When thinking of business in the UAE, we tend to think of areas such as Dubai’s vibrant downtown or the busy Jebel Ali port. However, there’s an important distinction to make when considering the entire business landscape. How you run your business in the UAE depends on where your company operates- mainland or one of the 51+ free trade zones located across the country.
What is a free zone in the UAE?
Much of the UAE’s business activity is carefully regulated by government laws. Free zones are specially allocated areas intended to stimulate foreign interest and bolster local entrepreneurship through a range of attractive concessions, including, but not limited to, a near-zero tax regime, relaxed ownership policies and expedited set-up processes. For more information free zones in the UAE, click here.
Key features of the UAE’s free zones:
1. 100% ownership
Only recently have foreign nationals been able to own 100% of a company on the mainland. Even with this change, activities are still restricted, which leaves investors to explore free zones, which allow 100% ownership for a vast range of business activities that would not be available through a mainland license.
2. Favourable business conditions
In 2018, Dubai saw a 41% increase in ventures involving foreign investment, which contributed to the economy’s diversification beyond the oil trade and has confirmed the UAE’s status as a major player in the global market.
The government also provides several other advantages to foreign investors operating in the free zones, such as complete repatriation of profits to their home country, free funds transfers. and exemption from foreign exchange controls.
3. Exemption from tax, duties, customs
Business owners are exempt from certain taxes, duties and customs in free zones and are also not obligated, in certain circumstances, to rent or purchase office space. These special conditions make running a business more affordable in free zones, particularly for new entrants to the UAE market, such as start-up companies.
Free zone companies’ financial success is evident from the number of licenses issued monthly, which offers a look into the local economy.
For example, high-performing free zones, such as the DMCC, can issue up to 200 licenses per month, which shows a strong appetite amongst entrepreneurs, as well as established companies, to start or expand operations and take advantage of the unique opportunities available in free zones.
4. Hassle-free procedure
The free zones are independently governed by an authority established specifically for the purpose, such as the Jebel Ali Free Zone Authority for Jafza.
These authorities provide streamlined systems for setting up and operating a business in their free zone. It makes recruitment and other work processes smoother and more efficient when compared to the hassle of dealing with multiple government departments for the same.
5. No trading in mainland
A free zone’s business is limited to conducting business within its vicinity. After a business has grown, it may need to consider relocating or open branches in the mainland in order to engage with the larger UAE market or work with the government sector.
There are also limitations on staff sizes and the number of visas given to a free zone company. It depends on the authority managing it.
Are you interested in exploring your business options in one of the UAE’s free zones? Our trusted consultants offer expert advice on starting a free zone company, guiding clients through every step of the process. Contact us now for more information.