Free zones stand for isolated financial locations that grant a bundle of tax perks along with customs privileges to international investors. So far, over 45 specialized free economic zones (FEZ) are accounted for in the United Arab Emirates and the superiority of which is positioned in Dubai. This model has evolved into a benchmark for many foreign economies, as it has outperformed all analogous initiatives in terms of trade volume and cross-border investments. Here are some of the perks of incorporating a company in a free economic zone:
- Complete ownership of the entity by the international investor. A local associate is not a necessity;
- No taxation (5% VAT is charged under certain circumstances);
- Superior infrastructure;
- First-rate traffic interchanges;
- Residency visa for investors, employees, and family;
- Establishment of an account with the best financial institutions in UAE;
- The wide availability of industrial, storage, and office locations;
- Business-friendly legislation.
Factors to remember before choosing Free Zone in UAE
A vital motive for the intensifying acclaim of the UAE as a focal point for entrepreneurship may be the active development of FEZs. One has to reflect on particular matters when picking the best free zone in the UAE.
Business Activity
Most designated areas do not authorize every commercial operation. Certain territories lack an industrial license, and some, such as the DMCC, do not accommodate warehouses, thus limiting your choice as well. Many FEZs substantially narrow the scope of operations that you can perform under a given license. Every area has an independent governing body (FZA), suggesting distinct licensed activities, and regulatory policies.
Capital Requirement
When forming an undertaking within a state, a widespread prerequisite is the company’s financial assets. However, many free areas require no capital to be credited to the account. Requirements as to the minimum capital are varied throughout the registering bodies. Some free zones may necessitate a minimum amount of as low as 1000 AED to incorporate a firm. However, some areas need more than 185 000 or 300 000 dirhams for an undertaking to be incorporated. At the same time, in some areas, the capital for trading enterprises must be 1 000 000 AED.
Facility Type
Requirements for facilities rented by enterprises founded in Emirates free areas may vary markedly conditional on the selected FEZ and the nature of the undertaking. Certain districts permit the leasing of a virtual room for operations as provided by the FEZ administration. Others include the mandatory request to rent physical spaces and other premises of appropriate dimensions for the operation concerned. The essential parameters regarding office rental or other premises within the best free zone in Dubai or other Emirates:
- Multiple endeavors are not authorized to reside in the same space;
- A business may only occupy premises in the zone where the company is registered;
- The room being rented must be compatible with the operations of the organization;
- The site’s dimensions directly affect the aggregate quantity of possible visas in most cases.
Furthermore, sometimes FEZs might simply not encompass the desired class of premises. By launching an organization in such an area and renting an office, within a short period of time, one may encounter the problem of finding a warehouse or manufacturing facilities, since this type of property may not be around in the said territory, or all may be occupied.
Number of UAE Residence Visas
The nature of the enterprise will dictate your quota for visas. Overseas nationals seeking to set up an enterprise in the UAE or launch a venture must acquire residency visas from a competent governmental body. Similarly, you will also be required to obtain visas for your employees if they are non-residents.
Additionally, each free zone comes with its own allowable quantity of visas. With no real office setup, most areas will grant you from 2 to 3 visas, and more entry permits would require you to set up a physical office. Besides, the size of the premises in a considerable percentage of cases directly influences the possible maximum quantity of visas that an enterprise can get for its shareholders and employees.
Legal Entity Type
Companies on such territories may be established in the form of:
- A subsidiary or representative office of a third-party entity;
- Free Zone Establishment – a limited liability company with a single shareholder;
- Free Zone Company – a limited liability entity with two or more shareholders.
Nationalities of Shareholders
A domestic UAE shareholder is not deemed required for a foreign investor to establish a firm in the country’s FEZ as foreign ownership is possible regardless of the investor’s nationality.
Location of Free Zone
The selection of a suitable location will be influenced by many factors, in particular your financial situation and the nature of your chosen activities. Give some thought to whether your UAE business should be closer to a seaport or airport. To keep costs down, the closest strategic transportation routes and transportation hubs should be situated near the firm. For example, if your company plans to deal mainly with imports and exports, it is preferable to place it near major ports.
Competitor Analysis
Understanding entrepreneurial, cultural, financial, and psychological aspects is crucial if you intend to launch a successful venture in a foreign jurisdiction. The price parameters of the products and services you offer depend, for instance, on what the prevailing social groups are in the community where you are planning to establish your presence. Such surveys reveal whether your product or service is in high demand in the current situation, as well as who your clientele might be.
The data you gather from these studies is useful in discovering the competitive strengths of your brand. This kind of market investigation assists you in gaining insights from companies that are competing for your potential clients. It is fundamental to identify competitive benefits that provide a sustainable revenue stream.
8 best free zones in the UAE
Jebel Ali Free Zone Authority (JAFZA)
The area provides a straightforward route to Jebel Ali Seaport and Al Maktoum International Airport. It houses a standalone customs area, thus assisting in decreasing the duration and charge for cargo clearance. Transportation, logistics, and trade companies are commonly situated here. The range of possible activities is quite extensive. The proposed categories of licenses are as follows:
- Trading;
- Logistics;
- Services;
- Industrial.
Dubai Multi Commodities Centre (DMCC)
There are two subway stations and a convenient entrance to Dubai’s main highway. The selection of activities can range from conventional trade or professional services to crypto trading.
Up to 6 types of undertakings of the same group may be contained in your license. That is double the average number commonly granted in the Emirates. Alternatively, you may choose to set up a retail store, health center, restaurant, or other types of commercial business within Jumeirah Lake Towers. As a result, this turns setting up a firm in the DMCC into a superb substitute for a mainland company, one that requires a national citizen as a sponsor.
International Free Zone Authority (IFZA)
IFZA stands as an extremely competitive and one of the most profitable areas in Dubai. It serves investors with favorable fees and a transparent way of launching a venture. A broad spectrum of sophisticated office and warehouse options are readily available for your specific business purposes here. IFZA allows a diverse array of ventures. Up to 6 associated activities are authorized per license. The kinds of licenses are enabled:
- Consulting Services;
- Trading.
Fujairah Creative City Free Zone
The territory focuses on delivering high-end professional services. It offers no commercial activities. However, instead, the zone features an impressive list of professional endeavors featuring a wide variety of services and consulting. The activities include the following:
- Radio broadcasting;
- Music & Entertainment;
- Education;
- Information Technology;
- Mass media and advertising;
- Publishing activities;
- Events organization;
- Media support services;
- Consulting;
- New Media Technologies Services;
- Commercial information;
- Engineering.
Sharjah Media City Free Zone (Shams)
The location stands out as the newest FEZ in the country. It was set up in January 2017 to accelerate the expansion of media enterprises and innovative businesses. Sharjah wishes to keep up with Dubai when it concerns cutting-edge technologies, so the authorities intend to turn it into a state-of-the-art hub, home of innovative services & media. The area is commonly referred to as the free media zone, but its commercial operations are not restricted solely to the mass media industry.
The scope of activities is extremely broad and encompasses the following:
- Trade;
- Professional services;
- Holdings;
- Public opinion leaders in the social networking industry.
There are over 120 types of activities in total. You may merge more than one type of activity in your license.
Sharjah Publishing City Free Zone (SPCFZ)
The SPCFZ, the world’s pioneering dedicated location for press and publishing, has been stepping up efforts to develop an attractive and supportive environment for a vast spectrum of printing, publishing, and affiliated fields to build, nurture and expand into new markets and contribute to the world’s thriving publication industry.
It is probable to rent an unfurnished and furnished office, retail areas, as well as warehouses in the free zone. When renting an office five visa quotas are granted per company.
This area is a unique location dedicated to publishing making it the first zone of its kind. SPCFZ is under the supervision of the Sharjah Book Authority (SBA).
Ras Al Khaimah Economic Zone (RAKEZ)
The region is the group of the most rapidly evolving FEZs in the United Arab Emirates.
The beneficial geographical position of RAKEZ, its wide choice of authorized endeavors, the capacity to instantly obtain a visa, and a relatively instantaneous and uncomplicated way to rent an office. All of the above factors encourage foreign entrepreneurs to conduct business in Ras Al Khaimah.
Commercial, service, and professional endeavors are authorized in the RAKEZ. Moreover, a single enterprise is entitled to hold licenses to engage in multiple lines of business.
Umm Al Quwain Free Trade Zone (UAQ)
The area is situated in closeness to the UAE’s major harbors and is a forty-minute trip from International Airports. UAQ represents the ultimate destination for any entrepreneur to comfortably operate around the globe. A firm incorporated there permits conducting activities stipulated in the licensing documentation throughout the free zone and/or anywhere beyond the UAE.
UAQ FTZ enables virtually any type of legal commercial activity, from freelance to advisory, E-Commerce, general trade, and manufacturing. The zone’s infrastructure is beneficial to tech companies, such as IT, research, and development-oriented companies. Furthermore, the Emirate’s vigorous economical assistance to startups by governing bodies, the free zone’s territorial accessibility, as well as minimal operational costs, promise a highly efficient potential for new ventures, thus boosting their overall prospects for growth.
To pick the best free zone in UAE you should carefully contemplate plenty of issues, primarily centering on the nature of your line of work and the surrounding infrastructure essential to running a prosperous enterprise. Remember also to be considerate of the resident visa for yourself and your employees.
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