The UAE free zones are sector-specific business areas governed by their own regulatory authorities. They were designed to make the region more attractive to foreign investment and offer many advantages for businesses.
In 2017 there are 40 free zones across the UAE. Here we list 6 main advantages of setting up in one of the free zones in the UAE:
Control of your business
Foreign investors in the UAE, outside the free zones, are required to have a local partner. This local partner must hold a minimum of 51 percent ownership of the business, leaving you with minority ownership. In the free zones, a foreign investor retains 100 percent of the operation without the need for a locally based partner.
Major tax breaks
You do not pay corporate tax or income tax. Outside the free zones there is still no personal income tax to pay, but depending on your industry there may be corporate tax.
The tax position in the UAE is set to undergo some changes with the expected introduction of 5 percent VAT on 1 January 2018. What that will mean for the free zones currently remains unclear. While businesses in free zones are likely to remain exempt, suppliers outside the free zones will not, so VAT will still affect the business model of firms operating within them.
You can send all your profits home
You have the right to repatriate 100 percent of capital and profits, particularly if your business in the UAE is branch of a company that already operates in other countries.
Free zone businesses enjoy 100 percent duty exemption on all exports to non-GCC countries. Normal 5 percent customs duties apply when you sell in the local and GCC market.
Benefit from relevant knowledge, expertise and collaboration opportunities
Free zones are not just tax havens, they foster knowledge and expertise in the region, helping to develop diversity and realise growth potential. Free zones cater to specific industries, putting you close to the necessary infrastructure, facilities and potential collaborators.
Share capital requirements can be low
The required share capital varies between free zones. A new enterprise in the Dubai Multi Commodities Centre requires a minimum share capital of AED50,000 per company and AED10,000 per shareholder, yet setting up a branch of an existing firm, requires no share capital.