Establishing a business entity in one of the numerous UAE Free Trade Zones
(FTZs) can be an attractive option for foreign investors and businesses. All seven Emirates already have, or are developing, such economic zones.
Free zones contribute to and stimulate the economy by attracting foreign direct investment, generating thousands of jobs, stimulating non-oil exports, encouraging the setting up of ancillary industries, and helping in the transfer of knowledge, expertise and technology to the country.
The major advantages in operating in a free zone are:
100 per cent foreign ownership of the enterprise
100 per cent import and export tax exemptions
100 per cent repatriation of capital and profits
No corporate taxes for 15 years, renewable for an additional 15 years
No personal income taxes
Less documentation, mostly in English
Assistance with labour recruitment, and additional support services such as sponsorship and housing.
There are over 20,000 companies in 21 Free Zones around the UAE. The largest Free Zones, by number of companies, are the following:
An independent Free Zone Authority (FZA) governs each free zone and is responsible for issuing FTZ operating licenses and assisting companies with establishing their business in the FTZ. Investors can either register a new company in the form of a Free Zone Establishment (FZE) -- a limited liability company governed by the rules and regulations of the Free Zone in which it is established -- or simply establish a branch or representative office of their existing company based within the UAE or abroad.
The procedures for establishing a business in a Free Trade Zone are usually very straightforward and can be generally completed quickly, especially if there are no environmental issues involved. Individual Free Zones may have specific requirements, but general steps are:
Questionnaire from the relevant Free Zone Authority which will assist in assessing a company's requirements.
License application, planning documents, and a consumer request for electricity.
Provisional approval and lease agreement.
Meetings with the authority to finalize details of the project.
Once a legal presence has been established in the Free Zone, the business will need to lease premises or land and acquire an operating license from the FZA. Different types of licenses apply in the different types of free zone, however, it is important to understand that companies with trade and industrial licenses can only conduct business within the Free Zone or abroad. To sell products in the UAE, a UAE official agent is required, and a joint venture needs to be formed.
When not to choose a Free Zone
There are a few scenarios in which a prospective company might not want to choose to do business in a Free Zone, and should instead opt for a regular joint partnership. These are if a company:
Practices a regulated profession.
Requires a lot of visas or warehouse/office space.
Plans a long presence in the UAE and wants to reach a wider portion of the UAE market.
Has a particular UAE company or individual with which to go into partnership.
Special Economic Zones
Besides Free Zones, the UAE has established strategic frameworks for increasing the number of small- and medium-sized businesses in Special Economic Zones (SEZs). Abu Dhabi has set up the Higher Corporation for Specialised Economic Zones, which has since been renamed Zones Corp
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