The UAE announces the list of VAT Designated Zones and Zero-rated Medicines

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published Cabinet Decision No. 56 of 2017 on Medications and Medical Equipment, and Cabinet Decision No. 59 of 2017 on Designated Zones for the purposes of the Federal Decree-Law No. (8) of 2017 on Value Added Tax (VAT). 

The decisions confirm the areas which will be treated as a Designated Zone for VAT purposes and the Medications and Medical Equipment which will be subject to the zero-rate. 

The Cabinet Decision No. 59 confirms that the following Free Zones in the UAE are to be treated as Designated Zones. These Designated Zones will be subject to special rules for supplies of goods within those Designated Zones:

  • Free Trade Zone of Khalifa Port
  • Abu Dhabi Airport Free Zone
  • Khalifa Industrial Zone
  • 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
  • Dubai Airport Free Zone
  • Hamriyah Free Zone
  • Sharjah Airport International Free Zone
  • Ajman Free Zone
  • Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
  • Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road
  • RAK Free Trade Zone
  • RAK Maritime City Free Zone
  • RAK Airport Free Zone
  • Fujairah Free Zone
  • FOIZ (Fujairah Oil Industry Zone)

We would suggest that businesses in doubt as to whether they, or others in their supply chain are covered by a Designated Zone, or, as to the implications that this may have transactions affected, contact our team below.

The Cabinet Decision No. 56 on Medications and Medical Equipment confirms that the supply of all Medications and Medical Equipment registered with the Ministry of Health and Prevention, or imported with its permission or approval, shall be subject to VAT at the zero-rate.

Both decisions take affect from 1 January 2018, and therefore have retrospective application. 

Those businesses that may have charged VAT on supplies made in either of the affected situations since 1 January where the supply should have been out of scope of VAT, should be able to correct the VAT position by issuing credit notes to customers. In the situation where this affects the supply of affected Medications or Medical Equipment, and where the recipient is not easily able to be identified, it is suggested that a notice be shown at the premises offering a credit where the original VAT invoice is provided as proof.

Please click on the link relevant to you to access the full details of the Cabinet Decisions:

Designated Zones: English and Arabic.

Medications and Medical Equipment: English and Arabic.

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