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We are dealing with free economic zones in the UAE

Разбираемся со свободными экономическими зонами в ОАЭ

In the 60s of the twentieth century, with the beginning of oil production, the Arab Emirates began to transform. Factories for processing black gold were built everywhere, specialists came to the country. Petrodollars filled the state treasury with a plentiful flow, however, dependence on the level of world prices prompted the new administration to search for other areas of development. This is how free economic zones were born in the UAE.

FEZ in the Emirates

Frison is a separate space where any foreign investors are allowed to conduct business and enjoy certain benefits – tax and other preferences from local authorities. The variety of frisons determines the freedom of choice for effective commercial activity.

Legal entities with 100% participation of foreign founders are allowed to register in the FEZ. At the same time, it is possible not to involve local citizens, as it was a year earlier. The undivided ownership of his own company allows a visiting businessman to feel at ease.

Key advantages of doing business in the UAE

Advantages of doing business in the UAE

If you decide to create your own company, then you will be struck by a large number of organizational and legal forms. Even within the same free zone in the UAE, the same types of companies may differ in profile. At the same time , it is worth highlighting the following main advantages:

  • the banking system is working stably;
  • there is no income tax;
  • no export/import duties;
  • unlimited repatriation of funds;
  • absence of local partners in the founders;
  • ability to work with world currencies;
  • fixed US dollar exchange rate;
  • privacy;
  • physical presence in the country of registration;
  • access to modern infrastructure;
  • sending cargo to any point on the map;
  • The UAE is not part of the European Union and does not work according to its rules.

Features of business organizations that have registered in frizons

Free zones attract investors with favorable conditions for trading operations. Within one day, several dozen companies are registered here.

What is allowed for companies in the UAE Free Economic Zone

Each free zone has its own peculiarities in terms of permitted activities. To understand this point, let’s give some examples.

In the Dubai Free Economic Zone, the International Center allows transactions in the financial business (banks, capital management, insurance) and non-financial (retail, restaurants, educational institutions, art galleries, premium hotels).

In Arizona DMC, you are free to choose a commercial activity from 20 sectors of the economy:

  • energy;
  • gold, precious stones;
  • technologies;
  • finance and audit;
  • aviation and shipping;
  • consumer goods;
  • Media;
  • education;
  • utility service;
  • health protection, etc.
Commercial real estate in the UAE

What is prohibited for companies in the FEZ

With all the favorable conditions for entrepreneurship, there are also restrictions:

  • The production, advertising and sale of alcohol and tobacco is prohibited, despite the fact that they are available in the retail network;
  • Any gambling business (sweepstakes, bookmaking, etc.) is prohibited;
  • An absolute ban on all activities related to prostitution and pornography, including content through social networks;
  • The leadership of the UAE has signed several international agreements on the prohibition and non-proliferation of narcotic substances.

When planning a business in the UAE, we recommend that you first familiarize yourself with all legislative acts and rules and then follow them in practice.

How to choose a free zone for company registration in the UAE

Choosing a Free trade zone in the UAE

Choosing a frieze is a difficult process. We only offer a general algorithm of actions.

The first stage: determining the type of activity

Each free zone Dubai has its own list of activities. This territory has its own rules. The more directions you intend to master, the more expensive the license costs. It happens that a company issues two or even three licenses. In order not to overpay, directions are selected within the same group and by the same type.

For example, in the DMCC zone, it is allowed to issue 6 types of activities under the same type of license. If the first two digits of the document number match, you can congratulate yourself – you were lucky and you saved. If you are not interested in saving much, then you can ignore the code number.

In the DSFZ zone, commercial and service activities cannot be issued for one license. And there are a huge number of such factors. Licensees’ favorite areas are: trade, consulting, e-commerce, media, production, e-commerce.

Second stage: office selection

Selection of an office in the UAE

To begin with, we recommend renting a shared office site or flexi-desk (address without reference to the place), which is the minimum requirement for obtaining a license.

Remember! A company registered in any frizone has the right to an office and business real estate only in this Arizona.

The third stage: determining the number of visas

Each of your employees will need resident visas. To obtain resident visas, you need to take into account several points:

  • 1 quota is issued for 10 m2 of office space;
  • the number of visas depends on the type of office owned by the company or rented;
  • in the Northern Emirates, it is possible to obtain resident visas in larger numbers;
  • each FEZ has its own procedure for obtaining resident visas.

The fourth stage: the proximity of sea harbors and airports

Decide whether you need a business near a seaport or an airport terminal. Identify logistics chains and strategic transport routes to reduce financial costs. This is important when creating a trading company. For example, in the JFZ zone, the port of Jebel Ali should be considered as a worthy place for a trading and manufacturing company to work. Equipped warehouse terminals, brokerage and logistics companies are located here. Conduct analytics on likely competitors and … begin a progressive movement to the top of your own self-sufficiency.

The fifth stage: the introduction of the authorized capital

Introduction of the authorized capital

Deposit the required amount of authorized capital to the account of your legal entity or to the account of Arizona. Each FEZ has its own amount of authorized capital. When paying to the account, you must provide a confirmation of the deposit. The announced option does not provide for the transfer of money to the account when registering the company.

Stage six: restrictions for shareholders

There are some restrictions for shareholders at risk. If this is your case, then it is better to register in the free zone in Dubai.

The seventh stage: requirements for the submission of the audit report

In some FEZs, it is necessary to provide annual audit reports. Such a report is provided through official auditors in Dubai, who are authorized through DMCC. If the report is not provided on time, then significant fines will definitely not pass your company.

We recommend that you apply for an audit on time and then you will be given the opportunity to use the following preferences:

  • get loans from local banks;
  • attract investors;
  • determine financial policy.

The eighth stage: finding out the reputation of the selected frizone

Free zones in the UAE

Before registering, you need to get advice from local analysts in the corporate services segment. Specialists will be able to help you open a corporate account with banks from the top list. This must be done before registering a business to make sure that it is legal to open a corporate account.

The ninth stage: if you are a resident of the UAE, then you need to find out if you need a NOC certificate

The NOC is a letter from the employer who sponsors the visa. It confirms that your company is not against you opening a business in one or another free zone. There is no such requirement in the DMCC zone. In the DSFZ zone, a NOC from the employer is provided. Each emirate plays by its own rules.

The tenth stage: laying the budget for operating expenses

You need to find out what fees and charges you need to pay for registration, rent, licenses and immigration cards for the first and second years of your company’s activity. Calculate visa fees for shareholders and employees who will be hired during the first year. Thanks to careful planning and compliance with the laws, you will be able to avoid fines, the size of which is quite impressive and can discourage any type of activity.

A brief overview of the licenses issued

An industrial license gives the right to import raw materials for the purpose of processing, manufacturing parts and assembling finished products. Also, a license is issued to companies that are engaged in packaging goods. The shipment of products for export is allowed outside the UAE.

A trade license gives the right to sell, export/import, distribute and store finished products. With some differences, but in similar areas, commercial and general trade licenses are issued (rent, logistics, real estate, brokerage services).

The media license gives the right to broadcasting, publishing activities in the direction of mass media and organization of events.

An educational license is issued to companies engaged in consulting and organization of educational platforms.

E-Commerce allows the owner to sell goods/services through an electronic service.

An individual license is issued to a legal entity with one shareholder for the right to engage in a narrowly focused type of activity.

Differences between frison and freehold zones

Arizona involves purely commercial activities. Visiting buyers who have purchased real estate in the freehold zone become the rightful owners of this property. Thus, the freehold zone provides for real estate transactions.

What is the mainland zone

There are areas within the city limits where the rules for frison do not apply. A company registered in the mainland zone can conduct business anywhere in the UAE and also abroad. Mainland companies are exempt from visa restrictions. The only condition is the presence of an office with an area of at least 140 m2. The main difference is that a free zone company can only operate within its free zone.

Top leading frison

Dubai Multi Commodities Center

Dubai Multi Commodities Center is the most famous frison, which has been recognized 5 times as the winner in the nomination “The best free Zone of the year”. There are 16,000 companies operating in the FEZ and large multinational corporations are located here.

Business activity is related to trading, consulting and cryptocurrency operations. You can be a licensee with 6 types of activities from one group (2 times more than the average in the UAE), which allows you to save money. How much does such a license cost?

  • Preliminary approval – 1035 dirhams.
  • The one–time registration fee is 9020.
  • Memorandum with articles – 2020.
  • Registration card – 1800.
  • The security deposit is 1000.
  • Flexi-desk – 17500.
  • The license fee is 20285.
  • Total: 52660 dirhams.
  • The amount of the authorized capital is 50 000 dirhams. (1 dirhams = 22 RUB).
  • The average cost of an amendment (removing/adding a manager, changing the company name or location) is 4,000 dirhams.

A slightly cheaper alternative is Dubai South.

Dubai South

Dubai’s Southern Free Zone is one of the most modern and developing centers. Dubai South is located next to Al Maktoum Airport, which opens up ample opportunities for cargo transportation operations. There is an incessant flow of businessmen and tourists. There is a metro and motor transport. The pavilions of the EXPO forums are regularly opened. A luxury residential complex has been built in South Dubai. Furnished offices, storage modules, land plots are offered at your service. The office premises are equipped with unique equipment.

Activities are available in the following groups:

  • production;
  • consulting;
  • trading;
  • e-commerce;
  • freelance.

Dubai South is a great solution for those who want to have a company in Dubai for a reasonable budget. This is a good option for Russian businessmen to open a company and get resident visas for themselves and their families.

KIZAD

The Khalifa Industrial Zone in Abu Dhabi (KIZAD) is located in the area of a large airport. Khalifa Industrial Zone Abu Dhabi is the most accessible free zone. There are many equipped warehouses in KIZAD that do not require financial injections.

The infrastructure of KI ZAD was developed taking into account advanced technologies and the wishes of representatives of the business elite. The obvious advantage of the frison is that a trade license is issued free of charge, provided that the head office is rented.

The focus is on the following industries:

  • Trading
  • Industry
  • Logistics

This zone attracts excellent tax conditions for enterprises producing goods and supplying them abroad. You can also qualify for a raw material tax exemption.

KIZAD also carries out service activities related to

  • Management
  • Marketing
  • Forwarding support
  • Tourism.

The KIZAD license allows you to conduct 5 types of activities. It is added to the name of your company, for example: ABC food and drink trading LTD.

Official activity requires confirmation of an academic degree.

KIZAD is a great option for those who want their business to be registered in Abu Dhabi, or are planning to organize production activities near the port.

The Umm Al-Quwain Free Zone (UA FTZ) was founded in 1987, but began to develop actively in 2014. It differs favorably in that the same preferential conditions are offered in this medium-sized zone as in well-known large FEZs.

Option packages can be upgraded and downgraded depending on the needs of the company owner.

UAQ

Permitted categories of activity:

  • industry;
  • commerce and premium commerce;
  • consultation and premium consultation;
  • general trade;
  • freelance.

Popular selection options for one license: 3 unrelated activities, 10 related activities.

The starting price of the license is 8,000 dirhams.

The initial rental price of the office, including the license fee, is 35,000 dirhams.

The cost of a visa is one of the most optimal – 2,500 dirhams.

UAQ welcomes all areas of activity. This FEZ is recommended for those who need an optimal and operational organization of the business structure.

Jebel Ali (JAFZA) is the most expensive free zone in the UAE. Founded in 1985. It is located in close proximity to the port of Jebel Ali and Al Maktoum International Airport. More than 7,000 companies are based here. It compares favorably with other territories with a single customs zone, which allows you to save money and reduce the time for processing documents for cargo transportation.

JAFZA

JAFZA has a developed logistics system for all types of transport:

  • aircraft;
  • railway;
  • land transport;
  • merchant fleet.

A company providing services can only be registered as a branch of an existing organization on the mainland of the UAE.

Commercial, Industrial and Service licenses are of 2 types:

1 type: up to 7 products from one group;

type 2: up to 12 products from one group.

If you want to add additional activity to any type of license, it will cost 500 dirhams UAE.

The creation of JAFZA is highly recommended for those who plan to engage in international trade, distribution or logistics.

Advantages of the top free zone in the UAE

  • it is impossible to determine the beneficiary – the option of a closed registry;
  • the number of shareholders has no restrictions;
  • a high level of stability and security of the banking system;
  • you are exempt from many types of taxes and fees;
  • you can register your company with 100% capital and be the undivided owner;
  • 100% repatriation of funds;
  • visa-free business opening;
  • a company not located in an offshore zone – reliable jurisdiction for banks and credit institutions.
HFZA

HFZA is operated by the Emirate of Sharjah. The second largest FEZ after JAFZA. It is growing rapidly, expanding its size and number of companies.

The zone is the preferred location of many industrial companies due to low electricity and rental rates.

Hamria has all the additional opportunities for running your business: own customs, logistics companies, warehouse terminals, banks, medical fitness center.

The administration of the Hamria Free Zone has recently changed and improved the list of activities, adding many popular types, such as:

  • Insurance consultations
  • Fashion design
  • Sports research
  • Consultations on science and technology
  • Investing own resources, etc.

It also offers a license for maintenance, vessels and freight, which allows for full-fledged operations in the seaport.

Activities are grouped in the usual way, as in any other free zone:

  • Commerce
  • Service
  • Industry

Even the most basic license allows you to carry out up to 3 types of activities without additional fees.

The Hamriyah free zone can be set up in 1 working day. Warehouse registration will take a little more time, because you need to provide a business plan for approval.

Hamria is becoming a more customer-friendly area suitable for small and large businesses. If you need an office or warehouse at a reasonable price and you don’t mind the remoteness, Al Hamriyah Sharjah Free Zone may be your option.

RAKEZ

RAKEZ is one of the most popular free zones for starting a business in the UAE. Even people who haven’t heard much about the UAE’s free zones know about it and are interested in starting a business in Ras Al Khaimah. It is located near RAK Airport and has a seaport in the immediate vicinity.

Ras Al Khaimah Business license can be obtained for a variety of activities, and you can be sure that you will find what you need.

The RAKEZ list is one of the largest among all the free zones of the UAE. Types of activities are divided into several categories:

  • Commerce
  • Services
  • Industry
  • Mass media
  • Education
  • Individual / professional e-commerce
  • Accounting
  • Architectural design
  • Aviation consulting
  • Consulting on engineering communications, etc.

We recommend RAKEZ to those who want to open an industrial, manufacturing or assembly business with stable functioning facilities.

Full list of UAE frizons

Conclusion

The Emirates, as a modern replacement for the classic offshore, have long been offering favorable conditions that have positively influenced the free economic zones in the UAE. However, many domestic entrepreneurs do not know enough about the advantages that such companies give in terms of conducting and developing business. We hope that this article has helped you to lift the veil of secrecy and discover some of the secrets of the eastern market that beckons like eternity.

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