United Arab Emirates: Free Zones

What is a Free Zone?

• A Free Zone is a clear-cut piece of land / building, mostly near an airport, with a special tax regime. Free Zones offer many incentives for investors and strive to offer the company founder a modern and barrier-free business environment. Free zones are always subject to the respective jurisdiction of the country. For the United Arab Emirates, the 0% tax privilege, ie. there are no direct or indirect taxes, salaries are paid gross for net and there are no social security contributions.
• To operate in a free trade zone, each company needs a „business license“, depending on the type of activity. This license is usually issued within 5-6 working days of approval by the Free Zone. For the approval numerous documents are necessary, which are partly to be certified.

What advantages are offered?

• 100% ownership rights for the investor
• 0% tax privilege (applies to company profits, import / export, personal income)
• Capital and profits can be executed 100%
• Modern infrastructure
• No foreign exchange restrictions
• Companies can work around the clock
• Various facilities, such as post office, restaurants and supermarkets are located within the Free Zone
• Visa is issued for 3 years and can be renewed
• Employees also get a visa with a license

Differences between a Free-Zone and a Non-Free-Zone company

• A Non-Free Zone company is a company whose capital is held at least 51% by a person with a United Arab Emirates passport (often called a „sponsor“). In contrast to the Free Zone Company, this legal form is able to sell to individuals residing in the Emirates. Therefore, this is the most binding and unique form for restaurants, retailers, supermarkets, etc.
• A Free-Zone company may be held 100% by a non-resident investor. A company established in the Free Zone may only operate within the Free Zone through the respective license in various areas.

Which company forms exist?

In many Emirates, only the distinction between a Free Zone Limited Liability Company (FZ-LLC) and branch of a foreign or domestic company is made.