a wholly independently owned and operated company. Further benefits also include the ideal location, at the epicenter of the globe with all the advantages of having the MENA, African and Asian region’s marketplace to hand.
The aim and purpose of Sharjah Publishing City is in keeping with the overall mission of the Sharjah Book Authority, to foster investment and growth in the publishing and printing sector within the UAE and the International community.
This update has been compiled by Chaitanya G. Kirtikar, Senior Manager, Structuring Services Department