The United Arab Emirates is rightfully considered one of the most attractive jurisdictions for doing business and company incorporation. This has been made possible by a well-designed, consistent economic policy aimed at attracting foreign capital and fostering a business-friendly environment.
In practice, the UAE offers highly competitive and comfortable conditions for business development, including through the operation of free economic zones (FEZs) – special territories created to conduct business under preferential and simplified regimes.
It should be noted that 20 out of the 35 active free economic zones in the UAE are located in the Emirate of Dubai. As a result, Dubai has become the country’s largest international business and investment hub and a key center for the wider region.
The activities of companies registered in free economic zones are governed by the regulations and rules of the specific FEZ in which the company is incorporated. If a company conducts commercial activities outside the free zone, it becomes subject to the UAE Federal Commercial Companies Law, as well as the licensing and regulatory requirements of the relevant emirate.
Companies registered in free economic zones may carry out retail trade on the UAE mainland only through a local distributor or official commercial agent who is a UAE resident. In such cases, goods imported into the mainland are subject to a 5% customs duty.
Among the key advantages of registering a company in a UAE free economic zone are:
- no requirement to appoint a UAE national as a shareholder;
- the possibility of 100% foreign ownership;
- no import or export duties within the free economic zone;
- full repatriation of capital and profits;
- absence of currency control and foreign exchange restrictions;
- exemption from corporate income tax for up to 15 years, with the possibility of extension for a further 15 years (depending on the free zone);
- no personal income tax for individuals;
- no nationality requirements for company employees;
- access to developed business and logistics infrastructure.
An additional advantage of company registration in a free economic zone is the possibility of obtaining UAE residence visas for shareholders, directors, and employees. The maximum number of visas usually depends on the size of the leased premises (on average, one visa per 10 sq. m), though specific conditions may vary according to the rules of the selected free zone.
It should be noted that a free zone company is required to lease office premises of at least the minimum permitted size. This may be a physical office or a service desk (flexi-desk), which effectively represents a virtual office. The use of flexi-desk solutions is not permitted in all free zones and, as a rule, limits the number of available employment visas (typically 1-3 visas).
Under the applicable free zone legislation, foreign investors may register companies in the following legal forms:
- Free Zone Establishment (FZE) – a legal entity with a single shareholder;
- Free Zone Company (FZC/FZ-LLC) – a limited liability company with two or more shareholders;
- a branch or representative office of an existing company registered in the UAE or abroad.
UAE free economic zones are widely used for trading, investment, financial, and service activities. The list of permitted activities depends on the type of license obtained. Companies registered in free zones may apply for the following types of licenses:
- commercial license;
- general trading license;
- industrial license;
- service license.
Both the license and the lease agreement are issued for a term of one year and are subject to mandatory annual renewal.
We provide professional advice and full support at all stages of company registration in the UAE free economic zones. Contact us to receive detailed information and to select the most suitable solution for your business objectives.
