Abu Dhabi free zones in 2024

1. The free zone is a gift for foreign companies using Abu Dhabi as a gateway to Africa and the Middle East. A wholly owned foreign company, legally tax exempt, with access to cheap energy and labor, and allowed to receive residence visas for staffs and business owners;
2. Abu Dhabi free zones (FZ) are suitable for foreign companies intending to use the UAE and Abu Dhabi as a regional manufacturing or distribution base, with the bulk of their business conducted outside Abu Dhabi. Free zones are mainly for import and export oriented companies who only require an office in Abu Dhabi.

Advantages

1. Free Zones companies do not require a UAE national shareholder. While it is mandatory to rent a free zone office at a low rent, it is not necessary to hire staff;
2. Free zone business entities are exempt of all types of taxation while benefiting from the UAE’s 50 double tax treaties, minimizing withholding tax in international countries;
3. No duties are imposed on goods imported and exported from the free zones companies;
4. Each free zones companies is managed by an onsite, independent government authority. Consequently, business licenses, permits, and employee visas are issued quickly.

Disadvantages

1. Free zone companies must confine business activities to within that zone and cannot cater to customers in Abu Dhabi and within the UAE. An entrepreneur violating the provisions of this law can be fined up to US$35,000;
2. The paid up share capital of a free zone entity ranges from US$14,000 to US$300,000 depending on i) the free zone chosen and ii) the free zone corporate structure. After FZ company incorporation, the paid up share capital can be used to fund daily business activities;
3. Company licenses are renewable annually after free zone laws are complied including submitting annual audited financial statements to the Free Zone Authority;
4. A free zone business must rent an office within its free zone, and cannot rent an office in Dubai or in another emirate following company formation.

Trading within the UAE

Free zone companies can conduct business in Abu Dhabi city and within the UAE if:

1. A 51% UAE local partner is appointed and the Department of Economic Development issues a specific license to the free zone company to trade within the Emirate; or
2. A branch of the free zone company is established in Abu Dhabi city and the goods and services are distributed through a UAE agent, in the name of the free zone company; or
3. The free zone company appoints a service agent to sell and distribute goods and services within the emirate of Abu Dhabi, in the name of the agent; and
4. Custom duty of 5% would be levied on free zone business sales within the UAE.

Legal considerations

Free zone business entities can be registered in three forms:

Free zone logistics

1. Free zones enjoy excellent infrastructure and business environment including warehouse facilities, onsite immigration department, and onsite customs clearance department;
2. Each free zone Interior Design Department finalizes with the foreign entrepreneur the optimum layout and interior design of your office. The office includes i) furnished and semi-enclosed workstations ii) high speed internet network iii) dedicated phone number iv) residence visas and work permits v) parking facilities.

Commercial considerations

1. Free zone activities allowed include i) import of raw materials ii) manufacturing iii) processing and assembling and packaging iv) exporting finished products v) storage or warehousing of products;
2. A service license allows the investor to carry out the services specified in the license within the free zone. Consulting services include management, finance, investment, legal issues, labour relations, industrial development, and marketing;
3. Other services include logistical support such as: restaurants or food outlets, catering services, travel agencies, leisure and social activities, insurance, cargo and freight forwarding, accounting, and audition services.

Comparison of free zones

Khalifa industrial zone Abu Dhabi (Kizad)

1. Kizad is located within Khalifa Port, one of the world’s most advanced deepwater seaports and the main commercial port of Abu Dhabi, costing US$7.2bn to build. It offers a world class transportation infrastructure including sea, air, roads and rail network to ensure easy accessibility to and from the industrial zone;
2. The targeted business sectors include petrochemicals, steel, pharmaceuticals, life sciences, chemicals, biotechnology, metals, food and beverages, logistics, and transportation;
3. Kizad also offers renewable leasehold for a period of 50 years (Musataha agreement) which allows investors to legally own all assets developed on their plot;
4. Kizad freezone proximity to two major airports: Abu Dhabi International Airport (35 kilometres) and Al Maktoum International Airport (52 kilometres);
5. The port will have an initial capacity of over 2.5 million TEUs (Twenty Foot Equivalent Units) and 12 million tonnes of break bulk cargo every year in the phase 1, with plans to eventually boost the capacity to more than 15 million TEUs and 35 million tonnes of cargo per annum;
6. Typical size of industrial units is 2,362 m² with an annual rent of US$283,000.

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Al Ruwais industrial complex

Al Ruwais Industrial Complex, located about 240 kilometres west of Abu Dhabi, was developed by Abu Dhabi National Oil Company (ADNOC) and hosts a number of petrochemical industries. It includes an oil refinery plant, a natural gas liquids fractionation plant, a fertiliser plant, a marine terminal, and a sulphur handling terminal.

Industrial city of Abu Dhabi (ICAD)

1. ICAD is located 30 kilometres from the heart of Abu Dhabi city and Al Ain Industrial City (AAIC), located 20 kilometres from Al Ain city centre;
2. ICAD comprises of 355 major manufacturing companies employing more than 30,000 workers. The existing zones of ICAD include:
   • ICAD I – dedicated to heavy-to-medium manufacturing, engineering, and processing industries);
   • ICAD II – light-to-medium manufacturing, engineering, and processing industries;
   • ICAD III – light-to-medium manufacturing;
   • ICAD IV – technology and light industries;
   • ICAD V – automobile Industry.

Masdar city free zone and science and technology park

1. As a test-bed for renewable energy, business in Masdar City free zone can pilot, demonstrate, refine, develop, and commercialise their technologies;
2. As an industry cluster, the city creates a dynamic, vibrant, international and entrepreneurial community that offers numerous benefits, including potential access to capital, a critical mass of sector knowledge, a large pool of high-quality talent, and a launching point into local, regional, and international markets;
3. Masdar welcomes activities related to developing, installing, and modifying software products to improve operational performance, productivity, or efficiency while reducing costs, inputs, energy consumption, waste, or pollution;
4. Masdar City, a six-square-kilometre special economic zone, is a low-carbon, renewable energy-powered development, pioneering best practices in sustainable urban planning, design, and development;
5. Masdar City has already attracted General Electric, Schneider Electric, Bayer Material Science, BASF, SENER, and many more. The International Renewable Energy Agency (IRENA) will also locate its secretariat at Masdar City.

Abu Dhabi airport free zone authority (AFZA)

1. AFZA is within the boundaries of Abu Dhabi International Airport and a popular business location for electronics, engineering, logistics and cargo, aviation, and pharmaceutical firms;
2. AFZA is popular because of i) its proximity to the Abu Dhabi Cargo Village and the FLC Air Cargo Terminal ii) its on-site customs inspection iii) its 24 hours a day operation hours;
3. Free Zone Logistics Centre (FLC) is a dedicated freighter terminal for both scheduled and chartered operators and is located in the Abu Dhabi Airport Free zone. FLC offers flexible, cost-effective handling between tenants’ warehouses, the main cargo terminal, and the cargo planes;
4. The FLC is located on a 26,000 sqm site, which includes a docking area capable of handling up to 50 trucks. Some 200 sqm in the FLC is dedicated to specialized storage facilities including cooler, freezer, vulnerable, and valuable storage rooms;
5. Abu Dhabi airport currently services over 150 airlines serving more than 200 destinations worldwide, and is considered the Middle East’s premier airport.

Mussafah industrial area

The Mussafah Industrial Area is situated 30 kilometres from the Abu Dhabi city centre adjacent to Mussafah Port. It covers 14 km² and is made up of six varieties of industrial zones based on their activities.

1. Zone 1: automobiles, machineries, and spare parts shops
2. Zone 2: food, textile, and soft drink manufacturing
3. Zone 3: engineering works, wood, and herbal industries
4. Zone 4: chemical, plastic, and petrochemical industries
5. Zone 5: building and construction related materials
6. Zone 6: advanced technology industries

Abu Dhabi Global Market

1. Abu Dhabi Global Market (ADGM) was established as an international financial centre in 2013 and was declared open for business in October, 2015. As a financial free zone, ADGM will provide global financial institutions a base to provide private banking, wealth management and asset management services;
2. ADGM occupies 114 hectares in the Al Maryah Island. It offers world-class office space, hotels, retail stores and leisure avenues for its Clients. Also, the Clients will benefit from i) the common law regulations being used by the zone authorities ii) the availability of world class talent and iii) access to deep capital within the zone;
3. ADGM is currently managed by 3 independent authorities – the Registration Authority, the Financial Services Regulatory Authority and the ADGM Courts. These authorities will ensure ADGM regulations are at par with the globally accepted financial norms;
4. Besides financial services, it is also possible for ADGM companies to offer business and professional services including i) legal and consulting services ii) accounting services iii) HR related services and iv) IT services. For this purpose, our Clients may choose to setup limited liability companies (LLCs) or partnerships.

10 steps to setting up a free zone business

Determine whether the company qualifies for inclusion in a free trade zone (FTZ). Healy Consultants will efficiently and effectively project-manage our Clients company engagement, providing detailed email status updates every second day:

1. Prior to business setup, our Client i) settles company incorporation fees ii) signs and returns our Client engagement letter and iii) provide us all the required due diligence documents;
2. Healy Consultants drafts a detailed free zone business engagement project plan, mapping out by week each step to company engagement completion, optimising transparency, and setting Client expectations;
3. Healy Consultants assists our Clients determine i) what type of free zone business entity is required for the company registration engagement ii) what class of business license is required iii) how a UAE national sponsor will help iv) banking and cash flow considerations v) employment visa strategies;
4. The exact corporate structure is agreed with our Client for the company registration engagement. Thereafter, Healy Consultants i) reserves company name with the free zone authority ii) prepares company deeds of establishment and articles of association notarised by a UAE embassy;
5. Our Client supplies Healy Consultants with a lease agreement for their office premises. If this is not possible, Healy Consultants will supply virtual office services for 6 months until our Client finds their preferred business address;
6. Healy Consultants assists our Client open a corporate bank account with a Dubai bank. Our Client deposits the paid up the necessary share capital and supplies Healy Consultants with a certificate of deposit and bank statement;
7. Healy Consultants then i) notarises all company documents through the UAE embassy and ii) produces the required business plan and iii) registers the company with the specified free zone authority;
8. The relevant license application is submitted to the specific free zone authority together with i) the MOA ii) name approval certificate iii) the lease agreement iv) a certificate of paid up share capital and v) detailed business plan. Within three weeks, business license approval and company registration certificate are received;
9. Healy Consultants will obtain work visas from the Ministry of Labor and the General Directorate of Residency and Foreign Affairs;
10. Following the company registration engagement completion, Healy Consultants couriers a full company kit to our Client, including original Abu Dhabi corporate documents, unopened bank correspondence, and a Client feedback survey.