Free zone Licensing
Free zones, also known as free trade zones, are specialized economic areas in Dubai where businesses benefit from favourable tax and customs rates. There is a common misconception that free zone companies and offshore entities are the same, but they are distinct. Free zone companies are onshore entities that can operate within Dubai under specific conditions, while offshore companies are established to conduct business outside their registration jurisdiction.
Dubai boasts approximately 67 free zones, with new ones being introduced regularly. Currently, over 150,000 businesses operate within these free zones, a number that continues to grow. Notably, free zone companies can now open branch offices on the mainland. To do so, the branch must be registered with the Department of Economic Development (DED) and the Ministry of Economy under the same commercial name as the free zone entity. Unlike earlier regulations, the free zone company can fully own its mainland branch without needing a local partner.
Advantages of Setting Up a Free Zone Company in Dubai
Establishing a business in one of Dubai’s free zones offers numerous benefits that can significantly enhance your entrepreneurial venture. Here’s why setting up in a free zone can be highly advantageous:
- Full Foreign Ownership: One of the standout benefits of Dubai’s free zones is the allowance for 100% foreign ownership. Unlike mainland businesses, which typically require a local sponsor or partner, free zone companies offer complete control and flexibility to foreign investors.
- Repatriation of Profits: Businesses operating in free zones can repatriate all profits and capital to their home country without any restrictions, facilitating easier access to funds and financial management.
- Corporate Tax Benefits: Companies in Dubai’s free zones benefit from favorable tax conditions. Those with revenue under AED 375,000 are exempt from corporate tax, while those exceeding this threshold pay a competitive 9% corporate tax rate.
- Streamlined Import and Export: Free zone businesses enjoy simplified import and export procedures with exemptions from customs duties on goods entering or leaving the UAE. This reduces the cost and complexity associated with cross-border trade.
- Prime Location: Dubai’s free zones are strategically situated near key seaports, airports, and national borders. This advantageous positioning speeds up air cargo transportation, lowers shipping costs, and boosts supply chain efficiency.
- Global Connectivity: Dubai’s major seaports and airports provide excellent connectivity, making it easy to engage in local and international trade. The city’s central location connects you with markets across the MENA region and South Asia.
- Vibrant Expat Community: As a global hub attracting millions of tourists and investors, Dubai hosts a diverse international community. This vibrant expat environment offers ample networking opportunities and connections with a global business network.
- Diverse Business Opportunities: Dubai’s free zones cater to a wide array of commercial activities. Whether your focus is trading, manufacturing, technology, media, healthcare, or consulting, you’ll find a free zone that supports your industry and business goals.
- Efficient Registration Process: Setting up a free zone company is a quick and straightforward process. The streamlined registration procedures and efficient administrative services simplify the setup and operational phases, saving you time and effort.