What are the pros and cons of starting a UAE free zone company?

Starting a UAE free zone company offers benefits in terms of taxation and 100% ownership. The UAE free zones have played a major role in expanding the foreign investment in the country. UAE free zones are significant jurisdictions and maximise the scope of business establishment. Yet, this is not the same for all the business activities! The UAE free zone authorities have implemented user friendly single window systems and online procedures. However, it is important to understand if starting a UAE free zone company is the right option for every type of business.

So, what is a free zone?

Free zones in the UAE are economically divided jurisdictions used for setting up businesses or importing and exporting goods.

Free zones businesses are lightly taxed or are even tax free! Free zones encourage economic activities and foreign investment in the region. Mostly, UAE free zones are distinct and are divided according to their business activity.

What are the company structures allowed in the UAE free zones?

  • Free Zone Company
  • Free Zone Establishment
  • Branch Office / Branch Company

What are the various free zones in the UAE?

There are several free zones in the UAE, below listed are segregated on this basis of their Emirates:

  • In Abu Dhabi – Free Trade Zone of Khalifa Port; Abu Dhabi Airport Free Zone and Khalifa Industrial Zone, etc.
  • In Dubai – Jebel Ali Free Zone; Dubai Multi-Modal Corridor; Dubai Media City; Dubai Internet City; Dubai Airport Free Zone; Dubai International Financial Centre; Dubai Silicon Oasis; Dubai Healthcare City; Dubai Knowledge Village; Dubai International Academic City; Dubai Maritime City; Dubai Logistics City; etc.
  • In Sharjah – Hamriyah Free Zone; Sharjah Airport International Free Zone; Sharjah Media City; etc.
  • In Ajman – Ajman Free Zone; Ajman Media City, etc.
  • In Umm Al Quwain – the Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port and the Umm Al Quwain Free Trade Zone on Sheikh Mohammed bin Zayed Road.
  • In Ras Al Khaimah – RAK Free Trade Zone, the RAK Maritime City Free Zone and the RAK Airport Free Zone.
  • In Fujairah – the Fujairah Free Zone; Fujairah Oil Industry Zone (FOIZ) and the Fujairah Creative City.

The Pros of starting a UAE free zone company

  • Removes the obligation of forming a partnership with a UAE national.
  • Free Zone companies can trade across the world and do business internationally.
  • Offers complete possession, as an investor can have 100% ownership in the company.
  • Distinct consideration for the recruitment process and procedures.
  • Complete freedom in terms of company operations of the company.
  • Advantages on taxation, customs, currency control and more.
  • Organisational services can be cleared through a single window system.
  • Lesser restrictions on the number of business activities.

The Cons of starting a UAE free zone company

  • Free zone companies are monitored by the free zone authorities and different authorities have different regulations, which can be difficult for companies to adapt.
  • Authorities of free trade zones are not controlled by the government and legal legislative of the Emirates, they have a governing of their own.
  • Companies in free zones are restricted to trade inside the country.
  • Businesses in free zones are only allowed to do business internationally, it limits their expansion opportunities within the country.

Ask an expert:

Want to understand if a mainland business setup in the UAE is better a free zone or even an offshore business setup? Speak to an expert!

Speak to a business setup consultant for FREE at DBS Business Setup, know more about UAE free zones or ask any query related to business setup in the UAE. Click here https://www.dubaibusinessservices.com/ to chat with our live associates and book your free consultation today!

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