The UAE has dozens of free zones — Jebel Ali (JAFZA), Dubai Airport Freezone, Hamriyah and Sharjah Airport in Sharjah, KEZAD in Abu Dhabi and many more. A lot of importers and distributors hold their stock there. For a buyer on the mainland, that changes a few things worth knowing. This is a general guide, not tax or legal advice; the rules differ between zones and change over time, so check the specifics for your purchase.
1. Who can sell to you directly
A free zone company is licensed by its free zone authority, mainly to trade inside the zone and abroad. Selling into the mainland market has traditionally gone through a mainland distributor or agent, though some emirates now let free zone companies get a permit to trade on the mainland. A mainland company is licensed by the emirate's economic department and can sell to you directly. Ask a free zone supplier how they invoice mainland customers — directly, or through a mainland partner.
2. Customs
Goods held in a free zone are generally treated as outside the UAE's customs territory. When they move from the zone to a mainland buyer, they are usually treated as imported at that point, with customs duty and clearing paperwork. A mainland supplier's stock has normally been cleared already. So ask: is the price duty-paid and cleared, or ex-free-zone? UAE import duty and VAT explains how duty is worked out.
3. VAT
Some free zones are “designated zones” for VAT, where certain supplies of goods are treated differently. For a mainland business buying goods for use on the mainland, VAT normally applies in the end either way, but who charges it and when can differ. Ask for a tax invoice with the supplier's TRN, and check with your accountant if a quote says VAT does not apply.
4. Delivery and collection
Collecting from a free zone warehouse can mean gate passes and paperwork that a mainland yard does not need, and delivery out of a zone may take longer while goods are cleared. A quote that is “ex-warehouse JAFZA” and one that is “delivered to Al Quoz” are not the same price. FOB, EXW and CIF explained covers how to read those terms.
Questions to ask any free zone supplier
- Which free zone are you licensed in, and can you send the licence?
- Do you invoice mainland customers directly, or through a mainland company?
- Is the price duty-paid and cleared, or ex-free-zone?
- Is VAT included, and will you issue a tax invoice with your TRN?
- Is delivery to my site included, and how long does it take from the zone?
The cheapest quote from a free zone can be the dearest one delivered — or the other way round. Ask before you compare.
Comparing both on the same basis
On PurchoSmart, the AI calling agent asks every supplier — free zone or mainland — whether the price includes delivery and VAT, so the comparison puts them on the same basis. See how to find suppliers in the UAE and how to check a supplier is legitimate.