UAE Free Zones Business Information Guide
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United Arab Emirates Free Zones Business Information Guide – What is UAE Business Guide? UAE Free Zones Business Information Guide is an online FREE one-stop-shop website for transparent, current and simple information related to licensing, registration and costs for establishing business in the UAE Free Trade Zones.

The Free Trade Zones (FTZs) of the UAE are a veritable opportunity for the country to showcase its development and special area approach. The UAE in the last decade has witnessed a quantum increase in industrial development and one of the most significant and remarkable achievements is the success of Free Zones. Free Trade Zones are established under a special Decree passed by the Ruler of the Emirate in which the Free Zone is created.

Free Zones in the United Arab Emirates

To date the Free Zones have been successful in attracting a large number of foreign companies and foreign direct investment. The share of the Free Zones in non-oil exports has increased considerably along with the net exports from the Free Zones. An independent Free Zone Authority (FZA) governs each Free Zone, and is the agency responsible for issuing FTZ operating licenses and assisting companies with establishing their business in the FTZ.

Business investors can either register a new company in the form of a Free Zone Establishment (FZE)/Free Zone Company (FZCO) or simply establish a branch or representative office of their existing or parent company based within the UAE or abroad. An FZE is a limited liability establishment, incorporated in a Free Zone, owned by one natural or judicial person, whereas an FZCO is a limited liability company incorporated in a Free Zone by more than one shareholder, generally up to five. FZE/FZCO are governed by the rules and the regulations of the Free Zone in which they are established. There is a minimum capital requirement ranging from AED 50,000 to AED 1,000,000 depending upon the selected Free Zone.

Once a legal presence has been established in the Free Zone, the business will need to lease premises or land and acquire a license from the FZA. Different types of licenses are issued in different Free Zones, however companies with valid licenses only can conduct business within the Free Zone or abroad. To sell their products in the UAE, a UAE registered official agent is required. Services and products can be obtained from and within the UAE without an agent. The licenses issued by the FZA can be renewed annually as long as a lease agreement is in force with the FTZ.

The UAE Free Zones have been among the strong pillars of the country’s economic performance attracting much foreign investments, creating thousands of jobs, and facilitating the needed transfer of technology into the country. Together, the Free Zones account for more than half of the country’s non-oil exports and underpin the UAE’s ranking as the third most important re-export centre in the world.

The Free Zones help in keeping the engine of economic diversification rolling by attracting foreign investment in the private sector, which is central to the region’s overall plan aimed at reducing its economic dependence on oil, while creating employment for its nationals. Moreover, the Free Zones could prove to be the mechanism not only for a new impetus to diversification, but also for changing the very face of economic activity in this region.

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.

Establishing Business in Free Zone

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.

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:

  • Jebel Ali Free Zone (6,000 companies)
  • Sharjah Airport International Free Zone (3,900 companies)
  • Dubai Airport Free Zone (1,300 companies)
  • Dubai Media City (1,200 companies)
  • Dubai Internet City (1,000 companies)
  • RAK Free Trade Zone (7500 companies)

UAE Free Zones Procedures

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.

UAE Free Zones Licenses

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.

UAE Special Economic Trade 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.

The Industrial City of Abu Dhabi and Khalifa Port and Industrial Zone are part of the Abu Dhabi SEZs, while Dubai Industrial City, Dubai Multi Commodities Centre (DMCC), Dubai International Financial Centre (DIFC) and the various entities under Tecom Investments such as Dubai Internet City, Dubai Media City, Knowledge Village, Dubai Studio City, and Dubai International Academic City can be classified as SEZs. The Emirates Industrial City in Sharjah also falls under the SEZ category.