# Designated Zones in UAE: Complete 2026 List, VAT & Corporate Tax Guide The UAE has 45+ free zones, but only a specific subset hold “designated zone” status under the VAT law. This matters because designated zones have special VAT treatment for the movement of goods — and that treatment is often misunderstood. This guide explains what a designated zone is, the current list across all seven emirates, when designated-zone status helps, when it does not, and how it interacts with the UAE corporate tax regime. ## What Is a Designated Zone? A “designated zone” is a specific UAE free zone that has been formally designated under the VAT law — Federal Decree-Law No. 8 of 2017 and the related Executive Regulations — as effectively outside the UAE for VAT purposes for the movement of goods. The original list was set by Cabinet Decision No. 59 of 2017 and has been updated periodically since. Critically, designated-zone status applies to **goods**, not to services. The supply of services within a designated zone is treated like any other UAE supply for VAT. Real estate inside designated zones also follows normal VAT rules. ## How a Designated Zone Differs From Other Free Zones - **Designated zone:** Movements of goods between two designated zones — or from outside the UAE into a designated zone — are typically outside the scope of UAE VAT, subject to specific conditions. - **Non-designated free zone:** Goods movements follow normal UAE VAT rules; VAT may apply on local supplies. - **Both:** Services supplied within either zone are subject to normal UAE VAT rules, including the 5% standard rate and normal exemption or zero-rating categories. ## Current Designated Zones List in the UAE As of 2026, 27+ free zones across the UAE hold designated-zone status. The list has been amended several times since Cabinet Decision No. 59 of 2017. Always validate against the most recent FTA publication before relying on the list for a specific transaction. ### Designated Zones in Abu Dhabi - Free Trade Zone of Khalifa Port - Abu Dhabi Airport Free Zone - Khalifa Industrial Zone (KIZAD) - Al Ain International Airport Free Zone - Al Butain International Airport Free Zone ### Designated Zones in Dubai - Jebel Ali Free Zone (JAFZA) — North and South - Dubai Cars and Automotive Zone (DUCAMZ) - Dubai Textile City - Free Zone Area in Al Quoz - DAFZA Industrial Park Free Zone, Al Qusais - Dubai Aviation City - Dubai Airport Free Zone (DAFZA) - International Humanitarian City, Jebel Ali - Dubai CommerCity ### Designated Zones in Sharjah - Hamriyah Free Zone (HFZA) - Sharjah Airport International Free Zone (SAIF Zone) ### Designated Zones in Ajman - Ajman Free Zone ### Designated Zones in Umm Al Quwain - UAQ Free Trade Zone in Ahmed Bin Rashid Port - UAQ Free Trade Zone on Sheikh Mohammed Bin Zayed Road ### Designated Zones in Ras Al Khaimah - RAK Port Free Zone - RAK Maritime City Free Zone - RAK Airport Free Zone - Al Hamra Industrial Zone — Free Zone - Al Ghail Industrial Zone — Free Zone - Al Hulaila Industrial Zone — Free Zone ### Designated Zones in Fujairah - Fujairah Free Zone - Fujairah Oil Industry Zone (FOIZ) ## VAT Treatment in Designated Zones: Goods vs Services The benefits of designated-zone treatment apply only to goods movements. ### Goods Movements - Movement of goods between two designated zones is typically outside the scope of UAE VAT. - Import of goods from outside the UAE into a designated zone is typically outside the scope of UAE VAT. - Goods leaving a designated zone for the UAE mainland are treated as an import, and 5% VAT applies. - Goods consumed within the designated zone are typically standard-rated. ### Services in Designated Zones Services supplied within a designated zone are subject to normal UAE VAT rules. There is no designated-zone benefit for services. For example, a consultancy operating inside JAFZA charges 5% VAT on services to UAE customers in the same way as a mainland consultancy. ### Real Estate in Designated Zones Real estate inside designated zones follows normal UAE VAT rules: - Commercial leases are subject to 5% VAT. - The first supply of residential property is zero-rated within 3 years of completion. - Residential resale is exempt. Designated-zone status has no effect on real-estate VAT. ## Corporate Tax in Designated Zones Designated-zone status is a VAT concept, not a corporate-tax concept. All entities, whether in a designated zone or not, are subject to UAE corporate tax under Federal Decree-Law No. 47 of 2022. Free-zone entities, including those in designated zones, can qualify for 0% corporate tax on qualifying income under the Qualifying Free Zone Person (QFZP) regime. Cabinet Decision No. 100 of 2023 sets the framework, while Ministerial Decision No. 265 of 2023 defines qualifying and excluded activities. Non-qualifying income is taxed at 9% above AED 375,000. The de minimis threshold for non-qualifying revenue is the lower of AED 5 million or 5% of total revenue. ## How to Set Up in a Designated Zone The setup process is the same as any other UAE free zone, but the business must be established within one of the designated zones listed above. The best zone depends on the business model: - **Heavy industry, oil and gas:** HFZA in Sharjah, FOIZ in Fujairah, or Al Hamra / Al Ghail / Al Hulaila in Ras Al Khaimah - **Logistics and port-based trading:** JAFZA in Dubai, Khalifa Port FTZ in Abu Dhabi, or RAK Port FZ - **Aviation and airport-adjacent trade:** DAFZA in Dubai, Abu Dhabi Airport Free Zone, or SAIF Zone in Sharjah - **E-commerce:** Dubai CommerCity - **Specialised goods trading:** DUCAMZ for automotive, Dubai Textile City, or International Humanitarian City - **Cost-conscious general trading:** Ajman Free Zone or UAQ Free Trade Zone ## Designated-Zone Compliance Checklist Businesses operating in designated zones should ensure the following: - VAT registration on EmaraTax if taxable supplies exceed AED 375,000 - Correct classification of every goods movement, including: - between designated zones - from a designated zone to the mainland - imports into a designated zone - Customs documentation for every movement of goods crossing the designated-zone boundary - Corporate-tax registration on EmaraTax regardless of revenue - Awareness of the AED 10,000 late-registration penalty for corporate tax registration - Continuous monitoring of the QFZP de minimis threshold - Audited financial statements if claiming QFZP status - Transfer-pricing documentation for related-party transactions ## BCL Globiz Experience: Common Issues in Designated-Zone Setups The most common misconception BCL Globiz sees is that clients assume “designated zone” means tax-free for everything. It does not. Designated-zone status helps with VAT on goods movements only. Services charged from a designated-zone entity to a UAE customer are still subject to 5% VAT. Real estate follows normal VAT rules. Corporate tax still applies, although the entity may qualify for 0% on qualifying income under the QFZP regime. The most-missed compliance step is the correct classification of goods movements. Goods moving from a designated zone, such as JAFZA, to the UAE mainland trigger import VAT at 5%. Businesses may incorrectly reclaim VAT, charge VAT when they should not, or fail to charge VAT when they should. ## Frequently Asked Questions ### How many designated zones are there in the UAE? As of 2026, the UAE has 27+ designated zones across all seven emirates. Dubai and Ras Al Khaimah have the largest concentrations. The number may change over time based on updated Cabinet Decisions. ### What is the difference between a designated zone and a free zone? A designated zone is a specific subset of UAE free zones that holds special VAT status under the VAT law. All designated zones are free zones, but not all free zones are designated zones. The benefit applies to movements of goods between designated zones, not to services or real estate. ### Are designated-zone companies exempt from UAE corporate tax? No. Designated-zone status is a VAT concept, not a corporate-tax concept. All free-zone companies are subject to UAE corporate tax under Federal Decree-Law No. 47 of 2022. However, they may benefit from a 0% rate on qualifying income if they meet QFZP conditions under Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 265 of 2023. Non-qualifying income is taxed at 9% above AED 375,000. ### Do I need to register for VAT if my business is in a designated zone? Yes. Being in a designated zone does not exempt a business from VAT registration. If taxable supplies and imports exceed AED 375,000 in the preceding 12 months, VAT registration is mandatory. Voluntary registration is available at AED 187,500. Registration is completed on the FTA’s EmaraTax portal. ### What goods movements get the designated-zone benefit? Movements between two designated zones, and imports from outside the UAE into a designated zone, are typically outside the scope of UAE VAT, subject to specific conditions. Goods leaving a designated zone for the UAE mainland are treated as imports and attract 5% VAT.