Freezones have been excluded from the territorial scope of the UAE. However, for VAT purpose that is not the case.
Only those Free Zones listed in a Cabinet Decision quality for special VAT treatment and that special VAT treatment has certain limitations. These nominated Free Zones are known as Designated Zones of VAT Purpose.
The effect for businesses operating in Designated Zones will be that many supplies of goods will be outside the scope of UAE VAT, subject to strict criteria and detailed record keeping. Supplies of services are subject to normal UAE VAT rules.