Benefits of Setting up Company in Free zone in UAE

The United Arab Emirates is considered to be one of the most attractive jurisdictions for carrying on business and setting up companies. This is due to the well-thought-out policy of the UAE Government.

The UAE government, for the past many decades, plays a proactive role in bringing foreign investment to the Emirates from around the world. A visionary government, business-friendly policies and the entrepreneurial zeal of the UAE residents are the major reasons behind the economic progress of the UAE. The tax-related and other financial benefits that the government provides to foreign investors are manifold. The UAE market is classified into 3 business jurisdictions and they are Mainland, Free zone and Offshore. When it comes to company formation in UAE, the investors should opt for any of the 3 jurisdictions based on their business activity, customers and goals. There are both benefits and limitations associated with forming a company in these jurisdictions. Here’s a brief understanding of the Free zone jurisdiction and the benefits associated with the same.

A Free Zone Company is governed by the rules and regulations of the Free Trade Zone where it is registered. If you will use the company for carrying out business activities outside the FTZ, it will be subject to the UAE Commercial Companies Law as well as the licensing procedure and other requirements of the respective Emirate.

What are the Free Zones in the UAE?

Free zones are special economic regions or jurisdictions that issue operating licenses for business establishments and grant financial and tax exclusions. Altogether, there are over 40 Free zones in the 7 Emirates. The government body in charge of a Free zone is called the Free Zone Authority. Free Zone Authority or FZA is the governing body in charge of the pivotal activities in connection with free zone operations and license issuance.

Major Free Zones in Dubai

Dubai Multi Commodities Centre or DMCC
Dubai Airport Free zone or DAFZA
Dubai South Free zone or DWC
Dubai Media City or DMC
Jebel Ali Free zone or JAFZA
International Free Zone Authority or IFZA

3 Types of Business Entities

Free zone company (FZC) – (Limited Liability Company with 2 or more shareholders);
Free zone establishment (FZE) – (Sole Establishment);

Branch or representative office of either existing or parent company, which is registered in the UAE or abroad.

Types of Licenses in Free zone Company

Commercial license;
General trading license;
Industrial license;
Service license.

Benefits of Forming a Free Zone Company

Among the numerous advantages of setting up a company on the territory of the UAE Free Trade Zones there are:

100% Foreign Ownership / No requirements to the UAE national as a shareholder
Absence Of Currency Regulations
Import And Export Duty Exemption
Tax Benefits
Repatriation Benefits
Smooth Labour Recruitment
No limitations on the citizenship of the company employees
Readily Available Workspaces
Ease Of Company Incorporation
Trouble-Free Immigration Procedures
Excellent Communication and Infrastructure

Another favourable feature of using the UAE FZs is the provision of the residence visas for all the members of the management board, shareholders and company employees. The possible number of such visas usually depends on the total area of the rented.

You should also take into account that the free zone companies are obliged to rent at least some minimal office space that can be either a real office or flexi desk or virtual office that is allowed in some free zones.

Limitations of Forming a Free Zone Company