Dubai Airport Freezone (DAFZA) – Designated Zone

Dubai Airport Freezone (DAFZA)

DAFZA: The fastest growing Zone in the world
Ranked 1st globally by fDi magazine

Dubai Airport Freezone (DAFZA) is ranked 1st globally by the Foreign Direct Investment Magazine’s Global Free Zones & Awards 2012/13, DAFZA won this rating as a result of its outstanding strategic approach and well-articulated plans to service its investors and partners.

DAFZA is one of the most prestigious and advanced free zones in Dubai, providing an ideal base to do business in the Middle East by providing a business-friendly environment, world class infrastructure, tax exemptions, full repatriation of earning, total ownership and exceptional facilities. Strategically located next to the Dubai International Airport, DAFZA is boasting rapid clearance and fast processing of paperwork to maximize business activity and efficiency.

Established in 1996, Dubai Airport Free Zone has become the gateway for a remarkable number of global investors seeking business opportunities in the Middle East region. Home to over 1600 international firms from various parts of the world, the DAFZA positions itself as one of the fastest growing economic zones in the region.

Formation Types:

  1. FZCO Setup

The FZCO company type is similar to a limited liability company that can operate within the Free Zone. Shareholders may be individuals, corporate entities or a combination of the two.

FZCO Features:

  • Can be from 1-50 shareholders (individual, corporate or both).
  • Minimum share capital: AED 1,000 (USD 272) per shareholder.
  • Value of each share: AED 1000 (USD 272).
  1. Branch Setup

Existing companies can establish a Branch of their parent company in DAFZA. No share capital is required.

Branch Features:

  • 100% owned by parent company.
  • Same business name as parent company.
  • Same business activities as parent company.

DAFZA offers following licensing options:

  1. Trade License

A trade license allows the holder to carry out trading activities including import, export, re-export, distribution, and storage of specific products.

  1. Service License

A service license is geared towards service-oriented businesses and enables an entity to provide services specified in the license. Note that obtaining a service license requires consultation with the sales executives to facilitate the selection of the right category.

  1. Industrial License

An industrial license entitles the holder to carry out light manufacturing industrial activities, packaging and assembling.

  1. General Trading License

A General Trading license allows the holder to trade in general activities including import, export, re-export, store, and distribute.

DAFZA business benefits:

  • DAFZA has a strategic location in the heart of Dubai next to the airport.
  • State-of-the-art infrastructure.
  • World-class facilities.
  • Single window convenience for administrative services.
  • Investor-oriented management.
  • 24/7 customs services and rapid cargo clearance.
  • A dedicated logistics center.
  • 24/7 security.

Tax incentives:

  • DAFZA offers 100 per cent corporate tax exemption.
  • 100 per cent personal income tax exemption.
  • 100 per cent import and export tax exemption.

Investment incentives:

  • DAFZA ensures 100 per cent foreign company ownership.
  • 100 per cent repatriation of capital and profits.
  • No currency restrictions.

Value Added Tax (VAT):

Value Added Tax (VAT) has been introduced across the UAE on 1 January 2018 at a standard rate of 5%.

Who should register for VAT?

A business whether situated in designated zone or non-designated zone or outside free zone should register for VAT if the taxable supplies and imports exceed the mandatory registration threshold of AED 375,000 within preceding 12 months or it is anticipated  that the total value of taxable supplies exceed AED 375,000 in the next thirty 30 days. Upon registration, a tax registration number (TRN) would be issued to business by the Federal Tax Authority.

What is a designated zone?

A Designated zone is a specified fenced geographical area having security measures and customs controls in place to monitor entry and exit of individuals and the movement of goods to and from the area. Following free zones are declared as designated zones.

a. Free Trade Zone of Khalifa Port
b. Abu Dhabi Airport Free Zone
c. Khalifa Industrial Zone
d. Jebel Ali Free Zone (North-South)
e. Dubai Cars and Automative Zone (DUCAMZ)
f. Dubai Textile City
g. Free Zone Area in Al Quoz
h. Free Zone Area in Al Qusais
i. Dubai Aviation City
j. Dubai Airport Free Zone
k. Hamriyah Free Zone
l. Sharjah Airport International Free Zone
m. Ajman Free Zone
n. Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
o. Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road
p. RAK Free Trade Zone
q. RAK Maritime City Free Zone
r. RAK Airport Free Zone
s. Fujairah Free Zone
t. FOIZ (Fujairah Oil Industry Zone)

What is a non-designated zone?

Any free zone which is not declared as designated zone is a non-designated zone. In other words a non – designated zone is any geographical area within UAE which does not have any security measures and custom controls in place to monitor entry and exit of goods and individuals. Eg. DMCC, Dubai Media city, DIFC and Dubai Internet city.

What transactions are subject to VAT within Designated zones?

a) Goods transferred between designated zones shall not be subject to VAT. However goods supplied by an entity in the designated zone to entities outside the designated zone are subject to 5% VAT.
b) Services provided by an entity to other entities inside the designated zone or outside the designated
zone are subject to 5% VAT.
c) Professional fees for services are subject to VAT @ 5%.

What government/free zone fees (License/Visa/rent) are subject to VAT?

In case of designated zones the trade license fees, visa fees, lease rentals will not be subject to VAT. And in case of non-designated zones the trade license fees and visa fees are not subject to vat however rent is subject to 5% VAT.

If you need additional assistance or have any questions, please contact the following:
Email: legal@jitendragroup.ae
Tel: +971 4 343 8022