A free zone, also known as a free trade zone, is a restricted geographic area within each emirate. Free zones can also be present as a result of the communal agreement of several countries on the establishment of duty-free zones in certain zones. The fact that no duties or taxes are imposed in the free zone encourages trade, especially the import and export of goods of all kinds in this area. The United Arab Emirates has several popular free trade zones, most notably the Ras Al Khaimah and Ajman.
The business setup process in most free zones is very easy. The particular application process will depend on your company and the free zone selected, but in most cases, all you need to do is provide some basic documents, such as copies of passports and business documents. The whole process often only takes a week or two. Many free zones also offer flexible desks and virtual plans that allow you to use the free zone addresses and facilities on an ad hoc basis for convenience.
This is perhaps the most captivating purpose for choosing the free zone: the tax regime. Your company is established in a free zone and benefits not only from 0% corporate and personal taxes but also from VAT, which is currently 5%. And that's just the tip of the iceberg. Companies in the free zone are also exempt from import and export taxes and can trade without currency restrictions.
Another major advantage of being in the free zone is the ownership of a foreign company. Most overseas entrepreneurs are looking to set up business in the UAE mainland and need to work with local partners to do business. This is not the case in the UAE free trade zone. Set up your business here and you will retain 100% ownership of it.
Free zone companies are not allowed to deal directly with the local UAE market, but this is easy to overcome. One option is to work with a local distributor who will bring your goods and services to market for a fee. Instead, it may be possible to set up your free zone business and then branch office of your free zone company in Emirates at a later date. These offices can be used to promote your packages and start a business in UAE.
Finally, free zones are very popular among data protection entrepreneurs because there is no open directory of company properties and company information such as shareholder information is never released to the public.
There are numerous advantages to beginning a business in the UAE. However, the UAE free zones offer some extra benefits if a foreign investor or international entrepreneur chooses to set up a business in one of the free zones. They are:
Numerous businesses avoid putting investments into the UAE because of the impulse of having a UAE national as a partner with 51% shares claimed by them. Along these lines, free zones have become a well-known type of business registration in Dubai, UAE, where 100% of foreign possession is permitted. The UAE government has set up numerous free zones in the Emirates, each designed for explicit business activity. UAE free trade zones offer rewarding facilities to non-resident corporations, similar to the accommodation of single-window service, no bureaucratic red tape, and 100% ownership.
There are around 44 free zones situated everywhere in the United Arab Emirates that have pulled in international entrepreneurs and foreign investors direct investment as 200,000 companies add to the GDP growth. The free trade zones differ in their focus, setup expenses and administrative work required, yet the essential requirements are the same.
The vast majority of the UAE Emirates have set up free zones to give a boost to the economy in the region, market foreign investment, and drive development. Free Zone Authority is the government authority body that registers and issues licenses to operate to non-occupant companies in UAE free zones. The list of free zones set up across the UAE are discussed below: