The UAE has transformed into an international business destination that gives you a dynamic market that is suitable for starting or expanding your business. It is very desirable to establish a business in one of more than forty free zones in the country and engage in over two thousand ventures.
But why choose a free zone? Here are some key advantages for business groups in Dubai:
- 100% Foreign Ownership: You will be able to have full control over your business.
- Zero Corporate Tax: Get substantial tax advantages for your company.
- No Personal or Income Taxes: Get the most of your earnings without having to pay any personal income tax.
- Full Repatriation of Earnings and Capital: Freely transfer your profits and invested capital to other countries outside the UAE.
- Import and Export Duty-Free: Reduce import and export costs for your business operations.
- Liberal Labor Laws and Visa Rules: Enjoy simplified hiring processes and visa policies.
- No Restrictions on Currency: Have full autonomy in the handling of your business cash.
Top 5 Free Zones in the UAE
Here are the top 5 free zones in demand by business groups in Dubai and across the world:
1. International Free Zone Authority (IFZA), Dubai
IFZA is famous for its fast and simple registration procedure, and it provides different licenses, including commercial, industrial, branch, and professional. It is cheap and can be used in many industries.
2. Ras Al Khaimah Economic Zone (RAKEZ), Ras Al Khaimah
RAKEZ provides business setup services at a low cost and with state-of-the-art infrastructure. Some of the licenses it offers include a commercial license, freelancing license, e-commerce license, and industrial license. It has six different zones to accommodate various requirements.
3. Dubai Multi Commodities Centre (DMCC), Dubai
DMCC is an international trade centre providing business facilities, commercial premises, and access to more than 19,000 companies. It deals with goods such as diamonds, precious metals, and energy. It can even permit up to six business activities under the same license.
4. Jebel Ali Free Zone Authority (Jafza), Dubai
Jafza is the oldest and largest free zone in the UAE, situated close to Jebel Ali Port. It serves companies that are into trading, distribution, and production. Several types of licenses are available in Jafza, such as trade licenses, general trading licenses, service licenses, and industrial licenses.
5. Sharjah Airport International Free Zone (SAIF Zone), Sharjah
SAIF Zone is easily accessible by air and sea transport and currently hosts over 8,000 companies. It provides cheap services such as business premises, storage, and flexible working space. SAIF Zone offers trade, service, and industrial licenses and also offers financial assistance to start-ups and SMEs.
How To Select the Most Appropriate Free Zone for Your Business?
The choice of the right free zone is a critical success factor that you ought to consider. Here are key factors to consider:
- Business Activity: Select a zone that caters to your field of operation; this may include media, finance, or technology, among others.
- Personnel and Visa Needs: Take into account the number of employees and visas required for your business activities.
- Startup Budget: Consider the cost of licenses, office space, and visa processing fees.
- Infrastructure and Logistics: Select a zone that has the right facilities depending on your requirements, like nearness to ports or airports.
- Free Zone Licensing: Make sure the zone provides the exact license that your business activity needs.
- Business Setup Process: Find out the time and effort that goes into incorporating your business.
- Office Space Requirements: You need to decide if you require a physical office, storage, or shared working space. Remote work is also an option to consider.
- Ongoing Expenses: Consider annual license renewal charges and other expenses associated with the continuity of operations.
Tax Considerations in Free Zones
While free zones provide significant tax benefits, it is essential to understand their specific tax implications. Most free zones in the UAE provide:
- Zero Corporate Tax: There is no corporate tax on profits made within the free zone.
- No Personal Income Tax: Individuals working in free zones are exempt from paying personal income taxes.
- VAT Exemption: Certain goods and services in free zones are exempt from value-added tax (VAT).
However, it is essential to check with tax professionals to ensure complete compliance with tax laws. While transactions within the free zone are typically VAT-free, transactions with companies outside of the free zone may be subject to VAT. Furthermore, some free zones may have special tax rules or regulations for certain sectors or activities.
Visa and Residency Considerations
Free zones provide flexible visa choices for companies and employees. While the particular requirements differ per zone, some frequent alternatives include:
- Employment Visas: For employees working in a free zone.
- Investor Visas: For those who invest a specific amount in a free zone enterprise.
- Freelancer visas: For self-employed individuals working in a free zone.
- Dependent visas: For family members of visa holders.
Visa requirements and processing times may differ between free zones. Research the exact visa options available in your selected free zone and seek advice from immigration professionals.
In Summary
Despite the benefits that can be gained from free zones, they may not be ideal for holding companies. A holding company in UAE is normally involved in the management of shares in other companies, which may be situated in various regions. Free zones are mainly aimed at functioning companies.
For holding companies, it is recommended to open a local company on the UAE mainland. There are some emirates, for example, Abu Dhabi, that provide certain rules and advantages for holding companies.
Free zones can be used by business groups for their operating companies. It means that every company, which is a part of the group, may receive the license for certain activities. However, to hold and manage the entire group structure, it is advisable to form a holding company onshore in the UAE