Company Registration in Free Economic Zones of the UAE

Free Economic Zones (FEZs) in the UAE are designated areas that allow entrepreneurs to conduct business under highly favorable conditions. The UAE has the highest number of FEZs among all countries in the Persian Gulf region. In terms of trade volume and foreign direct investment, the FEZs in the UAE surpass all similar business support programs in other countries.

What are Free Zones in the UAE?

Free Zones (FZs) are territories where highly favorable conditions are created for conducting any type of business. Until 2021, registration in a free zone (FZ) was the only option for foreign investors to open a company in the United Arab Emirates without allocating 51% ownership to a UAE citizen, but now circumstances have changed.

Now that it is no longer necessary to appoint a nominal director owning more than half of the business for registration on the mainland, free zones attract entrepreneurs with favorable conditions and ease of operation. Registering a company in an FZ is a well-established business scheme. Many businessmen prefer to follow the proven path rather than take chances. Although registration on the mainland offers other advantages.

Free zones may offer different incentives to business owners, but their advantages are mostly the same. Here are just a few of them:

• No taxes and customs duties;
• Stable political environment and economic growth;
• Access to energy resources and infrastructure facilities on favorable terms;
• Strategic geographical location for accessing the global market, especially concerning the free markets of North Africa, East, and Central Asia.

How to Choose a Free Zone to Register a Company

When choosing an FZ, consider the specialization of the company, geographical coverage, and other business characteristics. Some FZs have a broad range of activities and register any type of company. Others prefer to work only with fintech and financial corporations or focus on the industrial sector - the choice of free zones is extensive.

It is essential to consider that you cannot operate outside the chosen FZ. All free zones are highly attractive for investment and offer significant economic benefits to their residents. However, if you do not consider the business profile when choosing, all the benefits of the free zone for you may be lost.

What else, besides the company's specialization, needs to be considered when choosing a free zone for company registration:

• Authorized capital size. FZs have requirements for minimum capital for registration. For example, to open a company in Dubai Academic City, a minimum of 300,000 dirhams is required, while in Dubai Airport Free Zone, only a thousand dirhams is sufficient.
• Residency of key personnel. A residency visa may be required for registration in Dubai FZs. Certain free zones have requirements for the permanent presence of company employees in the UAE.
• Submission of audit reports. In KIZAD (Abu Dhabi), reporting is required only from the second year of operation, in Ajman Media City, no audit is required at all, and in the Dubai Airport Free Zone, audit reports should be prepared annually.
• Need to rent an office. In some free zones, opening a representative office is a requirement. If the entrepreneur does not need this, another FZ should be chosen. Sometimes it is sufficient to rent a virtual office or a flexi-desk - a workplace in the FZ coworking space. This is much cheaper than a full-fledged office but allows you to meet the registrar's requirements. Also, consider whether you will need a warehouse for storing goods or production premises - not every zone has the necessary infrastructure.
• Status. Some companies are interested in registering in the most prestigious FZs, such as DMCC, DIFC, or Internet City in Dubai. The cost of opening a company in these free zones is higher, but it pays off in status.

The Level Consulting specialists can offer you the most advantageous option for registering a company in the UAE's free zones based on your needs and business characteristics. Contact us for consultation to get answers to all your questions.

Main Free Zones in the UAE

There are many free zones in the UAE. Let's consider the popular ones:

• Dubai Multi Commodities Centre (DMCC). A multi-profile (over 600 types of activities) commodity exchange is one of the most popular and fastest-growing FZs in the world. There is a wide selection of residential and commercial real estate, developed infrastructure, and many providers of high-quality goods and services within the free zone.
• Meydan (MEYDAN). A wide commercial space around the prestigious Meydan Racecourse in Dubai. The main activities in MEYDAN are advertising, marketing, and media, trading, import and export of goods, professional and consulting services.
• Internet City. A hub for high technology.
• Dubai International Financial Centre (DIFC). A large financial FZ where settlements are made in dollars. Suitable for registering insurance companies, financial consultants, banks, etc.
• Media City (DMC). Attracts freelancers and media companies engaged in publishing activities, media work, event organization, etc.
• Dubai Academic City (DIAC). An FZ with simplified registration for firms offering educational services.
• South Dubai. The main advantages are a favorable location and developed infrastructure: logistics area, railways, airport, seaport.
• Hamriyah Free Zone (HFZ). A large industrial FZ in Sharjah.
• IFZA. A free zone in the farthest emirate from Dubai - Fujairah. This is one of the cheapest FZs in the UAE for business. The IFZA business center is located in Dubai - when registering in Fujairah, you can buy or rent an office and work in the heart of the UAE.
• RAKEZ. A universal free zone in Ras Al Khaimah. You can obtain a commercial, educational, trading, industrial license, etc.

Features of Company Registration in Free Economic Zones

In Free Economic Zones (FZs), you can establish a branch of an international business or an independent company, engage in offshore business (if planning to operate outside the UAE) or onshore business (with an office in the UAE). Registering an offshore entity provides additional economic benefits, but you will not be able to obtain a residency visa or lease premises within the territory of the United Arab Emirates.

To start a business, you need to register, obtain a license, and a UAE residency visa, and open a corporate bank account. You can register a company online on the free zone's website. To streamline registration in the UAE free zones to the maximum extent, contact The Level Consulting. We provide comprehensive business support services and offer legal consultations.