The long awaited Executive Regulations on the Value Added Tax Law (“ER”) have been published today on the website of the Ministry of Finance and will come into effect on January 1, 2018 simultaneously with the Value Added Tax Law itself.
The ER clarify, inter alia, the registration procedure, requirements for certain zero-rated goods and services, requirements for tax invoices, treatment of free zones as well as any transfer of goods and services from and to a free zone.
It is interesting to note that while the ER contain a definition for the so-called designated zones, they do not specifically mention which free zones fall under this definition. This is subject to further specification by a Cabinet Decision. Furthermore, companies established in a designated zone will be treated as having a place of residence in the mainland and will therefore not be fully exempted from the application of VAT.
SCHLÜTER GRAF will provide you with a more detailed analysis of the ER and especially the articles related to free zones within the next days.