23 07 2020

Benefits of starting a business in one of the Free Zones of the UAE

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Opening a business in 1 of more than 40 different FEZs of the United Arab Emirates is an undoubted advantage and a catalyst for the company's economic growth. Below we will explain why.

The main difference between local companies (outside Free Zones) and companies inside the FEZ is the right to foreign ownership of the company. A foreign investor has the right to own 100% of a company located inside a Free Economic Zone, but in the case of a local company, the maximum share of ownership cannot exceed 49%.

With regards to the activities of companies in the FEZ, they can trade on the international market and, of course, within the Free Zone in which they are registered.

The Free Economic Zones have gained great fame thanks to the complete exemption from income and corporate taxes. As for duties on exports and imports, they are also absent, with the exception of the sale of goods on the local market of the United Arab Emirates. All this has a positive effect on the economy of the company and helps to develop at a faster pace.

There is no public register of the company's shareholders in the FEZ. Therefore, we can safely say about the high level of data confidentiality.

Companies within FEZs are ideally suited for international trade due to excellent logistics infrastructure, convenient location and relatively low energy costs. The ways of selling goods to the markets of Asia and Europe are open for you.

The government does not stop signing agreements with other countries to get rid of double taxation. At the moment, there are more than 50 such agreements.

Each Free Economic Zone has its own distinctive features and advantages and is intended for certain types of activities. For example, Dubai Technopark is for IT, Jebel Ali is excellent for the management of cargo ships, Dubai Healthcare City is perfect for the medical industry, etc. In such special zones, it is much easier to interact with partners and develop business in general.

For a company in a FEZ, it is necessary to obtain a license to carry out the selected activity. Most often it is a commercial license. The process of obtaining a license does not take much time and is not a complicated process.

Company shareholders have the right to obtain a residence permit, as well as their family members and company employees. The company can purchase real estate in certain locations.

If we compare a company inside a free economic zone with an ordinary offshore one, then it is worth noting that there are higher costs for opening and registration, as well as other legal requirements.

Without a local intermediary, the sale of goods and services outside the FEZ is prohibited.

Without a license for certain activities, the company is prohibited from engaging in these activities. As a result, non-compliance with the rules can lead to liquidation of the company or heavy fines.

The most important thing is that your company's activities comply with all UAE laws. With this approach, no problems usually arise.