Establishing a business entity in one of the numerous Free Trade Zones can be an attractive option for foreign investors and businesses. All seven Emirates already have, or are developing these economic zones with the purpose of attracting foreign investors. They offer incentives and a dedicated infrastructure not available elsewhere in the country.
Among the prime attractions of Free Trade Zones are 100% foreign ownership and a guaranteed exemption from corporate taxation to businesses that set up in their territories. Additional advantages include:
Most free zones are built to cater to a specific field of business activity. A dedicated infrastructure is formed for specific industries to foster areas of specialisation, thereby increasing productivity. Free zones are also located strategically, near ports, airports, warehouses and storage facilities, thus increasing efficiency for trade and commerce.
Each free zone is governed by an independent Free Zone Authority which is responsible for issuing Free Trade Zone operating licenses, regulating its own set of rules and laws, assisting companies establish their business within their zone. Most free zones, also act as the sponsor for employees and interact with the relevant authorities for all necessary paperwork.
A company established in a free zone is not allowed to trade outside the free zone in the UAE. If a company wishes to do so, it must either open a branch outside the free zone that is licensed by the Department of Economic Development or appoint a service agent. The branch will have to meet the requirements as specified by the UAE Commercial Companies Law.
The types of companies that can be established in a Free Trade Zones are:
Free Zone Company: Limited liability company owned by one person or non-individual (company).
Free Zone Establishment: Limited liability company owned by two to five shareholders, these can be individuals or non-individuals (companies) or a combination of both.
Both types above require a minimum capital that can range from 150,000 AED (~$8,000) to 1m AED. (~$272,000) depending on the free zone one wishes to establish their company.
Branch of a Company: A branch is considered the same legal entity as its parent company. There is no requirement for minimum capital.
A fee is required for registration and for issuing the license, the amount of which will vary depending on the free zone. Some free zones also require that a company leases premises within that zone, such as an office, warehouse or land, depending on the activity. These must be operational and fully manned within an agreed space of time. The lease is renewable annually along with the license, usually three months before expiry.
A few free zones offer hot desks as an alternative (fully equipped instant offices or space within offices) that can be used when needed. Fees will depend on frequency of use and terms can be flexible. In addition most free zones offer additional facilities such as meeting rooms. The area of specialisation of the free zone will determine what types of license are available. As the free zones develop, some offer additional licenses to the three main ones described below:
Trading or Commercial license: For any and all kind of trading activity where profit is gained through buying and selling of goods and services. The holder is allowed to import, export, store and distribute the items specified in the license.
Industrial license: Industrial and manufacturing activities where the objective is either discovering natural resources or transforming raw materials into manufactured or semi-manufactured products.
Professional license: Professions, services and craftsmen where practice of the profession depends on physical and mental efforts rather than the need of monetary capital.
A list of the various free zones is offered below grouped by the emirate they are located:
Jebel Ali Free Zone
Jumeirah Lake Towers Free Zone
Dubai Airport Free Zone
Dubai Silicon Oasis
Dubai Multi Commodities Center
Dubai Media City
Dubai Studio City
International Media Production Zone
Dubai International Academic City
Dubai Knowledge Village
Dubai Outsource Zone
Dubai Biotech Research Park
Mohammad Bin Rashid Technology Park - Jebel Ali Area
Dubai International Financial Centre
Dubai Logistics City
Dubai Maritime City
Dubai Flower Centre
Dubai Car and Automotive City Free Zone (Dubai Auto Zone)
Dubai Health Care City
Dubai Internet City
International Humanitarian City
Dubai Industrial City
Dubai Energy and Environmental Park
Twofour54 Media Free Zone
Masdar City Free Zone
Abu Dhabi Airport Free Zone (under development)
Khalifa Port and Industrial Zone
Hamriyah Free Zone
Sharjah Airport Free Zone
Fujairah Free Zone (FFZ)
Fujairah Creative City
Ras Al Khaimah
Ras Al Khaimah Investment Authority
Ras Al Khaimah Free Trade Zone
Ras Al Khaimah Media Free Zone
Ajman Free Zone
Umm Al Quwain
Ahmed Bin Rashid Free Zone