How To Choose The Free Zone When Registering A Company In The Uae

If you are looking to open a company in a foreign country, we suggest that you should consider the Free Zones found in the United Arab Emirates. There you will find highly beneficial conditions for doing business in multiple areas from trade to science and from production to cryptocurrencies.

Below we discuss the main properties of Free Zones in the UAE, list some of the most popular such zones, indicate their specializations , and speak about some obstacles that foreign entrepreneurs may face when registering companies in the UAE Free Zones.

What is a Free Zone in the UAE?

The term refers to a territory where foreign investors will find serious business bonuses offered by the Zone administrations. In particular, no corporate income tax is payable in such Zones and there are no import/ export duties. Each Free Zone has a unique infrastructure and a specific set of governing principles.

Companies registered in the UAE Free Zones have the following rights:

• Conduct business activities anywhere outside the mainland UAE;
• Cooperate with companies registered in the same Free Zone and in other Free Zones;
• Obtain a tax residency certificate;
• Hire personnel, obtain visas for them, and rent office space.

Companies registered in the UAE Free Zones do not have legal rights to do the following:

• Rent office space outside the Free Zone where the company is registered;
• Sell products in the mainland UAE;
• Provide services in the mainland UAE
• Apply for participation in public tenders.

The most important advantages of registering a company in one of the UAE Free Zones include the following ones:

• Tax optimization (income tax is 0%);
• Fast company registration;
• Stable banking system, a high probability of opening an account with an UAE bank;
• Opportunity to obtain economic substance in the country of registration;
• Opportunity to acquire legal residence in the UAE.

What Free Zones are there in the UAE?

The Emirates have more than 40 Free Zones in total. Each of them specializes in certain business areas and you should choose the Zone that fits your company. For example, if you are planning to provide some sort of services, establishing a company in Fujairah Creative City Free Zone would make good sense. Below please find a long but incomplete list of Free Zones in the United Arab Emirates.

Abu Dhabi

• Masdar City Free Zone — sale of goods;
• Abu Dhabi Global Market — cryptocurrencies, service, sale of goods, professional activities;
• Khalifa Industrial Zone Abu Dhabi — sale of goods;
• TwoFour54 Media and Entertainment Hub — professional activities, service.

Ajman

• Ajman Free Zone — sale of goods, manufacture;
• Ajman Media City — professional activities, service, sale of goods.

Dubai

• Jebel Ali Free Zone — sale of goods;
• Dubai South Free Zone — sale of goods, service, professional activities;
• Meydan Free Zone — sale of goods, science, professional activities;
• Dubai Airport Free Zone — cryptocurrencies, service, sale of goods;
• Dubai Internet City — service, professional activities;
• Dubai Technology Entrepreneur Campus — service, professional activities, sale of goods;
• DMCC Dubai — sale of goods, cryptocurrencies, professional activities, service;
• Dubai International Financial Centre — sale of goods, cryptocurrencies, professional activities, service;
• Dubai Media City — service, professional activities;
• Dubai Knowledge Village — service, professional activities;
• Dubai Healthcare City — professional activities, service;
• Dubai Auto Zone — sale of goods, service;
• Dubai Silicon Oasis — service, sale of goods, professional activities;
• Dubai Production City — professional activities, service;
• Dubai World Trade Center — cryptocurrencies, sale of goods, service;
• Dubai Outsource City — sale of goods, professional activities, service;
• Dubai Gold and Diamond Park — sale of goods;
• Dubai Science Park — science, manufacture, service;
• Dubai International Academic City — science, professional activities, service;
• Dubai Design District D3 — professional activities, service, sale of goods;
• Dubai International Humanitarian City — service, sale of goods.

Ras Al Khaimah

• RAK Free Trade Zone — sale of goods, manufacture, professional activities, service;
• RAK Investment Authority — sale of goods, service;
• Ras Al Khaimah Economic Zone — sale of goods, professional activities, service, manufacture.

Umm Al Quwain

• Umm Al Quwain Free Trade Zone — sale of goods, manufacture, professional activities, service.

Fujairah

• Fujаirah Creative City — service, professional activities, sale of goods;
• Fujairah Free Zone — sale of goods, manufacture, service;
• International Free Zone Authority — sale of goods, manufacture, professional activities, service.

Sharjah

• Sharjah Airport Free Zone — sale of goods, service, professional activities;
• Sharjah Publishing Free Zone — professional activities, manufacture, service;
• Hamriyah Free Zone — sale of goods, manufacture, professional activities, service.

Each of these Zones has its own system of legal and regulatory acts.

Factors to consider when choosing the Free Zone

When deciding what Free Zone to choose to register a company in the UAE, you have to take the following factors into consideration:

1. Types of Licenses issued in the Zone. You have to obtain a license that service as a permit for conducting certain kinds of business activities. If you do what you are not licensed to do in the Emirates, you will be fined and your bank account will be blocked.

1. Infrastructure and office space. When applying for company registration, you have to submit an office rent or working space rent agreement, among other documents. If you need warehouses and access to air and sea ports, you should be aware that these opportunities are unavailable in many Free Zones in the UAE.
2. Visa acquisition specifics. The company owner can be eligible for a resident visa to the UAE. However, the requirements can be different in different Free Zones. Some administrations will want you to buy a medical insurance policy to qualify for a visa while some other administrations will want you to make a bank deposit equal to your salary for a few months. In some zones, you cannot obtain an investor visa but only an employee visa. In some other zones, you have to regularly submit rent agreement extensions and utility bills to prove that you permanently reside in the UAE.

Requirements to the company organizational. Every foreign company registered in a Free Zone has to have a Director (above 21), a manager (a natural person), and shareholders (natural persons or legal entities). In some Zones, a company Secretary is also required. The company employees do not have to be legal residents of the UAE. One person can hold all positions at a time.

Requirements to the charter capital as well as reporting requirements can vary greatly from one Free Zone to another. Depending on the type of business activities that your prospective company is going to be engaged in, you may not have to be physically present in the Free Zone when your company is registered.

Obstacles that foreign entrepreneurs face and mistakes they make when applying for company registration in the UAE Free Zones

The following obstacles and mistakes are common:

1. Political obstacles. There can be factors that you may never have thought of. For instance, a citizen of Turkey cannot obtain a resident visa in Sharjah because of religious controversy. Such factors are outside the scope of your control.
2. A poor business plan. The Free Zone administration has to clearly see what business operations our company is going to conduct. If you try to suppress some information or misrepresent some facts, the license may be denied to you and legal action may be taken against you.
3. Too wide a spectrum of business activities. Your spectrum of business activities has to be described as a narrow one. For example, you can indicate that your company is going to trade in household chemicals or car parts. If you indicate your sphere of activities simply as ‘trade’, the Free Zone administration is going to be suspicious. As a result, your application can be turned down.
4. Failure to comply with the bank’s requirements. Since 2019, local banks have conducted serious due diligence checks and you have to be aware of that.

Choose the Free Zone and start business operations in the UAE

Rarely can you find business conditions as attractive as those available in the UAE Free Zones. If you would like to have a foreign company, pick a Free Zone and start doing business from there! To avoid mistakes and the consequent stress, you will be well advised to contact an agency that specializes in offshore company formation and can help you register a business venture in one of the UAE Free Zones.