The presence of the various free zones is undoubtedly one of the best news for people in business and entrepreneurs that want to set up a business in the UAE. A Free Zone is a designated area within an emirate in UAE, and these free zones have their benefits. These free zones are specifically established, keeping in mind a particular business sector and provide state of the art infrastructure and ensure the growth of the businesses set there.
The decision of choosing a free zone is significant for a businessman as this decision will play a massive part in deciding the future of the company. The choice of selecting an open area should not only be based upon proper business planning, but the management should keep in mind the benefits the free zone provides to the company.
Why Choose Free Zones?
There are various benefits of setting up a business in the free zones. Each free zone is an independent entity and provides features such as:
- Easy setup process
- Different and independent rules and regulations
- Provision of step-by-step support and assistance
- Protection of the privacy of the company
- Various locational advantages
Apart from the pros as mentioned above, there are numerous other benefits such as no currency restrictions, no levy of taxes or import and export duties, no limit on the type of currency used, complete repatriation of profits, and many other benefits. Some free zones even provide benefits according to the size and the nature of the company and the business being performed.
Talking about the cost of setting up a business in the free zone, each free zone will have their pros and cons. Some will provide some incentive to the company in certain situations, and some will allow specific subsidies for company incorporation in the free zone.
Let's have a look at some of the most cost-productive free zones present in the United Arab Emirates.
The Most Cost-Effective Free Zones in the UAE
There are more than 38 free zones in the United Arab Emirates. Below are some of the free zones in which setting up a company will be very cost-effective.
1. International Free Zone Authority (IFZA)
This free zone is located in Fujairah and is one of the most cost-effective free zones in the UAE. IT offers various services to the companies at par with international standards such as One-stop shop for all permits and licenses, state of the art warehousing services, secure connectivity to other important markets and many other benefits. The location of this free zone is of particular interest as it allows easy transportation of goods and other resources as it has access to some of the major shipping routes of the world.
Benefits to Companies
- Quick and straightforward business incorporation services
- Availability of a range of business activates
- Complete exemption from taxes (corporate tax and personal income tax) and import and export duties
- No restriction of currency
- No requirement of a physical office
- Total foreign ownership
Business Licenses in IFZA
This license is necessary for all production, distribution of services, and all services based companies should acquire this license.
General Trading License
This license encompasses a large number of items that are put up to trade.
This license is different from the general trading license. It applies to companies that trade in certain specific goods.
Companies or industries which are import, export, product manufacture and package goods, this license applies to them.
The acquisition of this license allows a company to acquire and hold separate assets or shares or both of the other company.
This licence is usually used by management consultants, HR Consultants, and various other professionals.
The numerous benefits and the cost-effectiveness of the free zone makes it one of the most beneficial free zones to set up a company.
2. Ras Al Khaimah Economic Free Zone (RAKEZ)
This free was established as a result of an initiative taken up by the government two separate free zones, namely RAK Investment Authority (RAKIA) and RAK Free Trade Zone (RAKFTZ). Both the free zones were established previously, but they decided to merge in the year 2017.
It provides a fast and straightforward business setup process along with customer-friendly business environment for investors from all over the world. RAKEZ also has the provision of formation of a Free Zone and a Non-Free Zone company. The cost-effectiveness of the free zone makes it a very lucrative option for the setting up a business.
Business Licenses in RAKEZ
This license will allow the company to register itself as a free zone entity or a non-free zone entity and also assist in the trading of goods.
An investor can enter into the education business by obtaining this license.
By obtaining this license, a company will be able to trade a particular good or service on an online platform.
This license has various advantages and was developed in order to encourage creative and media-related industries.
General Trading License
This license can be used to increase the limit of the goods which are being traded by a company.
Companies into import, export, production, manufacture, and package goods require this license.
The many benefits to be availed also make it an essential entry in the list of cost-effective free zones.
3. Khalifa Industrial Zone Abu Dhabi (KIZAD)
The idea of this project was revealed to everyone by the Abu Dhabi Government in the year 2010, and the work to establish this free zone started in the year 2012. The main aim of this free zone is to achieve diversification of the economy by 2030.
Occupying a 417 square kilometer area, this free zone has a meager operating cost making it suitable for setting up start-ups and SME's. KIZAD is divided into two parts, area A emphasizes on the businessmen who are operating in the industrial sector, and area B focuses on commerce based companies.
Business Licenses in KIZAD
The different permits available in KIZAD are:
This is a very basic license in KIZAD and is required for import, export, packaging, manufacturing, etc.
Trading and General Trading License
This license allows the company to trade both in general goods and specific goods.
All the service-based companies need to obtain this license, e.g., management consultancy, cargo/logistics, etc.
4. Umm Al Quwain Free Trade Zone (UAQ FTZ)
This free zone is located very near to the seaport of Umm Al Quwain. The strategic location of the free zone makes it very advantageous for setting up of logistic and small companies. The companies present in the free zone are usually into exporting and importing goods from various parts of the world and vice versa.
Business Licenses in Umm Al Quwain Free Trade Zone
There are many different types of grants available in UAQ FTZ, such as:
General Trading License
This license allows the company to trade in a variety of general goods.
A commercial license will permit the company to deal with particular commodities.
Professionals who provide their services in the free zone need to obtain this license.
The freelance license will help individuals to operate in the creative and other professional fields of business.
The services license should be obtained by every service-based company in the free zone.
KIZAD is a very worthy entry into the list of cost-effective free zones in the United Arab Emirates.
5. Sharjah Media City (Shams)
Launched in January 2017, Shams has been aiming to become a world-class media hub. The Free zone fosters a hugely connected and vibrant environment and also ensures the growth of the companies in the free zone.
With quick and simple business setup process and affordable setup and operation costs of the free zone, it is one of the best places for setting up a media-based company in the UAE.
Business Licenses in Shams Free Zone
The licenses available in the Shams Free Zone are:
For the production, transformation, distribution, and re-production of services, the company must obtain a services license.
This license is required for production, manufacture, packaging, transforming, etc. of goods.
A trade license will allow the selling of goods within the free zone and also importing and exporting of goods.
These are the five free zones were setting up a company can be very beneficial. Do not forget that setting up a company is only the beginning; maintaining the company is an altogether different matter. To maintain a company and to ensure its growth, services like accounting and auditing are required. Only an approved auditor is allowed to conduct an audit in the free zones.
If you are looking for auditing and accounting services in the above free zones, do look into the services provided by JAXA Chartered Accountants. We are approved by all the high free zones and may more (DMCC, DSO, DAFZA, JAFZA, etc.). For more information about the services provided by JAXA, contact us, we will be happy to help you.