The UAE has created a large network of free zones catering to a wide range of industries and sectors. Through the UAE free zones, international entrepreneurs enjoy tax-efficient local and international trading, taking advantage of sophisticated transport and communications infrastructure and low energy costs. Below is an overview of the different UAE free zones and the benefits and disadvantages of UAE free zone company formation, enabling foreign investors to make an informed decision on which UAE free zone meets their business requirements:

UAE Free Zone entities are legally exempt from corporate or personal income tax. Furthermore, there are no customs duties (for imports or exports) nor personal income taxes. Consequently, UAE free zone companies are cost-effective and easy to maintain because there are no obligations to prepare annual financial statements or submit tax returns.

International entrepreneurs take 100% control of a UAE Free Zone entity. Unlike a limited liability company, a Free Zone entity is not required to have a UAE citizen as a 51% shareholder.

UAE Free Zone company incorporation procedures are less complex than those for a limited liability company. Applications to register a UAE free zone company and obtain an operating license are lodged with the relevant free zone authority, which will handle the application under one roof.

Because the UAE is a major oil and gas producer, energy and utility costs in UAE free zones are low compared to other international jurisdictions.

Jebel Ali Free Zone is the largest of the UAE free zones. Its 5,500 companies enjoy access to the Middle East's largest port, which facilitates international trade.

Dubai Airport Free Zone (DAFZ) is perfect for companies who trade internationally in high value, low volume cargoes which require rapid transport to markets. Located adjacent to Dubai International Airport, DAFZ claims fast cargo clearance of as little as eight hours.

Because UAE free zones are self-contained communities, companies enjoy the benefits of shared services and even operational synergies with other companies located there.

UAE free zones enjoy sophisticated communications infrastructure. For example, Dubai Internet City is home to many leading information technology (IT) companies.

For media businesses, printers and publishers, music producers, marketing service providers, leisure and entertainment companies and other broadcasters, Dubai Media City is one of the most important UAE free zones.

International entrepreneurs planning to trade gold, precious metals, energy and other commodities choose the Dubai Metals and Commodities Centre (DMCC).

International financial services providers opt for the Dubai International Financial Centre (DIFC). This is the only one of the Free Zones in Dubai to have a fully-fledged Stock Exchange. Organisations planning this type of Free Zone company incorporation operate in the investment banking, corporate banking, private banking, capital markets and asset management sectors. Profits are not taxed, the company can be 100% foreign-owned and there are no restrictions on the repatriation of capital.

Registration fees in Ras Al Khaimah Free Zone and Hamriyah Free Zone are low.

UAE free zones issue a wide range of licenses according to the activity of the company. License categories include i) General trading license ii) Professional services license iii) Industrial license and iv) Commercial license.

International entrepreneurs Free Zone company incorporation is available via three main entities: i) branch of a foreign company or UAE company ii) Free Zone Establishment (FZE) and iii) Free Zone Company (FZC). The principal difference between a FZE and an FZC are as follows:

a) The minimum capital requirement for an FZC is lower than for an FZE;

b) The minimum number of shareholders required for an FZE is 1. For an FZC the minimum number of shareholders is 2.

Following UAE free zone company incorporation, Healy Consultants assists international entrepreneurs open a corporate bank account with a recognised retail bank.

Some UAE free zones have high company registration and license fees. For example, the fees to obtain an annual commercial license in Dubai Media City amount to Dhs25,000 (US$6,800), compared to a commercial license in Sharjah Airport International Free Zone of Dhs3,500 (US$950).

Some UAE free zones are characterised by high minimum capital requirements. For example, Dubai Airport Free Zone has a minimum capital requirement of Dhs 1 million (US$270,000) for an FZE.

Some Free Zones, such as Jebel Ali Free Zone, are oversubscribed and have lengthy waiting lists for space.

Contact Us

For more information on UAE free zone company formation, contact email@healyconsultants.com or telephone us at (+65) 6735 0120.

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