UAE is one of the world’s best business hubs and one important reason for the UAE to achieve that status is the presence of special free zones in the country. There are several free zone areas in all the states of UAE while Dubai and Abu Dhabi are leading the list with most free zones among all the seven states in the Gulf country. These free economic zones are paradise for foreign investors as they are provided with several such incentives in these special zones that are not available in other areas of UAE.
In these areas, the investors have the opportunity to attain 100% ownership of business along with zero tax on their businesses and products. These and other facilities make these free zones of UAE the best place of foreign investment in the whole of Middle East. These free zones are famous on a global level. An example is DMCC, the world’s best free zone.
But it is also important to acquire complete information about the pros and cons of business in the free economic zones of UAE before launching any business. Following are 6 important things that should be considered before engaging in any business activity in these free economic zone areas of UAE.
1. Different Types of Free Zone Entities
The first thing the investors should know before setting up their business in the UAE free zones is that there are two main types of free zone entities in UAE; Free Zone Company (FZC) and Free Zone Establishment (FZE). In case of FZE, there is just a single shareholder required in the form of a company or a person. Comparatively, 2 or more shareholders (companies and persons) are required in case of Free Zone Company (FZC). Both of these entities have different rules and regulations. These rules may differ in free zones of different emirates.
Several of these free zones provide other types of business opportunities for companies and individuals. Branch/representative office of a company and freelancers can set up their business in these free zones as well.
2. Keep some extra Cash
There is no doubt that free zones provide immense opportunity due to low cost and higher business opportunities. But you should be aware of the fact that you can face a few hidden charges with your business in the UAE free economic zones. These can include card fees, administration fees and others. Therefore, it is important to have at least additional AED 5,000 with you while setting up a business in free zones of UAE.
3. Choose according to Business Type
You can get several types of opportunities before the UAE free zone company formation. Therefore, it is very important to choose an appropriate business based on the area, state, population and other factors. Another thing that should also be kept in mind is that few companies can face geographical limitations which makes it utmost important for them to make the best option about their business in the free economic zones of UAE in order to gain maximum benefit.
Several free economic zones are restricted to specific areas. Therefore, these free zones are best for such types of businesses where clients would like to come to you. An example is the start of an educational institute as a business in the UAE free zone as your clients will come to you in this case. But if you are starting business where you have to provide training to the clients at their place of work then the geographical location of the free zone can prove a hindrance in the progress of your business.
4. Avoid Legal Problems
It is important to know that all the 7 states of UAE have their own laws regarding businesses including business in their specific free zones. Therefore, it is important to take a comprehensive legal advice from a top legal expert before starting business in the free zone in any of the 7 states of UAE. You must also hire a good legal expert during the whole course of your business. It might prove expensive but it is helpful in preventing legal problems that you can face while setting and running your business in UAE free zone areas.
5. Prohibited Items in UAE Free Zones
Import and export of most of the goods in the UAE free economic zones are free from taxes and duties. But it is important to remember that not all the goods are allowed in the UAE free zones. There are several goods that are prohibited in every part of UAE including free zones of the country like weapons, narcotics, radioactive materials, imports and exports to an economically boycotted country and others. Therefore, it is necessary to avoid any business that requires goods that are prohibited under the UAE laws. It is not only harmful for your business in the UAE free zone but you can also face punishment according to UAE laws regarding these items.
6. Free Zones for Specific Businesses
The last important thing to consider is that most of these free zones are designated for specific type of businesses. Few of the examples of such special zones are Dubai Healthcare City related to health industry and Dubai Media City for media-related companies. But such restrictions don’t apply in all the free economic zones of UAE as you can get multiple business opportunities in the free zones like Dubai Multi Commodities Center (DMCC) and Dubai Airport Free Zone (DAFZA).
If you want to know other information regarding setting up your company in any of the free zones in UAE, then you can contact RIZ & MONA Consultancy via WhatsApp # 971-54-5821012. We will provide complete assistance in starting your free zone business in UAE.