How to Identify a Suitable Free Zone in UAE for Your Business?

by Zaara 19, Oct 2020

How to Identify a Suitable Free Zone in UAE for Your Business?

A free zone, also known as a free trade area, is a special economic zone where businesses can operate and obtain substantial exemptions from taxes and fees. Residents of expatriates can also have 100 per cent ownership of the company. Companies in free zones are regarded as offshore companies and thus do not communicate with the customs authorities or the Ministry of the economy. Instead, they are controlled by appointed authorities for the specific region.

Free Zones in UAE

Below table gives information about various free zones in the UAE.

Dubai

1. Dubai Airport Free Zone

 

2. Dubai Auto Zone

 

3. Dubai Cars and Automotive Zone

 

4. Dubai Design District

 

5. Dubai Flower Centre

 

6. Dubai Gold and Diamond Park

 

7. Dubai Healthcare City

 

8. Dubai Industrial City

 

9. Dubai International Academic City

 

10. Dubai International Financial Centre

 

11. Dubai Internet City

 

12. Dubai Knowledge Park

 

13. Dubai Logistics City

 

14. Dubai Maritime City Authority

 

15. Dubai Media City

 

16. Dubai Multi Commodities Centre

 

17. Dubai Outsource Zone

 

18. Dubai Science Park

 

19. Dubai Silicon Oasis

 

20. Dubai Studio City

 

21. Dubai Techno Park (changed to National Industries Complex)

 

22. Dubai Textile City

 

23. Energy and Environment Park

 

24. International Humanitarian City

 

25. Jebel Ali Free Zone Authority

 

26. Dubai Production City

 

27. Dubai World Central (changed to Dubai South)

Abu Dhabi

1. Abu Dhabi Airport Business City

 

2. Abu Dhabi Global Market

 

3. Abu Dhabi Ports Company

 

4. Higher corporation for specialized economic zones/Zones Corporation

 

5. Industrial City of Abu Dhabi

 

6. Masdar City

 

7. TwoFour54

Sharjah

1. Hamriya Free Zone Authority

 

2. Sharjah Airport Free Zone Authority

 

3. USA Regional Trade Center Free Zone

Fujairah

1. Creative City Fujairah

 

2. Fujairah Free Zone Authority

Ras Al Khaimah

1. RAK Investment Authority Free Zone

 

2. RAK Maritime City

 

3. RAK Free Trade Zone

 

4. RAK Media Free Zone

Ajman

 Ajman Free Zone Authority

Umm Al Quwain

Umm Al Quwain Free Zone Authority

Which Free Zone to Select? 

All the free zones have a few standard features. One hundred per cent of Foreign ownership is possible. In the UAE, there is no income tax for the companies themselves and their employees. However, there are duties on import for companies participating in import or export activities, and most companies have to charge a 5 Percent VAT. There are also variations in the cost and what you can do with the company. There are three critical questions we often ask our clients to know which free zone is best for them.

Would You Want to Do Business Within The UAE? 

Some companies have customers outside the UAE, and do not do business within the UAE. Through using cheaper free zone businesses, they can still use Dubai for their company image and banking services. But what if you want to do company within the UAE, or even need more substance? Then, the remaining two questions become essential.

What is the Activity of Your Business? 

UAE Free Zones offer Trade Licenses. These are different from general business registrations such as an Ltd or LLC, as they only allow for a particular operation in a specific sector. A financial consultant would require a license to provide financial consultancy. When a furniture trader has a license to trade in furniture, he cannot start trading milk all of a sudden. The rationale behind free zones is to establish synergy-creating a platform for related companies. That is why there is a media-free zone, a creative free zone, and commodity trading free zone. As a result, that ensures that not all activities are suitable, or even reasonable to any free zone.

What Sort of "Presence" Do You and Your Company Require?

Not all free zones offer the option of leasing office space or warehouse. Or maybe these are accessible but not in a suitable spot. If you want to get a visa or recruit staff? That has an effect on requirements and costs. When the answer to those two questions is understood, our experts usually advise you on one of the free zones mentioned above.

Advantages of Setting Up a Business in The UAE

Free Zones in the UAE are usually restricted to seaports or industrial areas. Their advantages are,

  • Confidentiality of assets
  • Complete repatriation of company profits
  • You can hold real estate property anywhere in UAE
  • Complete foreign ownership
  • Can be formed by only one person
  • Exemption from personal and corporate tax
  • The workforce is ready, and the recruitment process is quick
  • The communication system is modern and efficient
  • The company can work throughout the day 
  • No custom or import duty
  • You can hold multiple currencies
  • Energy is abundantly available and relatively cheap

However, there are certain restrictions for a free zone company.  A business in a free zone can not compete directly with the UAE market. Only through the locally appointed  distributors can it enter the local market. In that case, five percent of the customs duties are also applied.

The Most Cost-Effective Free Zones in the UAE

The United Arab Emirates contains 45 free zones. Below are a few of the free zones that will be very cost-effective in setting up a company.

1. International Free Zone Authority (IFZA)

IFZA is situated in Fujairah and is one of the free zones in the UAE that is most cost-efficient. It provides businesses with numerous facilities that meet international requirements such as a one-stop-shop for all licenses and permits, state-of-the-art warehousing systems, safe access to other important markets and several other benefits. The position of this free zone is of particular importance as it allows goods and other commodities to be transported easily because it has access to some of the world's leading shipping routes.

2. Khalifa Industrial Zone Abu Dhabi (Kizad)

The Abu Dhabi government announced the concept of this project to everyone in the year 2010, and the work to create this free zone started in the year 2012. The fundamental goal of this free zone is to achieve economic diversification by 2030. This free zone has lower operating costs making it suitable for start-ups and small and medium-sized enterprises. KIZAD is divided into two sections; area A emphasizes the businessmen working in the industrial sector and area B focuses on business-based companies.

3. Umm Al Quwain Free Trade Zone (UAQ FTZ)

UAQFTZ lies very close to the Umm Al Quwain seaport. The free zone's geographical location makes it very convenient for the establishment of logistic and small businesses. The businesses in the free zone usually export and import goods from different parts of the world, and vice versa.

4. Sharjah Media City (Shams)

Shams sought to become a centre of the world-class media. The Free Zone fosters a highly connected and lively atmosphere and also promotes business development in the free zone. It is one of the best locations to set up a media-based company in the UAE with a quick and easy business start-up process and inexpensive free zone start-up and operating costs.

5. Fujairah Creative City

One of the cheapest locations in the UAE is undoubtedly Fujairah Creative City. It provides a variety of affordable license packages with no need for paid-up share capital, no annual audit, and a simple process of incorporation. There's also no need to be present in the UAE to set up a company.

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Taking this on alone will be daunting, which is why Commitbiz can help you just as we helped thousands of entrepreneurs by sharing our 15 years' experience and crafting hyper-personalized solutions for their businesses. To get all the information in a fast and professional way, contact us today and get our expert advice.