"This means that any free zone company importing scrap metals from the UAE will not be subject to the Dihrams 250 (approximately US$68) per metric ton for export, if the scrap metal is used in value-added manufacturing processes," said Hareb.
The move follows investor fears that the free zones were losing their tax free status when companies were recently told to comply with a Federal Decree imposing a metal scrap export tax.
Speaking to the Gulf News to clarify the issue further Jafza's economic adviser Nermine Al Shimy said production units generating scrap metal as a residue of production processes are not liable to pay tax while exporting the scrap metal from the free zone to other countries.
Similarly, scrap dealers in the zone who collect the metal scrap from such companies are not liable to pay the export tax if exporting from the free zone to other countries, said Al Shimy.
"In fact free zone companies are not liable to pay any tax on transactions within the zone and if companies have received letters which go contrary to this they should contact me with the letters and we will look into it," she said.
Hareb asserted that Federal laws do not apply to a free zone which is considered 'a country within a country' and added that Decree No 262/4 of 2004 does not relate to the free zone companies.
However, companies outside the free zone exporting scrap metal into the free zone or to other countries are liable to pay the export tax and obtain a "No Objection Letter" issued by the Ministry of Industry and Finance showing the payment of the duty before leaving the UAE federal shores.
"This means that this duty shall be paid before entering the Jebel Ali Free Zone which is considered a different territory / country," said Hareb.
Jafza will not allow imports from the UAE to the free zone without the stamped "no objection letter", she said.
"Jafza has never been an instrument to bypass customs law.
By taking such actions, Jafza will be preserving the status of the free zone at the same time helping the national policy to limit the direct export of scrap metals that are needed for the continued economic growth the UAE is currently experiencing," she said. Gulf News