Economic zones

Economic zones are now supported in LN. An economic zone is a special zone with simpler tax handling and easier legal compliance for companies. Economic zones are located within a country’s national borders, but are treated as foreign territory for tax purposes. The supply from and to economic zones is handled differently than the regular supply.

Because economic zones are considered to be located in a foreign territory, the transactions with economic zones can be classified as exports and imports.

These characteristics apply to exports:

• Goods or services are taken out of a country or from an economic zone.
• Goods or services are supplied from one unit in the economic zone to another unit in the same economic zone or in another economic zone.
• Goods are supplied from a domestic area to an economic zone.

Because supplies to an economic zone are the same as for any other export, VAT taxation is also as for any other regular export.

Special Economic Zones with a separate tax registration, and Export Oriented Units without a separate tax registration, are required and supported especially for India. However, for economic zones in other countries, this functionality can also be used.

If required, a separate registration can be specified for an economic zone and an address can be designated as part of an economic zone. Through tax exception modeling, the correct tax code is set as a default. This can be done for own locations and for business partners.