The United Arab Emirates [UAE] is among the regions that have the most attractive jurisdictions for running a business and setting up companies. This is all thanks to the well-defined UAE government business-friendly policies.
UAE also offers a competitive environment for businesses to thrive, including the availability of the Free Zones [FTZs] – which are specialized areas designed for conducting specific business activities. Most of these Free Trade Zones are located on the territory of the Emirate of Dubai.
Table of Contents
What are the Free Zones in the UAE?
As mentioned above, free zones are specialized designed economic regions or jurisdictions for conducting certain business activities. There are over 40 Free zones in the seven emirates. The body that is in charge of a Free Zone is called the Free Zone Authority.
An investor can set up three types of business entities in UAE free zones, including:
- Free Zone Company [FZC]
- Free Zone Establishment [FZZE]
- Branch of a business concern
A Free Zone Company is governed by the rules and regulations of the Free Trade Zone where it is registered. In case you use the company for carrying out business activities outside the Free Trade Zone, it will be subject to the UAE Commercial Companies Law and the licensing procedure.
So why is Free Zone setup such an attractive option for investors? Well, let’s find out.
Benefits of setting up a free zone business
If you are planning to set up a free zone business in the UAE, then there are plenty of benefits you will enjoy. Some of these benefits include:
1. Easy setup
This is one of the top benefits of setting up a free zone business. The process is straightforward. The application process generally depends on the nature of your business and the free zone you have chosen. However, in most cases, you are only required to provide basic documentation, such as business paperwork as well as passport copies. The whole application process can take a week or two.
2. Foreign ownership
Another incredible benefit of setting up a business in a free zone is the complete foreign company ownership. This basically means that the foreigner does not have to find a UAE national partner to form the company, which is the case when setting up a business in the UAE mainland. When you set your business in a free zone, you will retain 100% ownership, regardless of your nationality.
3. No currency regulations
Currency regulations are generally currency-related restrictions imposed by the government on foreign currency transactions. When it comes to UAE free zones, there are no currency regulations of any kind. Of course, this makes financial transactions smoother.
4. Import and export duty exemption
Another thing, import and export duties does not apply to the free zone jurisdictions in the UAE. This helps to promote international trade.
5. Tax benefits
This is perhaps one of the greatest reasons why many investors prefer setting up a free zone business in the UAE. Free zone companies are eligible for 100% tax exclusion, which include income tax and corporate tax.
