The UAE has more than 40 multidimensional free zones, enabling expatriates and foreign investors to hold 100% company ownership. The free zones provide world-class infrastructure and customised services that make business operations faster with less time and effort.
A free zone implies an exclusive part in every emirate where all foreign-owned businesses operate under 0% income tax and specialised high-end infrastructure to promote growth in a particular sector. For a free zone to be eligible for a 0% tax rate, the business owners must communicate with the corresponding free zone authorities.
Benefits of operating within a free zone
Entities operating within free zones enjoy several advantages, including:
- 100% foreign ownership
- Full repatriation of capital and profits
- Simplified and quick business setup processes.
- Well-established business communities
- Numerous options at competitive costs
- Complete exemption from corporate and income taxes
- Zero custom duty charges
- Independent laws and regulations
- Easy access to regional and global markets
- State-of-the-art infrastructure
List of free zones across the UAE
The UAE hosts various free zones across different emirates, each serving as a unique hub for distinct industries. Some prominent free zones include:
- Abu Dhabi: Abu Dhabi Media Free Zone, Masdar City, Khalifa Industrial Zone Abu Dhabi (KIZAD)
- Dubai: Dubai CommerCity, Dubai Internet City, Dubai Media City, Dubai Production City, Dubai Studio City, Dubai Outsource City, Dubai Knowledge Park, Dubai International Academic City, Dubai Science Park, Dubai Design District, Dubai Multi Commodities Centre (DMCC), Jumeirah Lakes Towers (it is now part of DMCC) among others
- Sharjah: Sharjah Airport International Free Zone, Hamriyah Free Zone, Sharjah Media City – Shams
- Ras Al Khaimah: Ras Al Khaimah Economic Zone (RAKEZ), RAK Digital Assets Oasis
- Ajman: Ajman Free Zone, Ajman Media Free Zone (announced)
- Umm Al Quwain: Umm Al Quwain Free Trade Zone
- Fujairah: Fujairah Free Zone Authority, International Free Zone Authority (IFZA), Creative City
Step-by-Step Guide for Establishing a Business in a Free Zone
Setting up a business within a free zone involves several straightforward steps:
- Determine the type of legal entity suitable for your business, which may include Free Zone Limited Liability Companies (FZ LLCs), Free Zone Companies (FZ Cos.), or Free Zone Establishments (FZEs), depending on the specific free zone’s regulations.
- The differences lie in the number of shareholders and whether the shareholder is a natural person or a legal person. All free zones might not register both types of companies. You need to check with individual free zone authorities about the type of company they can register.
- Choose an appropriate trade name, ensuring compliance with free zone authority regulations.
- Selecting a trade name for your business involves adhering to specific guidelines set by respective authorities, ensuring that the proposed name complies with legal requirements and is not already registered.
- Apply for the relevant business license aligned with your business’s primary activity. Some types of business licences are:
- Commercial/trade
- Consultancy/services
- Industrial
- Educational
- Media
- eCommerce
- Offshore
- Freelancer
- Warehousing
- Manufacturing.
- Select an office space that meets your business’s requirements, considering size, location, and infrastructure.
- In DMCC, you can choose from a flexi desk of 20-30 sq. m., a flexi office of 200-265 sq. m., or offices running through multiple floors totalling up to 2,000 sq. m. each.
- In Dubai Airport Free Zone, you can choose between ‘Office Packages’, ‘Smart Desk Office Packages’ and ‘Executive Office Packages’.
- Hamriyah Free Zone Authority provides over 100 executive office suites ranging in size from 15 m2 to 42 m2 with conferencing and internet facilities.
- Proceed with pre-approvals, business registration, and obtaining the license from the free zone authorities, adhering to their specific documentation requirements.
Documents required for initial approval
- Completed application form
- Business plan
- Copy of existing trade licence/registration certificate (if you are an existing company, applicable for local companies only)
- Coloured passport copies of the company’s shareholder/s and the appointed Manager/Director for the new company
- Specimen signature of the company’s shareholder/s and the appointed Manager/Director for the new company
- Two years’ audited financial reports for the corporate entity or certificate of reference from a personal bank of the individual shareholder
- NOC from current sponsor (for individuals)
- Unit title deed
- Letter of Intent
- Registry Identification Code Form (RIC) for Manager/Director (Original and notarised)
Freelancers need to submit fewer documents. In most cases, they need to submit:
- Application for registration
- CV
- Bank reference letter
- Registry Identification Code Form (RIC) (Original and notarised)
Registration
After getting initial approval, you must pay registration and licence fees. The fees depend on the type of licence required. Then, you need to submit:
- Completed application for registration
- Board Resolution appointing Manager/Director (Notarised and attested)
- Power of Attorney given to Manager/Director (Notarised and attested)
- Memorandum and Articles of Association (Notarised and attested)
- Specimen signature of Manager/Director (Notarised and attested)
- Passport-size photo of Manager/Director against white background
- Share capital information
Licensing and visa process
- The authority will prepare lease agreements
- Then trade licence will be issued
- Visa processing will start
Capital requirements in various free zones
Different free zones have varying capital requirements:
- twofour54 Abu Dhabi: No minimum capital requirement
- KIZAD: A minimum paid-up capital of Dh150,000 for LLC formation
- Dubai Airport Free Zone: FZ Co. formation with a minimum share capital of Dh1,000 per share
- DMCC: Minimum share capital of Dh50,000 per company and Dh10,000 per shareholder for a free zone company
For more detailed information, visit https://www.moec.gov.ae/en/free-zones or https://u.ae/en/information-and-services/business/starting-a-business-in-a-free-zone.
