In order to avoid the requirement of 51% shareholding by UAE nationals for establishing companies on the mainland, investors opt for the establishment of a company in free zones with 100% foreign ownership.
In free zones, business activities can be conducted in special tax-free status and minimal trade restrictions.
UAE has the most number of free zones among all GCC states that offer investors to conduct various types of businesses. Jebel Ali Free zone was the first established in Dubai in 1985 and witnessed significant economic growth. Free zones have attracted foreign direct investment that contributed to the non-oil GDP growth of the UAE.
In order to provide maximum trading advantages to businesses, free zones have geographic locations that are near to national borders, international airports, and major seaports in UAE.
Advantages offered by UAE free trade zones are below:
- Procedural convenience through one-window administration
- Bureaucratic red tape is eliminated
- Availability of 100% foreign ownership
- Availability of 100% repatriation of capital and profits
- Availability of 100% exemption from income taxes
- Exemption from custom duty
- In some free zones, freehold offices are available
- Resident visa of 3 years
Registration of a free zone company with one shareholder is known as FZE (Free zone establishment), however where registration is with more than one shareholder, then it is known as FZCO (Free zone company). A branch of a foreign company or mainland company can also be opened in a free zone.
Free Zone companies are categorised as UAE onshore companies and are subject to 5% VAT if annual turnover exceeds the threshold limits.
At present most of the free zones are offering licenses with virtual office packages linked with either no visa eligibility or specific numbers of visa eligibility with very low rates for trading and services activities.
It is important to note that free zone companies cannot operate directly on the mainland. Either they need a mainland-based distributor or need approval from the Department of economic development to operate on the mainland.
Free zone companies are suited for those who do not have any mainland focused business activity.
Liquidation of a free zone company should also be considered by an investor right from the establishment’s date, so if the need arises, then an investor knows the liquidation process upfront.
What we can offer
Our expert services in the establishment of a free zone company can play a pivotal role because of the consideration of the below-listed factors:
Each free zone in UAE has been formed with a specific purpose to support some specified business activities; therefore, an investor must take advice from an experienced consultant to select the correct free zone that is most suitable for his business plans.
The free trade zones vary in their location, nature of the business it supports, establishment costs, and documentary work needed.
Each free zone company registration is regulated by its relevant authority; therefore, we being the well-informed consultants, can provide you professional guidance with client-focused requirements.