Article 51 – Designated zones
1. Any Designated Zone specified by a decision of the Cabinet shall be treated as being outside the State and outside the Implementing States, subject to the following conditions:
- The Designated Zone is a specific fenced geographic area and has security measures and Customs controls in place to monitor entry and exit of individuals and movement of goods to and from the area.
- The Designated Zone shall have internal procedures regarding the method of keeping, storing, and processing of Goods therein.
- The operator of the Designated Zone complies with the procedures set by the Authority.
2. Where the Designated Zone changes the manner of operating or breaches any of the conditions based on which the area was specified as a Designated Zone under a decision issued by the Cabinet, the Designated Zone will be treated as if inside the State.
3. The transfer of Goods between Designated Zones shall not be subject to Tax if the following two conditions are met:
- Where the Goods, or part thereof, are not released, and are not in any way used or altered during the transfer between the Designated Zones.
- Where the transfer is undertaken in accordance with the rules for customs suspension according to GCC Common Customs Law.
4. Where Goods are moved between Designated Zones, the Authority may require the owner of the Goods to provide a financial guarantee for the payment of Tax, which that Person may become liable for should the conditions for the movement of Goods not be met.
5. Where a supply of Goods is made within a Designated Zone to a Person to be consumed by him or another person, then the place of supply of these Goods shall be in the State except in any of the following cases:
- The purpose was to incorporate the Goods into, attach the Goods to, or that the Goods become part of or are used in the production of another Good in the same Designated Zone and such Good is not consumed.
- The Goods were delivered to a place outside the State, and the Supplier retains supporting commercial or official evidence proving that, and customs evidence proving that the Goods were removed from the Designated Zone.
- The Goods were moved from the Designated Zone to a place inside the State, and the Supplier retains official evidence establishing that VAT had been applied on that import.
6. The place of supply of any Services is considered to be inside the State if the place of supply is in the Designated Zone.
7. As an exception to Clause 6 of this Article, the place of supply of any services shall be outside the State, where shipping or delivery services are supplied directly in connection with Goods that have a place of supply outside the State according to paragraphs (b) and (c) of Clause 5 of this Article, and all of the following conditions are met:
- Shipping or delivery services are supplied by the same supplier of the Goods.
- The supplier of the Goods is a Non-Resident, and not registered for Tax.
- These Goods are sold via an Electronic Sales Platform; an Electronic Sales Platform refers to any type of online sales platform, including websites and electronic applications, which brings together third-party sellers and buyers, and through which Goods may be sold and purchased with or without shipping or delivery services.
- The person owning the Electronic Sales Platform is not the supplier of the Goods.
8. The Place of supply of water or any form of energy shall be considered to be inside the State if the place of supply is in a Designated Zone.
9. Goods located in a Designated Zone which the owner has not paid Tax on will be treated as Imported into the State if:
- The Goods are consumed by the owner unless they are incorporated into, attached to or otherwise form part of or are used in the production of another Good located in a Designated Zone which itself is not consumed.
- There is a shortage in Goods.
10. Any Person established, registered or which has a Place of Residence in a Designated Zone shall be deemed to have a Place of Residence in the State for the purposes of the Decree-Law.