• Economy/ Legal Update/ Taxation/ Uncategorized

    Federal Tax Authority announce list of Designated Zones in the UAE

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    Cabinet decision No. (59) of 2017 on the Executive Regulations of the Federal Decree-Law No. (8) of 2017 (UAE VAT Law) has provided for 20 Designated Freezones in the UAE (as listed below), which will be treated for VAT purposes as being outside the UAE.

    Under the UAE VAT Law and Executive Regulations, a Designated Zone is defined as “a specific, fenced geographic area which has security measures and customs controls in place to monitor entry and exit of individuals and movement of goods to and from the area.”

    Subject to the below exceptions, in general, if a supply is deemed to have taken place in a designated zone, VAT should not be charged. The place of supply is generally determined by looking at the location of the goods, activities or parties to a transaction. The rules are as follows:

    • Goods that arrive into a Designated Zone from outside the UAE are not treated as imported into the UAE, and no VAT should be charged on the arrival of such goods; and
    • A transfer or sale of goods from a place in the UAE which isn’t a Designated Zone into a Designated Zone is not an export for VAT purposes, and therefore will not give rise to zero-rated VAT treatment.

    The transfer of goods between Designated Zones will not be subject to VAT, as stated in Article (51) of the VAT law, provided both of the following conditions are met:

    • The goods (or part of the goods) are not released, used, or altered during the transfer between Designated Zones; and
    • The transfer is in accordance with the rules for customs suspension pursuant to GCC Common Customs Law.

    The Federal Tax Authority may also request that, where goods are moved between Designated Zones, the owner of the goods provides a guarantee in respect of the VAT in case the conditions outlined above are not met.

    However, there are exceptions within the VAT Executive Regulations that state that certain types of supplies taking place in the Designated Zones are to be treated as if they actually took place within the UAE, and are therefore subject to VAT. These supplies include:

    • Any services provided;
    • Water and all forms of energy; and
    • Goods sold for use or consumption.

    Designated Zones:

    Abu Dhabi: Free Trade Zone of Khalifa Port; Abu Dhabi Airport Free Zone; and Khalifa Industrial Zone.

    Dubai: Jebel Ali Free Zone (North-South); Dubai Cars and Automotive Zone (Ducamz); Dubai Textile City; Free Zone Area in Al Quoz; Free Zone Area in Al Qusais; Dubai Aviation City; and Dubai Airport Free Zone.

    Sharjah: Hamriyah Free Zone; and Sharjah Airport International Free Zone.

    Ajman: Ajman Free Zone.

    Umm Al Quwain: Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port; and Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road.

    Ras Al Khaimah: RAK Free Trade Zone; RAK Maritime City Free Zone; and RAK Airport Free Zone.

    Fujairah: Fujairah Free Zone; and Fujairah Oil Industry Zone (FOIZ).

     

  • Economy/ Taxation

    Proposed removal of UAE from EU tax-haven blacklist

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    The UAE is amongst 8 countries recommended to be removed from the EU tax-haven blacklist. The blacklist was introduced by the EU in December of last year, as part of an initiative against tax evasion and to urge countries to observe and adhere to EU standards of tax matters.

    The recommendation for removal comes from the UAE Code of Conduct working group on business taxation, and is likely to be implemented towards the end of the month. The effect of the recommendation will see the UAE move from a list of countries which are deemed non-cooperative for tax purposes, to a gray list of countries that will be observed to ensure that their tax practices are compliant with EU standards.

    The recommendation is due to be discussed and approved by EU finance ministers at their next meeting on 23rd January 2018.

  • Employment

    New visa requirements for working in the UAE

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    The UAE Coordination Committee has announced that as of 4th February 2018, any expatriates looking to work within the UAE, must also acquire a Certificate of Good Conduct as a pre-requisite to being issued a work permit. Essentially a police check, this Certificate must be issued by an expatriate’s home country, or the country in which they resided for the past 5 years.

    In addition to obtaining the Certificate, expatriates must also have the Certificate attested by either the UAE Diplomatic Missions prior to departure, or at one of the Customer Happiness Centers at the Ministry of Foreign Affairs and International Cooperation on arrival. 

    The reasoning behind the additional requirement is a move by the Government to maintain a safe living environment for UAE residents, cementing the UAE’s position as one of the most secure countries in the world. 

    The Certificate is not required for individuals travelling to the UAE on a tourist visa, nor is it a requirement for dependents. Expatriates who already reside in the UAE on a valid work permit, will also not require to obtain a Certificate on renewal of their visas.