Free Zone Company, Starting a UAE Free Zone Company? Here are the Benefits and Drawbacks

The ease of conducting business in the UAE’s free zones UAE has been one of the main reasons for entrepreneurs from all over the world to want to expand their businesses in the country. It is due to the free zones that the UAE has achieved a high position in the global market in terms of multiplying organizational structures and business opportunities.

The free zones in the UAE have significant business jurisdictions that help maximize the scope of any business establishment. However, this is not the same for all business-related activities. At times, free zones could also limit the possibilities of certain business activities on various grounds.

Company formation in the free zones offer advantages related to taxation as well as provide you 100% ownership of your business. Furthermore, there are fewer constraints on you while starting your business. Thus, this makes the business setup in free zones more appealing to the entrepreneurs. 

The free zone authorities often try to ensure that the process of setting up a business is convenient for entrepreneurs. From easy registering of your free zone company to offering you a ready-to-move office, the procedure is simplified with the implementation of user-friendly, single-window methods, and online formalities.

Before getting into the benefits and disadvantages of starting a business in the UAE free zones, it is crucial to learn about the free zone jurisdictions.

Defining free zone

In the UAE, free zones are regions or jurisdictions which are divided economically. These areas are popular for setting up businesses or importing and exporting goods. Free zones are also considered as designated areas or zones in which companies are taxed lightly or are even exempted from tax in order to boost the economic activities in the region. These free zone in the UAE are also categorized according to the varied business activities conducted. Thus, every business type has a designated free zone.

Corporate structures in the UAE free zones

  • Free zone company 
  • Free zone establishment
  • Branch office/branch company

What are the various free zones regions or areas in UAE?

Among the many free zones in the UAE, below are some segregated on based on the Emirate in which they are located:

  • Abu Dhabi – Free Trade Zone of Khalifa Port; Abu Dhabi Airport Free Zone, and Khalifa Industrial Zone
  • 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 Studio City, Dubai Healthcare City, Dubai Sports City,  Dubai Biotechnology & Research Park, Dubai Knowledge Village, Dubai International Academic City, International Humanitarian City, Dubai Outsource Zone, Dubai Maritime City, Dubai Logistics City, Energy and Environment Park, Dubai Cars & Automotive Zone; International Media Production Zone and Dubai Creative Clusters Authority
  • Sharjah – Hamriyah Free Zone, Sharjah Airport International Free Zone, and Sharjah Media City
  • Ajman – Ajman Free Zone
  • 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.
  • Ras Al Khaimah – RAK Free Trade Zone, the RAK Maritime City Free Zone, and the RAK Airport Free Zone
  • Fujairah – the Fujairah Free Zone, Fujairah Oil Industry Zone, and the Fujairah Creative Cit.

Benefits of free zone company formation in the UAE:

  • No mandatory requirement of forming a partnership with a UAE national
  • Free zone companies can trade across the world and conduct business activities internationally
  • Free zones offer complete possession. Thus, an investor can have 100% ownership of the company 
  • Leniency towards the recruitment process and procedures
  • Complete freedom in matters of business operations
  • Leverages on taxation, customs, and currency control among others
  • Single window system to clear organizational services
  • No restrictions on conducting multiple business activities
  • The free zone areas are categorized according to the business activities, thus providing ease of operations to companies conducting similar business activities
  • The UAE plans to increase the number of free zones in a bid to allow specification and relaxation to companies located in those jurisdictions

Some likely disadvantages of setting up a company in one of the UAE’s free zones:

  • Each of the free zone companies is monitored by specific authorities. So, each region has a varying set of rules and regulations, which could be difficult for businesses to adjust
  • Free trade authorities are not supervised by the federal government and legal legislative of the Emirates and have a governing of their own
  • The companies in the free zones are restricted to trade inside the country. Therefore, no free zone company can trade with another company within the UAE, unless the latter is also situated in the same region
  • Since free zone companies are only allowed to do business internationally, the scope of their expansion within the country is, thus, very limited
  • Free zone regions are mainly situated in the least proximate areas. However, transport and connectivity have been improving due to the presence of companies

To learn more about setting up a business in the free zone regions, book a free consultation with Shuraa Business Setup’s free zone company formation specialist, drop an email to [email protected] or call +971 44081900 or WhatsApp +971 507775554.

By Shailendra Kumar

Shailendra Kumar is an experienced Financial Consultant and Tech Reviewer who has 6+ years of experience in the field of finance, business, and technology. He is very passionate to write about Finance, Business, Technology, Gadgets, Digital Marketing, Guest Posting, Fashion, Lifestyle, etc.

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