Dubai Silicon Oasis (DSO) – Non- Designated Zone

Launched in 2004, Dubai Silicon Oasis is considered as one of the world’s leading centers of advanced electronic innovation, design and development. DSO is the region’s engine towards establishing a stable knowledge base economy and extends an appealing value proposition embodied in the presence of full government support, competitive cost of operations, state-of-the-art infrastructure, advanced IT network, free zone benefits, 100 per cent owner ship, and above all an environment that is specifically designed for the technology industry.

DSO offers an array of high-quality facilities to businesses operating within the technology park with state-of-the-art infrastructure, systems and equipment. Furthermore, DSO offers an eco-friendly and clean location with buildings being constructed to global energy saving standards and daily maintenance carried out to ensure a pristine business environment.

Company types:

  1. Branch- Any established company, whether in the UAE or abroad, can register its branch in the Dubai Silicon Oasis. The activity of the branch proposes to conduct in the Dubai Silicon Oasis is required to be identical to the activity conducted by the parent company.
  2. Free Zone Establishment (FZE)- An FZE is a legal entity incorporated/registered by a single shareholder. The shareholder can either be an individual or a non-individual/corporate.
  3. Free Zone Company (FZCO)- An FZCO is a legal entity incorporated/registered with a minimum of two shareholders. Shareholders can be either individuals or non-individual(s)/corporate.

Operating licenses:

  • Service License: This allows the registered entity to carry out only specified services.
  • Trade License: This allows the registered entity to practice activities which are related to import, export, and distribution of items and goods as specified in the license.
  • Industrial License: This allows the registered entity to import raw material, manufacture, and process, assemble, package and export the finished product.

Special Licenses:

  • Business Operation Permit: This is a special permit for companies operating in the Administrative Zone of DSOA (areas owned by private developers) using a license issued by Dubai Economic Department (DED).
  • Entrepreneurial Business License: An EBL license is designed to accelerate the successful development of young entrepreneurs and their businesses through an array of support resources and services.

Dubai Silicon Oasis offers the companies and individuals the following incentives and benefits:

  • 100% corporate tax exemption
  • 100% personal income tax exemption
  • 100% foreign company ownership
  • 100% repatriation of capital and profits
  • Single window clearance (One stop shop)
  • 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