One location, separate tax tests
The FTA issued public clarification TAXP010 on Free Zones and Designated Zones for Tax Purposes, listed in its register on 2 October. The clarification explains that corporate tax, VAT and excise use different definitions and requirements.
A VAT Designated Zone is not automatically a Corporate Tax Designated Zone. The FTA says the location must be recognised as both a VAT Designated Zone and a Free Zone for corporate-tax purposes.
Status must be evidenced for each regime
For corporate tax, taxpayers should confirm the relevant status with their Free Zone authority. VAT depends on the listed zone and applicable conditions; excise status involves FTA designation and the relevant warehouse arrangements.
The clarification does not turn every transaction in a free zone into a zero-rated or exempt transaction. Status and transaction treatment are separate questions.
The control gap to close
T&M analysis: a master-data field labelled free zone is too broad if the business uses it to drive several taxes. Record the location's legal status for each regime and the evidence supporting that classification.
Then map actual activities and movements of goods to the relevant rules. A tax outcome derived from the company's licence alone can miss the conditions governing a particular supply, warehouse or income stream.
A better site-selection comparison
Investors comparing UAE locations should ask what benefits apply to their planned activity and what conditions must remain satisfied. A marketing description of a zone is not a complete tax analysis.