Advantages and Disadvantages of starting a UAE free zone company

UAE free zones have been a major factor on expanding the UAE market and creating a standard over the long-endured protocols of the nation. Due to the free zones UAE has achieved a position in the global market in terms of the multiplying organisational structures and business opportunities.

UAE free zones are significant business jurisdictions that maximize the scope of business establishment. Yet, this is not the same for all the business activities, free zones at times may also limit the possibilities for certain business activity on various grounds.

Business setup in free zones offer benefit in terms of taxation and 100% ownership. Also, lesser constraints in starting a business makes it more appealing for entrepreneurs considering business setup in the UAE. The free zone authorities also make sure to create convinces in the procedural aspects of setting up a free zone company. Be it a UAE free zone company registration or offering you convenience in terms of getting an office in free zones – the free zone authorities have you sorted by implementing with user-friendly single window methods and online procedures.

Before understanding the advantages and disadvantages of starting a business in UAE free zones lets learn all about free zone jurisdictions.

What is a free zone?

Free zones in the UAE are economically divided regions or jurisdictions used for starting businesses or importing and exporting goods. Free zones are also considered as designated areas or zones in which business are lightly taxed or are even tax free to encourage economic activity in the region. Free zone in the UAE are also divided according to their business activity, every business activity has a designated free zone.

What are the company structures allowed in UAE Free Zones?

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

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

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

• In Abu Dhabi – Free Trade Zone of Khalifa Port; Abu Dhabi Airport Free Zone and Khalifa Industrial Zone.
• 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 Biotechnology & Research Park; Dubai Knowledge Village; Dubai International Academic City; International Humanitarian City; Dubai Outsource Zone; Dubai Maritime City; Dubai Logistics City; EnPark; Dubai Cars & Automotive Zone; Dubai Sports City; International Media Production Zone; Dubai Studio City and Dubai Creative Clusters Authority.
• In Sharjah – Hamriyah Free Zone; Sharjah Airport International Free Zone and Sharjah Media City.
• In Ajman – Ajman Free Zone
• 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.

Advantages of starting a free zone company in the UAE:

• 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.
• Organizational services can be cleared through a single window system.
• No restrictions on engaging in more than one activity.
• Free zone regions are designated according to the business activities, thus provides ease to companies related to the same business activity.
• UAE plans to open more free zones that can allow specification and relaxation to companies in free zone jurisdictions.

Disadvantages of starting a free zone company in the UAE:

• Free Zone companies are monitored by the free zone authorities and different authorities have different regulations, which can be difficult for companies to adapt.
• Free trade zone authorities are not controlled by the government and legal legislative of the Emirates, they have a governing of their own.
• Free Zone companies are restricted to trade inside the country. No free zone company can trade with another company in the UAE, unless the company is situated in the same free zone.
• As free zone companies are only allowed to do business internationally, it limits their expansion opportunities within the country.
• Free zone companies are mainly situated in the least proximate areas; however, transport and connectivity are making things better.

Want to understand whether a UAE mainland business setup is better than a UAE free zone business setup? Speak to a business setup consultant for FREE at Shuraa Business Setup, know more about UAE free zones or ask any query related to business setup in the UAE. Call us on +97144081900 or WhatsApp us on +971507775554. You may also email us on [email protected] or log on to https://www.shuraa.com/.