8 September 2026 · Definition
What Is a VAT Designated Zone
A VAT designated zone is a specific fenced, customs-controlled area named by Cabinet Decision that is treated as outside the UAE for VAT purposes on goods. It must have security and customs controls governing the entry and exit of goods and people. This treatment applies only to goods; services within the zone are taxed normally. If the controls are not met, the area is treated as inside the UAE.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
A controlled area
It is more than a business park.
- Fenced with customs and security controls.
- Named specifically by Cabinet Decision.
- Treated as outside the UAE for goods.
- Controls over entry/exit of goods.
Only for goods
The relief is narrow.
- Applies to goods, not services.
- Depends on the conditions being met.
- Fails the test = treated as within the UAE.
- Check the current official list.
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Frequently Asked Questions
For understanding the concept.
Is a designated zone tax-free?
Only for goods, under conditions. Services within the zone are taxed at 5%.
Who names designated zones?
They are specified by Cabinet Decision and updated periodically.
What if the controls are not met?
The area is treated as inside the UAE for VAT.
Can Exiloz confirm my zone?
Yes. We confirm whether your area is a designated zone.
Is your area a designated zone?
Exiloz confirms your zone status and what it means for VAT.