Umm Al Quwain Free Trade Zone

Arriving at Dubai International Airport, you will need to spend only 30 minutes to be in the Umm Al Quwain Free Trade Zone – a thriving free economic zone with the most attractive conditions for starting your own business. You can arrange a business even without personal presence, and the friendly attitude of the local administration attracts unique investors from all over the world. All representatives of small, medium, and microbusiness should get to know more about the peculiarities of starting in a real desert oasis.

Overview of the Umm Al-Quwain Free Zone

In the prosperous emirate of Umm Al-Quwain, the eponymous FEZ is located, which has become home to many representatives of the foreign business environment. Despite the fact that this emirate is smaller than all the others, the opportunities that partners acquire are no worse. Founded in 1987, it gained popularity only by 2014 and is now actively developing. 

A foreign citizen can register his company here within 6-7 working days. Businessmen in the field of trade, service, industry or freelancers often consider this zone as a platform for investment and professional development.

Advantages of opening a company in UAQ FTZ

The advantages that attract partners to the emirate of Umm Al-Quwain are undeniable:

1. There is no strict requirement regarding confirmation or payment of the authorized capital. 
2. The Managing Director and Director may not have a UAE resident visa.
3. Co-founders can be up to 50 people.
4. 100% foreign ownership.
5. Duty-free import and export of products within the free territory.
6. Personal and corporate profits of partners are not taxed. 
7. Repatriation of profits 100%.
8. You can hire foreign citizens in the state and issue visas for them.
9. The owner can also obtain a certificate of tax residency.

The advantage is that when opening an account with a local bank, there are practically no currency restrictions. When starting a business, it must be remembered that you can only get a number of visas strictly regulated by license documents. Pre-planning the opening will protect you from possible problems. 

Rental of offices, warehouses, land plots in the free zone of Umm Al-Quwain

The managing body of the FEZ tries to build partnerships with all investors and often establishes business cooperation on individual terms. Not only office and warehouse premises are available for rent, but also land plots. At the same time, you can coordinate with the administration and the construction of your own facilities on the leased territory. 

A wide variety of office space rental offers are presented for businessmen. You can rent both one workplace and a large office for an entire company with all the amenities. However, in this case, someone must necessarily be in the rented areas during the working period at the rate of an eight-hour five-day week. 

Storage areas starting from 100 squares are rented together with an office space, a pantry and a room with a washbasin. The premises have utilities, including water and electricity. They are optimal for organizing a business in the field of light industry or storage of finished products. Those wishing to rent land receive an area of 2.5 thousand square meters. meters for up to 25 years. The lease can be extended if desired. 

Doing business in Umm Al-Quwain

Businessmen who have decided to formalize their company within the jurisdiction of UAQ FTZ can do this in several ways. About each of them further in more detail.

In the UAE domestic market

If there is a local intermediary, the company gets the opportunity to conduct business in the domestic market of the United Arab Emirates. This applies both to the sale of physical goods and the provision of services. 

Inside the Umm Al-Quwain zone

When working inside the free zone itself , an entrepreneur should keep in mind several important features:

• Goods can be transported only if there are appropriate papers regulated by the local governing body;
• the import of foreign-made products is allowed without any restrictive clauses, payment of duties or fees;
• if the products are transported outside or on the territory of other countries NW, GCC countries, it is also not taxed;
• if the goods are exported from the territory of the zone to the domestic market of the UAE, it is listed as foreign, even if the production, like raw materials, was local, this means that duties will have to be paid according to the law;
• duties will also have to be paid for those products that were transported to the GCC countries from the FEZ.

At the international level

Entrepreneurs who have registered their business in the Umm Al Quwain Free Trade Zone get the opportunity to become part of the international business community, which means to participate in transactions on an equal basis with international partners. They can release their goods for resale without additional customs fees. 

By registering at Dubai Customs, Umm Al-Quwain investors will have the opportunity to use the ports and airports of this emirate to ship their goods. The advantage is in the cost of registration, which is significantly lower in UA FTZ than, for example, in Jebel Ali in Dubai. However, it should be remembered that the goods unloaded in this way must either remain in the port of Dubai, or be exported only upon payment of duties.

Opening a company in Umm Al Quwain Free Trade Zone

The activities of the firms opened in Umm Al Quwain are regulated by the local administration. The structure develops rules according to which all enterprises falling under the jurisdiction are registered and operate.

Allowed types of companies

Three variants of companies can be opened in UAQ FTZ: 

• “Free Zone Establishment” or FZE – one founder in the status of an individual or legal entity;
• “Free Zone Company” or FZC – several founders (from 2 to 50) in the status of an individual or legal entity;
• a branch of an existing company that already exists in the UAE or abroad.

Main types of licenses

To officially work on the territory of the Emirates and FEZ, a license is required. Each of certain types of activity requires obtaining a separate type of licensing. It is allowed to own several options at once, for example, to provide services and conduct commercial activities. The following licenses are available for registration :: 

• commercial (Commercial License), which is issued for trading a certain type of goods (10 similar or 3 different types), or in an expanded version (General Trading License), which allows trading in all goods permitted on the territory of the NW;
• for the provision of consulting services services (Consultancy License). Suitable for entrepreneurs who are ready to share their expert and professional opinion. Gives the right to carry out two similar types of activity; 
• industrial (Industrial License) allows you to import raw materials for further production, packaging, storage of goods and their export;
• it is possible to provide services, such as courier, insurance, logistics, sightseeing and others, only after registration of a service license(Service License); 
• if you apply for a freelance license (Freelance Permit), you can work on your own behalf as a freelance specialist.

When issuing a permit in a particular NW, an entrepreneur has the right to carry out activities only locally. It is also prohibited to violate the terms of the contract. That is, it is possible to conduct exclusively the activities that are prescribed in the issued document. The document is usually issued for a year, then you need to renew it again. At the same time, it is important that the entrepreneur submitting a repeated application meets the requirements of the administration of the NW.

Opening a bank account

A free zone partner can open a bank account in any selected emirate or on the territory of another state. There are no strict requirements in this regard. 

Office registration requirement

With the exception of a freelance license, when submitting documents, a businessman must rent an office for himself. Even a simple workplace will do, it doesn’t have to be a separate room.

Company structure requirements

Certain requirements are also imposed on the structure of enterprises in the free zone of the emirate of Umm Al Quwain. 

Directors

Only an individual can be listed as a director. At the same time, the residence of the head does not play any role. It is also mandatory to have a secretary with any tax status. 

Shareholders

Individuals and legal entities can be shareholders of a registered company. Residency here also does not play any role, and the number cannot exceed 50 people per organization.

Manager

There can be only one manager and only in the status of an individual. As in other cases, his residence will not play any role in the registration.

Authorized capital

The size of the authorized capital is formed based on the type of activity that it carries out, on average about 300 thousand dirhams. The issued shares must be of the same class and correspond to a price of at least 1000 dirhams.  

Registered office

The rented office is the actual address of the company. UAQ FTZ has package offers for any needs, involving a different number of visas for staying in the country, types of licenses and other features. 

Approximate budget for opening a company

To open a company in the UAQ Free Trade Zone, a resident will need to prepare start-up capital. The amount is calculated based on several factors.

License type

Companies are licensed based on the chosen type of activity. Its cost also differs, which includes the initial approval, registration, the actual document and the object. You also need to pay 5% VAT on all UAQ FTZ services, whether it is registration, modification, extension, cancellation or visa services. Design options: 

1. 13500 dirhams for a startup license, as well as for its annual renewal. It allows you to conduct commercial, including e-commerce, consulting activities. The package includes a standard set of services, a workplace with a legal address and two visas. 
2. Microbusiness. Licensing will cost 8 thousand rubles. At the same time, the package of opportunities will be as in the first case, with the exception of a visa, which in this case is not provided. 
3. Representatives of creative fields will be able to apply for a freelancer license for one visa for just 8000 per year. This payment includes the registration procedure itself, a supporting document, address services and a beneficiary fee.
4. A standard commercial or consulting visa for 3 visas will cost 20,500 dirhams. The extension will be cheaper by 2 thousand. The price includes a standard package of services.
5. The general trade that allows you to get 2 visas is 20,500 dirhams. The payment also includes a standard package of services with a legal address.
6. Businessmen who plan to provide premium consultations in the field of law, tourism, real estate must purchase an appropriate permit, worth 20,500 dirhams per year. When you apply for it, you can get 2 visas. 
7. You can also get an industrial license with a land plot or storage facilities for just 7000 and a subsequent extension for 5 thousand. In this case, an entrepreneur can, for example, produce pasta, fruit juices, dental and oral care products, protective clothing, etc. A legal address is also provided. 

Object type

When renting a particular type of premises, the administration of UAQ FTZ offers certain conditions for obtaining a visa. You can arrange one of the packages to choose from:

• a workplace (Hot Desk) for a freelancer implies obtaining one visa;
• when making a package for a startup business, 2 visas are provided;
• a premium-class office, for providing consulting or commercial services services – 3 visas;
• 4 can be issued by entrepreneurs who have paid for a premium office for general trade. 

The Hot Desk package for microbusiness does not provide for the possibility of obtaining a visa at all. On the basis of an industrial license, you can rent a land plot for 25 years. Provided that the partner rents at least 2.5 thousand sq. m. at a price of 25 dirhams per sq. m. Storage facilities are also available for rent:

• 100 sq. m. – 35 thousand dirhams;
• 150 sq.m. – 39 thousand dirhams;
• 300 sq.m. – 75 thousand dirhams.

Also, the entrepreneur must make a refundable deposit of 10% of the total cost of the area. 

Resident visa in UAQ FTZ

The resident will have to spend money on obtaining a residence permit. Its cost depends on the type. 2500 will be required to pay for an investor visa for 3 and 2200 for a working visa for a period of 2 years. For changing the status of the document, they will be asked to pay a fee of 750 dirhams. A separate fee is charged for a medical test and an Emirates ID card with a photo – 1250 dirhams. Additionally, you will need to pay the registration fee – 2400 and the renewal fee – 1400.

Company registration process

The algorithm of registration in the Umm Al-Quwain FEZ has a certain sequence, which is important to observe.

Definition of activity

First of all, they determine

• the name of the company (from three variants) in English or Arabic, it must be unique and not similar to existing brands, at the end there must be an abbreviation of the organizational and legal form (FZE or FZC); 
• structure; 
• authorized capital and distribution of securities among shareholders;
• type of activity and region;
• type of license selected; 
• type of rented office on the territory of the NW.

Payment for services

Further, the partner is obliged to pay all fees for services provided by the administration of the free economic zone.

Providing documents

We prepare a package of documents for all employees of the organization: 

• a copy of a passport with registration;
• a copy of a foreign passport;
• if there is no registration in the passport, a document confirming the address is provided;
• a copy of a visa or a border crossing mark UAE; 
• summary.

In addition, the shareholders confirm in writing their consent to undergo the Compliance procedure and sign a service contract. For some types of companies, a business plan is requested.

Preparation of a set of documents for registration

It is necessary to make sure that all documents are filled out and signed by shareholders before submitting an application.

Filing an application for registration

After completing the submission procedure, the owner of the company will receive:

• certificate of registration; 
• company charter; 
• share certificates; 
• permission for the selected type of activity; 
• registers of directors and shareholders;
• lease agreement;
• official seal of the organization.

The procedure takes about 10 working days on average.

Follow-up work

At the registration of the organization in the FEZ, the interaction of the entrepreneur with the administration does not end. Among other things, it will be mandatory to renew annually the permit at the established rate and the lease agreement of premises. 

Income tax

One of the nuances that attracts many investors is the absence of income tax. The entrepreneur is also exempt from paying capital gains tax, property and other taxes. Only VAT remains mandatory. 

VAT

Value added tax has been in place in the country since 2018. It applies to all monetary transactions if they are not exempt from this tax. The standard VAT rate is 5%. Nevertheless, if an entrepreneur has a small business and his income does not exceed 100 thousand dollars, then it is not required to undergo the procedure of tax registration for VAT payment. 

You will need to register as a VAT taxpayer if:

• profit growth is projected to exceed the threshold in the next 30 days;
• by the end of the month, taxable turnover exceeded the threshold for the previous year; 
• the company provides services in excess of the registration threshold on the principle of reverse charge.

The company can be voluntarily registered with the local tax authority if the turnover of the transactions has exceeded half of the established norm. It will take about 20 days to get a tax number. After that, you will need to file a VAT return every quarter. If the turnover of the organization is more than 150 million dirhams, then you need to submit data every month. 

Audit and reporting

Any firm that has been formed on the territory of FTZ Umm Al Quwain is required to maintain accounting records in order to be able to confirm its financial position. All documents must fully reflect the real state of affairs at the enterprise and up-to-date information on its assets and liabilities. 

For each reporting date, it is required to prepare statements containing the auditor’s opinion. The documents must be submitted to the shareholders and a general meeting must be held no later than within 4 months from the end of the financial year. There are no strict requirements for submitting reports to state bodies. 

The countdown of the first reporting period, which should be 6-18 months, begins from the moment the organization is created. After it, each subsequent report must be submitted no later than a year later.

License renewal

At the end of the first year of operation, you will need to renew your license. This can be done remotely, it is enough to pay the fee and send a new office lease agreement. The procedure is not complicated and, as a rule, does not take more than 3 working days. 

Changes

If any changes have occurred in the organization, it is necessary to notify the regulatory authority. Such changes include the change of name, type of activity, director, manager, transfer of shares and so on. Most of them can be confirmed remotely. The personal presence of shareholders or proxies will be required in case of a transfer of shares. 

Liquidation

The liquidation of the company in the Umm Al Quwain Free Trade Zone will require the personal presence of the founder or his proxy. The originals of the issued documents are returned to the regulatory authority, a state fee of about 2 thousand dirhams is paid and the liquidation procedure will be completed within a month.