There are around 40 Free Zones operating in the UAE, with more under construction. Each Free Zone is designed around one or more commercial categories and only offers licences to companies within those categories.
The main attractions of establishing an entity in one of the UAE’s Free Zones is that there are no foreign ownership restrictions and companies are governfored by an independent Free Zone Authority (FZA), which is responsible for issuing operating licences and regulating the activities of companies within the Free Zone.
The UAE is now a major business hub and ideal for setting up a business or a representative office, there are now over 40 different “Free Trade Zones” in the UAE so identifying the best Free Zone through which to conduct business in the region can be a tedious task. It is also a common misconception that a Free Zone Company is an offshore company, however, in spite of their similarities; they do also have very differing characteristics.
In addition to enabling shareholders, directors and employees to obtain residency visas in the UAE, the benefits of a Free Zone include:
- 100% foreign ownership (no requirement for a local partner/sponsor);
- 100% repatriation of capital and profits;
- 100% corporate and personal income tax exemption;
- Absence of currency restrictions;
- Wide variety of licensable activities;
- Abundant and inexpensive energy;
- Modern, efficient communications;
- Logistic efficiencies due to business cluster effect;
- Serviced desks and offices for SMEs and start-ups;
- Excellent support services.
The nature of the business activity that you intend to carry out will have a big influence on selecting the Free Zone to meet your requirements. The principal Free Zones and their licence activities include:
- Dubai Multi Commodities Centre (DMCC) – Commodities Trade and Exchanges;
- Jebel Ali Free Zone (JAFZA) – Trading, General Trading, Service, Logistics and Industrial;
- Dubai International Financial Centre (DIFC) – Banking, Financial Services and Legal;
- Dubai World Central (DWC) – Aviation, Logistics, Light industry and Ancillary Services;
- Dubai Knowledge Park (DKP) – Human Resources Management, Training and Personal Development;
- Dubai Internet City (DIC) – Internet and Communications Technology;
- Dubai Media City (DMC) – Media related activities;
- Dubai Silicon Oasis (DSO) – Information Technology, Telecom, Electronic and Engineering
- Dubai Healthcare City (DHCC) – Healthcare, Medical Education and Research, Pharmaceuticals and Medical Equipment;
- Ras Al-Khaimah (RAK) – Trading, General Trading, Service, Industrial and Educational;
- Fujairah Creative City (FCC) – Media, Consulting, Communications, Design and Technology.
Investors can either register a new company in the form of a Free Zone Establishment (FZE) or a Free Zone Company (FZC) – an FZE has one shareholder and an FZC has two or more – or simply establish a branch or representative office of their existing or parent company based within the UAE or abroad. An FZE or FZC is a limited liability company governed by the rules and regulations of the Free Zone in which it is established. The provisions of the UAE Commercial Companies Law (CCL) do not apply.
In order to begin the process of setting up a Free Zone Company, we will require the following documentation and due diligence from all shareholders/directors of the proposed new company:
- Certified Passport Copy and UAE Visa/UAE entry stamp (if non-resident)
- 2 x Proofs of Address (dated within 3 months)
- Bank or Professional Reference Letter
- Curriculum Vitae (summary of professional history)
- Company Application Form (which we will provide)
Please note that some Free Zones may request a detailed business plan, depending on the business activity of the proposed new company. Sovereign has a variety of templates in order to assist you.
Once a legal presence has been established in a Free Zone, the business will need to lease premises or land and acquire an operating licence from the FZA. Different types of licences apply in the different types of free zone. Companies with trade and industrial licences can only conduct business within the Free Zone or abroad. To sell products in the UAE, a UAE official agent is required, and a joint venture needs to be formed.