Free Zone are economic zones that encourage the start-up of international businesses in the UAE by offering various incentives to expatriate investors including free from taxes and customs duty.
Free Zones play an essential role in the country’s growth and development. There are more than 40 Free Zones in the UAE, wherein over 20 Free Zones are situated in Dubai alone. New Free Zones are frequently established in the country. Every Free Zone has its respective authority and regulations.
There are two types of companies that can be formed in Free Zones; they include Free Zone Company (FZCO) or Free Zone Limited Liability Company (FZ-LLC) and Free Zone Establishment (FZE).
The major Free Zones in Dubai include Dubai Multi Commodities Centre Authority (DMCC), Jebel Ali Free Zone Authority (JAFZA), Dubai Creative Cluster Authority (DCCA), Dubai Airport Free Zone Authority (DAFZA) and Dubai International Financial Centre (DIFC). Most industries should be able to obtain full foreign ownership, although there are specific sectors are not allowed to acquire complete foreign proprietorship including gas, oil, electricity and water sectors.
A minimum share capital of AED 1000 is required to form a Free Zone Company in Dubai Airport Free Zone. The denomination for each share should be AED 1000. The minimum capital required to establish a Free Zone company in DMCC is AED 50,000 for a firm and AED 10,000 for a shareholder. For an establishment to issue a General Trading Licence, the minimum required share capital should be AED 1 million.
There are several reasons why foreign investors prefer to establish their company in Dubai Free Zone:
- 100% foreign ownership, no Emirati sponsorship required
- Quick company formation and licensing processes
- Exempt from corporate taxes
- Low cost of operations
- Straightforward recruitment and liberal labor laws
- Exempt from personal income tax and capital gain taxes
- No currency restrictions
- Exempted from import and export duties
- 100% repatriation of capital and profits