Accounting software for UAE free zone companies
A free zone company is not automatically outside VAT, and this is the single most expensive misunderstanding in UAE bookkeeping. Some zones are designated zones for VAT purposes and some are not, the treatment differs for goods and services, and the classification has to be on the document when it is raised.
- Goods within a designated zone
- Outside the scope — no VAT
- Goods into the mainland
- Standard rated 5% on import
- Services from a free zone
- Normally standard rated
- Export outside the UAE
- Zero rated, conditions apply
What free zone companies use it for
Designated zone treatment
Goods movements within a designated zone treated as outside the scope, and movements into the mainland treated as imports, each classified on the document.
Goods and services separated
Free zone relief that applies to goods does not generally extend to services, and the two are classified differently rather than assumed to match.
Mainland and free zone together
Two entities, two sets of books, two returns, one account and one login — which is how most groups here are actually structured.
Corporate tax bookkeeping
Books kept on the accrual basis the corporate tax rules expect, with qualifying and non-qualifying income distinguishable.
Warehouse stock in the zone
Stock inside the zone and stock cleared into the mainland as separate locations rather than one total.
Audit-ready records
A database-level audit trail and documents retained in the form the authorities expect.
Free zone questions
Is a free zone company exempt from UAE VAT?
No, and this is the most costly misunderstanding in UAE bookkeeping. Some zones are designated zones where certain movements of GOODS are outside the scope; services are generally treated normally, and anything entering the mainland is an import. The treatment depends on the zone, the supply and the counterparty, which is why it belongs on the invoice as a classification.
Can I run a free zone company and a mainland company in one account?
Yes, as separate companies with separate books, TRNs and returns under one login. That is the usual structure and keeping them in one account is what makes group reporting possible without exports.
Does tBiz help with corporate tax?
It keeps the books corporate tax is computed from, on the accrual basis, with income and expenses attributable in a way that supports a qualifying-income analysis. It does not produce the corporate tax return — that is a separate filing and we do not claim otherwise.
How is stock inside a designated zone treated?
As its own warehouse location, so what is in the zone and what has cleared into the mainland are different numbers in the stock ledger and can be reconciled separately.
Related
Classify it on the invoice, not at quarter end
Start free, set up your free zone entity, and put the treatment on the document where it belongs.