There are more than 30 free zones in the UAE that offer the foreign investors many benefits including 100% ownership, repatriation of profits and tax benefits. However, since the introduction of the VAT in 2018, more than 20 of the free trade zones have been categorised as designated zones for the VAT purposes. In general, free zones are not outside the scope of VAT but special rules apply for the free zones categorised as designated zones by the Federal Tax Authority. The foreign investors need to know how VAT applicability differs in designated free zones and non-designated free zones before they choose any free zone in the UAE.
Source: jcauaeaudit.com
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