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Setting Up Business (UAE Free Zones)

Free Zones are geographically distinguished areas subject to laws and regulations different from the laws governing resident companies of UAE. Each Free Zone in UAE has its own Free Zone Authority registering non-resident companies in UAE.

Main Benefits

  • 100% ownership.
  • No tax on corporate gains or personal incomes
  • 100% repatriation of capital and profits
  • Exemption from import and export duties

Free Zones (sometimes called a free economic zone, duty free zone, tax free zone, trade free zone or free trade zone) are geographically distinguished areas subject to laws and regulations different from the laws governing resident companies of UAE. Free Zones are insulated from the different laws governing the land of UAE. Allowing 100% foreign ownership is one of such deviations from laws governing UAE lands outside the Free Zones. The companies registered outside free zones allow only maximum 49% foreign ownership and at least 51% of the ownership has to be held by a UAE National. A Free Zone entity is also free from tax on corporate gains - usually guaranteed for 15 or 50 years. Each free zone has its own specific requirements regarding minimum office/warehouse space and permitted activities.

Advantages of Setting Up Business in UAE Free Zones

The advantages of setting up a business in UAE Free Zone to a foreign investor can be listed as follows:

  • 100% ownership
  • No tax on corporate gains or personal incomes
  • 100% repatriation of capital and profits
  • Ready-made offices, factories, warehouses and easy start-up and licensing procedures
  • Exemption from import and export duties
  • Single window clearances, which mean the same government administrative office providing various government services, like licensing, visa, postal and traffic services.

Establishing a business entity in any of the UAE's many Free Trade Zones (FTZs) can be an attractive option to foreign investors due to above reasons.

Creation of UAE Free Zones

The Free zones have been designed to complement and contribute to UAE's growth and development but their legal status is extremely unique with the companies operating in them being legally treated as foreign companies or companies operating outside the UAE.

Some free zones are created in city-clusters or districts with specific services or industrial specializations like media and IT specialized zones, which include Dubai Media City, International Media Production Zone, Dubai Studio City, Dubai Internet City and Dubai Silicon Oasis Authority.

There are various other Free Zones in UAE like Jebel Ali Free Zone, Dubai Air Port Free Zone, Ras Al Khaimah Investment Authority, RAK Free Trade Zone, Hamriyah Free Zone, Sharjah Airport Free Zone, Dubai Multi Commodity Centre, Dubai Health Care City, and Ajman Free Zone. The procedures and cost for incorporating an entity depends on the Free Zones you choose and the type of your activity.

In a Free Zone, a business entity can be set up as a Free Zone Establishment (single owner), Free Zone Company (more than one shareholder) or as branch or subsidiary of a foreign company.

Legal Business Structures in UAE Free Zones

Limited Liability Company

Limited Liability Company or LLC is a legal business entity in which the liability of the shareholders is limited to the amount of paid up capital and may be set up either as

  • A Free Zone Company (with 2 to 5 shareholders)
  • A Main Land company (with 2 to 50 shareholders) or
  • An offshore company

Sole Proprietorship / Individual Establishment

A sole proprietorship or individual establishment is a legal business entity owned by just one person and may be set up either in a

  • Free Zone
  • Main Land or
  • Offshore

Branch / Representative Office

A branch or representative office can be set up for both UAE companies and foreign companies in

  • Free Zone
  • Main Land or
  • Offshore

Business Licenses in UAE Free Zones

An individual or a corporate entity can do business in UAE Free Zones being registered in any of the following legal forms:

  • Free Zone Limited Liability Company (FZ-LLC)
  • Branch of a Foreign Company, where the applicant is a foreign registered corporate person
  • Branch of a UAE Company, where the applicant is a UAE registered corporate person

Freelance permits are also issued in certain Free Zones. An individual can do business in Dubai Media City as a freelancer on being issued a Freelance Permit.



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