UAE VAT Compliance for Businesses in Dubai Production City Free Zone

UAE VAT Compliance for Businesses in Dubai Production City Free Zone

VAT Applicability in Dubai Production City Free Zone

Dubai Production City is classified as a Non-Designated Free Zone for VAT purposes. As a result, businesses operating in DPC are subject to standard UAE VAT rules, similar to mainland entities.

Key VAT implications include:

• Supplies of goods and services within DPC are generally subject to 5% VAT

• Transactions between DPC companies and mainland UAE customers attract 5% VAT

• Supplies between DPC and other non-designated free zones are taxable at 5% VAT

• Export of goods or services outside the UAE may qualify for zero-rated VAT (0%), subject to meeting FTA conditions.

VAT Registration Requirements for DPC Businesses

A company registered in Dubai Production City must apply for VAT registration if:

• Its taxable supplies exceed AED 375,000 in a 12-month period, or

• It expects to exceed this threshold within the next 30 days

• Businesses with annual taxable turnover between AED 187,500 and AED 375,000 may opt for voluntary VAT registration, which can be beneficial for recovering VAT on startup and operational costs.

• VAT registration is completed through the FTA online portal, and once approved, the business receives a Tax Registration Number (TRN).

VAT on Goods and Manufacturing Activities in DPC

Dubai Production City hosts many businesses involved in manufacturing, printing, packaging, and media production, making VAT treatment of goods particularly relevant.

Common VAT scenarios include:

• Sale of goods within the UAE → Subject to 5% VAT

• Transfer of goods from DPC to mainland UAE → Subject to 5% VAT

• Export of goods outside the UAE → Generally zero-rated, provided export documentation is maintained I Import of raw materials → Import VAT applies, often recoverable subject to conditions.

VAT Return Filing and Record-Keeping Obligations

• Once VAT-registered, DPC companies must meet ongoing compliance requirements:

• VAT Return Filing: Usually quarterly, though monthly filing may apply for larger businesses

• VAT Payment: Due within 28 days from the end of the tax period

• VAT-Compliant Invoicing: All invoices must include TRN, VAT rate, VAT amount, and supplier/customer details

• Record Keeping: Financial and VAT records must be maintained for at least five years

Input VAT Recovery for DPC Businesses

• VAT-registered companies in Dubai Production City can recover input VAT on eligible business expenses, including:

• Raw materials and production inputs

• Equipment and machinery

• Warehouse and office rent

• Utilities, logistics, and transportation

• Professional and advisory services

Common VAT Challenges in Dubai Production City

• Businesses in DPC frequently encounter VAT challenges such as:

• Misclassification of zero-rated exports

• Errors in VAT treatment of bundled goods and services

• Inadequate invoice documentation

• Delayed VAT return filing and payments

• Incorrect input VAT claims

How VAT-Gupta Accountants Can Support Dubai Production City Businesses

At VAT-Gupta Accountants, we provide comprehensive VAT solutions tailored to free zone businesses, including those operating in Dubai Production City.

Our VAT services include:

• VAT registration and deregistration

• VAT return preparation and filing

• VAT advisory for manufacturing and media businesses

• Input VAT review and optimisation

• VAT compliance health checks and audits

• Ongoing VAT support and representation before the FT