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Impact of Value Added Tax (VAT) On UAE Free Zone Companies

Here's the presentation displaying the background understanding about VAT imposition in UAE free zones and also enlighten you regarding its implications for business. <br>For more details on company formation in UAE, visit the link https://www.worldwideformations.com

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Impact of Value Added Tax (VAT) On UAE Free Zone Companies

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  1. Impact of Value Added Tax (VAT)on UAE Free Zone Companies

  2. VAT in UAE • Value Added Tax (VAT) is a consumption tax imposed on goods at every stage of supply chain, from production to the point of sale. • UAE Ministry of Finance has implemented the new VAT law which came into effect on Jan 1, 2018. • Businesses which have minimum turnover of AED 35000 are liable to pay taxes on both imports and exports of goods. • Thus business set up in UAE is subjected to VAT.But only 5% of tax is imposed by the Government on all supplies unless they are completely exempted to have a second source of revenue rather than depending completely on Oil.

  3. Apart from the empowered 23 designated zones, all other freezone companies are liable to pay VAT. • Designated zones are of multiple types • Entire freezone is a designated zone and thus VAT is exempted for all products inside. These are found mostly near ports. • Particular zones in free zones but not all of the free zones. Free zones producing goods will come under this category. After going through custom clearance goods should be stored in warehouses in designated zones. • Those service related firms which do not produce any goods such as media industry, internet are not liable to pay VAT.

  4. PROS OF VAT ON UAE FREEZONE COMPANIES • Educational, healthcare, food, internet services are exempted from the VAT. • Supply of certain vehicles including ships and aircrafts behaves normal. • Those companies got relief who make export outside GCC. • Transfer of goods from one designated zone to another designated zone is totally free. • First sale of new residential properties within their first 3 years of construction.

  5. CONS OF VAT ON UAE FREEZONE COMPANIES • Non designated companies are forced to pay VAT. • Gold and diamond industry is facing much cash flow problem as they only get back the expenses of VAT at the time of returns.

  6. Conclusion Introduction of VAT has thus brought the idea of a business setup in Dubai freezone and rest free zones in UAE to a next level comparing to other mainland areas there.For more details https://www.worldwideformations.com/blog/

  7. THANK YOU

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