UA E Bu sin e ss S e t u p G u i d e s

The UAE’s Free Zones

Jebel Ali Free Zone

Fujairah Free Zone

Twofour54

Ajman Free Zone

www.vz.ae
Index

3 The advantages of setting up

in a free zone

Quick facts
2
5 Free zone compliance

Understanding the
UAE free zones 1
6 Ready to get
started?
Understanding the UAE’s free zones

The United Arab Emirates has long been known as one of the trading capitals of the world – ideally
positioned between the vast and emerging markets of America, Europe, Asia and North Africa. But it has
not always been that way.

After the discovery of oil in the mid-1960s, the UAE began its transformation into a financial epicentre. For
the first 20 years of this transformation, however, the city’s relatively small population and reliance on oil
money meant it lacked the economic diversity to fully take advantage of its position on the world stage.

The powers that be across the UAE quickly decided they had to take steps in order to counteract this
problem. And so they began to diversify the economy by making the region attractive to a wider array of
industries – essentially opening up the country to a much greater influx of foreign investment by making
the investment climate more attractive.

One step that played a big role in this was the development of the UAE free zone concept. The original
free zone opened in the 1908s, setting the template for the many that followed, and today there are
almost 40 across the UAE.

1
Quick facts

• Free zones are largely sector specific – bringing together expertise from similar fields to encourage
collaboration.

• Free zones allow for 100% foreign ownership.

• Free zone companies pay no corporate or income taxes.

• Free zone companies may repatriate 100% of capital and profits.

• Free zone companies pay no duties on imports or exports.

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The advantages of setting up in a free zone

The main advantage offered by the

UAE free zones is that foreign investors
can retain 100% of their businesses
without the need for a local partner.
Outside of free zones, non-UAE
residents are not allowed a majority
stake in their business if that business
requires a commercial or industrial
license, and must therefore set up with
a local partner who takes a minimum
ownership of 51%. Other free zone
financial incentives include a 0%
corporate and income tax rate, no
customs duties levied on imports and
exports, and the option to repatriate
100% of the profits from the business.

3
The advantages of setting up in a free zone

Another factor which can present fantastic opportunities to free zone companies is that many of the free
zones are sector specific. This gives its entrepreneurs ready access to a hub of knowledge and expertise
from others within their field.

And speaking of knowledge sharing, it is in fact important to point out that the free zones were never
intended to simply be tax havens, and their creation was about much more than simply attracting foreign
investment into the emirates. One of the other main goals was to welcome foreign knowledge and
expertise in order to help the UAE fully realise its tremendous growth potential.

4
Free zone compliance

Free zones are a very flexible way for foreigners to run a business in the UAE, but it is also important to
be aware of the general rules. While some rules may at first glance appear restrictive, the reality is that in
most instances this is not the case.

For example, although free zone organisations are

prohibited from trading directly with the UAE market,
this is easily done by going through a locally appointed
distributor, or by opening a branch outside of the free
zone (which would be licensed by the Department of
Economic Development – DED).

On a similar note, employees with visas from free

zone companies are expected to work from the
company’s offices within that free zone – unless your
business has a local branch licenced by the DED or
sells its goods and services through a local
intermediary, as explained above. But again there are
some flexibilities here across the different free zones.

5
Ready to get started?

Virtuzone has helped thousands register a free zone company in the UAE, and about 80% renew with us
each year going forward. Find out why we are the UAE company setup experts of choice by getting in
touch with us today.

Phone : +971 4457 8200

Email : info@vz.ae

Office 404, Building B, Al Saaha Offices

Souk Al Bahar - Old Town Island
Burj Khalifa District, Dubai
United Arab Emirates

Drop-in hours: 9:00 AM – 6:00 PM

www.vz.ae