A Free zone is a special trade area in UAE also known as free trade zone with different tax settings and framework of regulations compared to the other parts of UAE. Each Free zone is designed for a specific category of business industry and only those companies who fall under that category are allowed to establish their set up. There are independent Free Zone Authorities which govern each free zone, issues FTZ operating licenses and provides all other necessary assistance.
What makes Free Zone different from other trading areas in UAE?
There are certain laws and rules which apply to all the foreign establishments in UAE :
1) Should have a local partner with at least 51% of ownership.
2) Should abide Commercial Companies Law (CCL).
3) Should obey the local labour law.
In Free Zone, A foreign investor doesn’t require a partner to establish his entity. However he/she would need a local agent to sell his product in the local market. Commercial company law doesn’t apply to Free zone establishments and he/she could recruit as many expatriates as they want.
What types of entities could be set up?
There could be 6 types of entities established in FREE ZONES
1) Free Zone Limited Liability Company (FZ-LLC): Could be formed by a minimum of two and a maximum of fifty partners.
2) Free Zone Establishment (FZE): Formed only by an individual/company.
3) Free Zone Branch (FZB): Any company with valid license
4) Limited Liability Company (LLC): It needs minimum of two share holders and minimum 51% of local ownership.
5) Individual Establishment (lE): Formed by one share holder, either UAE national or a UAE LLC. Foreign individual would need a local agent.
6) Local Branch (LB): Only to local UAE companies applying for a branch.
Types of Licenses provided in UAE
There are 6 types of licenses issued in Free zones :
1) Industrial License: To import raw materials, manufacturing of it, processing it, assembling, packaging and export of the finished goods.
2) Trading license: To import, export, distribute and trade (Max 5 similar product lines or 3 different product lines allowed).
3) General Trading: Same as trading license but with no restrictions.
4) Commercial license: Activities involving Contracting, maintenance, renting, repairing, shops and restaurants.
5) Consulting/services license: Any type of business management, industrial consultancy or professional services and real estate.
6) media license: to all media and communication services
There is a minimum capital investment required for the registration.
Where to find the Free zones?
There are 37 operating and 9 under construction free zones in UAE. Out of which 6 are located in Abu Dhabi, 22 in Dubai, 3 in Sharjah, 3 in Ras Al Khaimah and one in Ajman, Fujairah and Umm Al Quwain.
Free zones in Abu Dhabi: Twofour54, Abu Dhabi Airport Free Zone, Industrial City of Abu Dhabi, Masdar City Free Zone, Higher Corporation for Specialized Economic Zones and ADPC – Khalifa Port and Industrial Zone (KPIZ).
Free Zones in Dubai: Dubai Airport Free Zone, Dubai Biotechnology & Research Park (DuBiotech), Dubai Academic City, Dubai Car and Automotive City Free Zone (DUCAMZ), Dubai International Academic City, Dubai Healthcare City, Dubai Industrial City (DIC), Dubai Gold and Diamond Park, Dubai Logistics City(DLC), Dubai Multi-Commodities Centre or Jumeirah Lakes Towers Free Zone, Dubai Internet City (DIC), Dubai Silicon Oasis, Dubai Media City ,Dubai Knowledge Village, Dubai Techno Park, Dubai Outsource Zone, Dubai Technology & Media Free Zone, Dubai Studio City, Dubai International Financial Centre(DIFC), International media Production Zone, Jebel Ali Free Zone and Economic Zones World.
Free Zones in Sharjah: Hamriyah Free Zone, Sharjah Airport International Free Zone, and U.S.A. Regional Trade Center (USARTC) Free Zone.
Free zone in Ras Al Khaimah: Ras Al Khaimah Media Free Zone, RAK Investment Authority Free Zone and Ras Al Khaimah Free Trade Zone.
The rest are Fujairah Free zone in Fujairah, Ajman Free Zone in Ajman and Umm Al Quwain Free Trade Zone (UAQFTZ) in Umm Al Quwain.
All these feature of Free Zones is what makes it an ideal place for business.