- Advantages of setting up the UAE Free Zone Companies

Advantages of setting up the UAE Free Zone Companies

Advantages of setting up the UAE Free Zone Companies

The United Arab Emirates is considered to be one of the most attractive jurisdictions for carrying on business and setting up companies. This is due to the well-thought-out policy of the UAE Government.

In fact, the country offers competitive environment for developing a profitable business, including the availability of the so-called Free Trade Zones (FTZs) — specialized areas designed for carrying on specific business activities.

It should be noted that 20 out of 35 Free Trade Zones are located on the territory of the Emirate of Dubai. It makes this emirate the largest international business hub.

A Free Zone Company is governed by the rules and regulations of the Free Trade Zone where it is registered. If you will use the company for carrying out business activities outside the FTZ, it will be subject to the UAE Commercial Companies Law as well as the licensing procedure and other requirements of the respective Emirate.

Free Zone Companies may carry out retail trade activities outside the territory of the free trade zone under the condition of attracting a local distributor or an official agent from the UAE. Such activities are subject to the 5% import duty.

Among the numerous advantages of setting up a company on the territory of the UAE Free Trade Zones there are:

  • No requirements to the UAE national as a shareholder;
  • Possibility of 100% foreign ownership;
  • No import and export taxation;
  • Full repatriation of capital and net profits;
  • No foreign exchange controls and currency restrictions;
  • 15 years corporate tax exemption period, with the possibility of further prolongation for another 15 years;
  • No personal income taxation;
  • No limitations on the citizenship of the company employees;
  • Complete infrastructure.

Another favourable feature of using the UAE FTZs is the provision of the residence visas for all the members of the management board, shareholders and company employees. The possible number of such visas usually depends on the total area of the rented space (1 visa — 10 square metres). However, the exact terms may vary in different FTZs.

You should also take into account that the free zone companies are obliged to rent at least some minimal office space that can be either a real office or a so called flexi desk — a virtual office that is allowed in some free zones. In the case of renting a flexi desk, the company may apply for 1-3 employment visas depending on the rules of a particular Free Trade Zone.

The applicable law of the Free Trade Zones provides the possibility of opening the following types of companies by investors:

  • Free Zone Establishment (Sole Establishment);
  • Free Zone Company (Limited Liability Company with 2 or more shareholders);
  • Branch or representative office of either existing or parent company, which is registered in the UAE or abroad.

The UAE FTZs are often used for carrying on trade, investment, financial and other activities. The list of the permitted activities depends on the type of the obtained license. Free zone companies may choose between:

  • Commercial license;
  • General trading license;
  • Industrial license;
  • Service license.

Both License and Lease Agreement are valid for 1 year and must be renewed annually.

We provide consultations at all stages of setting up companies in the UAE Free Trade Zones. Contact us and get all the necessary information.