Problems relating to Trade and Investment on United Arab Emirates
10. Restrictive measures for operations in Free Trade Zones ("FTZs") and Special Economic Zones ("SEZs") |
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Issue |
Issue details |
Requests |
Reference |
| (1) Implementation of Unreasonable Scheme concerning Free Zone | - Free zone: A firm now negotiates with customs over the import duty levy on goods purchased from the UAE domestic enterprise in Abu Dhabi for resale to a purchaser in a city in Abu Dhabi, after storing the goods in Jebel Ali free zone (JAFZA), Dubai. It is beyond comprehension how GOU can levy import duty on products domestically manufactured in UAE and resold to a domestic purchaser in UAE. Already two-months have passed since the issue surfaced without conclusion, although the Firm has kept consulting with the Customs Authority (CA) over the question, if such transaction form has ever existed in JAFZA, possible impact on other enterprises, as well as implementation of tax levy upon other firms. - Where an Firm in the UAE free zone imports goods from abroad and resells such goods to a domestic purchaser in UAE (DPU) holding import duty exemption licence (IDEL), it requires quite a complex, onerous procedure before DPU gets the tax exemption. The firm must obtain from its parent (member firm) the power of attorney (POA) stamped by Japan chamber of commerce & industry, and further endorsed either by Japan Ministry of foreign affairs (MOFA) or Japanese consular office in Dubai. |
- It is requested that CA clearly defines the transactions for the UAE domestic products between the parties in and out of the free zone. Should such transactions incur import duty, the firm's effort for business expansion gets materially impaired. - It is requested that the CA makes a fair decision in favour of the firm. Should CA levies tax on such transactions, it will impair the firm's effort to expand sales of the UAE domestic products. - The free zone (being a kind of off-shore), it is requested that GOU obviates the need for the firm's POA to enable firm's purchasers benefiting from the tax exemption measures (under IDEL). Moreover, the going scheme precludes the firm's direct purchase from parties other than the headquarter office, since the firm is unable to import direct competitive products from third countries. To the firm's purchasers, as well, it means the loss of business opportunities. |
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