UAE has established numerous Free Trade Zone Areas to give businesses an additional incentive to be located there. Initially, free zones were created to attract foreign investment and promote foreign trade. They were notified areas where special laws operated with regard to ownership, taxation, recruitment of labour, value addition and income repatriation. As globalization gained ground, free zones became the preferred areas for foreign investment as they offered the most cost effective mix of factors of production, transportation and distribution in addition to benefits numerated earlier.

The Free Trade Zones in the UAE are well equipped with all the amenities, facilities and communication infrastructure required to set up a business. The increased number of free zones operating in the country is serving to offer a wider range of options to potential investors. Furthermore, 100% foreign ownership is allowed with no recruitment or sponsorship requirements. Corporate tax and customs duty exemption on imported raw materials and equipment and no levy on exports and imports are some of the other benefits.

The major advantage in setting up in a free zone is that you are entitled to:

When a company is approved for the Free Trade Zone, it is given one of the following licenses by the Free Zone Authority. These licenses can be renewed annually as long as the lease agreement is in force. Companies with Trade or Industrial licenses can only conduct business within the Free Zone or abroad. To sell their products in the UAE, they should use an UAE official agent. But services and products can be obtained from and within the UAE without one.

Trade License
Companies which are legally incorporated outside the UAE in imports and exports are permitted a Trade license. Ownership can remain 100% foreign and no license is required from the Economic Department

Industrial License
Companies that are legally incorporated in industrial production outside the UAE and are within the Free Trade Zone can be given an Industrial license. Ownership can be 100% foreign and no Economic Department License is required.

Service License
Companies holding a valid license from the respective government body in the UAE can offer banking, contracting services etc. but have to abide by any requirements of the governing body.

National Industrial License
Industrial manufacturers granted this license are accorded the same status as a local or GCC company in the UAE. Share capital must be at least 51% AGCC and 40% of the sale value of the product must be value-added.

These licences can be renewed annually as long as a lease agreement is in force with the FTZ.

Procedures of starting a company in a Free Trade Zone                            Back