15 Facts Every Foreign Investor Needs to Know About UAE Free Zones

Do you know how beneficial it can be for your business to be established in a Free Zone?
Of course, you’ve heard the words “Free Zone”. Nevertheless, not everyone knows what it really means.

• “Free Zone” or “Free Trade Zone” or ‘Free Economic Zone’ is a certain geographical area where taxes, employment or trade restrictions on business don’t apply in the same way as in other parts of the country.
• Secondly, it is a designated area within which goods might land, handled, produced or modified. Only when the goods move to consumers in the mainland of the country, where these areas are located, customs duties will be applied.
• And finally, Free Zones are often established around major seaports and international airports — areas with many geographic advantages for international trade.

Now you know what a Free Zone is. And below are 15 most enlightening facts about Free Zones in the UAE, you will find very useful when taking decision about Free Zone business setup.

Fact #1: UAE has more than 50 Free Zones.

Fact #2: Each Free Zone has its own specialized laws and policies for specific business types. Some of the Free Zones specialize in particular activities. For example, Dubai Internet City provides activities related to IT, Software, and the Internet. Dubai Design District is specialized in activities related to fashion and design.

Fact #3: The first Free Zone in the UAE, Jebel Ali Free Zone (JAFZA), was established as early as 1985. Currently, JAFZA is not only the largest Free Zone in the world but is also located at Jebel Ali Port, the largest man-made harbor in the world that is connected to 140 ports worldwide and the busiest port in the Middle East!

Fact #4: UAE Free Zone companies are offered 100% foreign ownership. You don’t need a UAE partner to register your Free Zone company.

Fact #5: UAE Free Zones offer complete exemption from personal and corporate income taxes. Enjoy 0% personal and corporate income tax!

Fact #6: If you are willing to set up a Trading company in a Free Zone you can only import and re-export to other countries. Goods are not allowed to enter the UAE mainland unless they are cleared through a Limited Liability Company (Trading) or a logistics provider.

Fact #7: You can sell goods in the local market through a local distributor. A Free Zone company may not directly retail goods to the local market. A Free Zone company is allowed to trade on a wholesale basis only. But some exceptions are applicable, as for example in Dubai Design District (D3) Free Zone, where you can find retail shops, showrooms, beauty salons, restaurants.

Fact #8: You can register a New Company, Subsidiary or a Branch in a Free Zone.

Fact #9: A Branch Company registered in a UAE Free Zone can only have the same name and same activity as the Parent Company, provided that this activity is available in a Free Zone. The same doesn’t apply to a Subsidiary Company with a corporate shareholder, which can choose an independent activity and a different company name.

Fact #10: As an investor who owns a Free Zone company, you are eligible for the UAE Residence Visa for 2-3 years. You can also sponsor your family members and domestic helpers and provide them UAE Residence Visas.

Fact #11: The number of Investor or Employment Visas under the company depends on the type of facility you rent under your Free Zone company. Flexi desk/smart desk provides a limited number of visas (can vary depending on each Free Zone). The physical office provides quota for 1 visa per 10 square meters.

Fact #12: You can set up business in a Free Zone without obligation to rent an office. As such, you can have smart desk/flexi desk facilities provided that the licensed activities don’t specify certain property type (i.e. the licensed activity does not require a retail shop, physical office space, etc.)

Fact #13: Your office can only be located within a Free Zone where your UAE Free Zone company is registered.

Fact #14: A Free Zone company allows you to enjoy 100% capital repatriation. It means you can remit 100% of profits of your company to your home country without restrictions.

Fact #15: If you hold an Industrial license from a Free Zone and your product is manufactured inside a Free Zone, duty-free GCC agreement will not apply if you supply to GCC countries.

Hope, you have found these facts useful and they will help you to make a decision towards company setup in a UAE Free Zone. As for which Free Zone will be the most suitable for your business activity – give me a call and I will gladly find the best new home for your business.

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