What are free zones? Free trade zones are areas in the United Arab Emirates (UAE) that have a special tax, customs and imports regime. These zones work under their own regulations. There are several UAE free zones across Dubai, Abu Dhabi, Sharjah, Fujairah, Ajman, Ras al Khaimah (RAK) and Umm Al Quwain.

Each free zone in the UAE cater to a specific type of business category. Business owners who want full ownership can choose a license and location in one of the many free zones in the UAE. These areas were created to encourage foreign investors with easier start-up process, labour and immigration procedures. Each zone has its own rules and governed by its own authority.

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Table of Contents

• Types & What are the Functions of Free zones in the UAE
• Free Zones per Emirate
• How to setup a business in the UAE?
• FAQS

What are the Types & Functions of Free Zone in the UAE

Each free zone offers licenses to companies within those categories. An independent Free Zone Authority (FZA) governs each free zone and is responsible for issuing FTZ operating licenses and assisting companies with establishing their business in the FTZ.

Some of the exemptions of free zones are:

• 100% foreign ownership of the enterprise
• 100% import and export tax exemptions
• 100% repatriation of capital and profits
• Corporate tax exemptions for up to 50 years
• No personal income taxes
• Assistance with labor recruitment, and additional support services, such as sponsorship and housing.

A new company can be registered by an investor in the form of a Free Zone Establishment (FZE) or simply establish a branch or representative office of their existing or parent company based within the UAE or abroad.

What is an FZE? It is a limited liability company governed by the rules and regulations of the Free Zone in which it is established. The provisions of the Commercial Companies Law (CCL) do not apply to FZEs, except for acquiring nationality in the UAE.

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Free Zones per Emirate

At present, there are 45 Free Zones operating in UAE.

You can view the complete map of UAE free zones here

How to setup a business in the UAE?

The UAE offers a lot of opportunities for foreign investors. However, investors need to know the basic rules in setting up a business in Dubai to avoid problems.

1. A local sponsor (UAE national) for local business startup is needed
2. Apply for a Free Zone if you want to own your business 100%
3. Choose a location that is convenient and cost-effective for you
4. Confirm your Business Visa eligibility and requirement
5. Hire a registration agent to help you throughout the process

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FAQS about Business Setup in UAE Free Zones

1. What are the requirements regarding capital investment?
The requirements vary depending on business type and authority governing the free zone.

2. What are the types of businesses I can do in a free zone?
From financial, educational, retail, media to hospitality – you can do any business in any field. You must check with respective authorities for business permitted on their premises.

3. What is the process of setting up a business in UAE Free Zone?
Generally, free zones require minimum paperwork and duration. Here are the steps to set up a business in a free zone:

1. Choose the type of legal entity
2. Choose a trade name
3. Apply for a business licence
4. Choose an office space
5. Get pre-approvals, register your business and get your licence

4. What are the different types of legal entities in UAE Free Zones?
There are two different types of legal entities in the UAE Free Zone:

• Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZ Co.)
• Free Zone Establishment (FZE)

5. How much is the capital requirement?
Depending on free zone, capital requirement may vary.

• twofour54 Abu Dhabi doesn’t give minimum capital requirement
• You can form an LLC for which the minimum paid-up capital should be AED 150,000 in KIZAD
• You can form an FZ Co. with a minimum share capital of 1000 AED in Dubai Airport Free Zone. Each share should be in the denomination of 1000 AED
• The minimum share capital for forming a free zone company is 50,000 AED in DMCC per company and 10,000 AED per shareholder. For a company to be issued a General Trading Licence, it should have a minimum of AED 1 million share capital.
• You can form an FZE with a share capital of AED 150,000 in Hamriya Free Zone

6. How do you choose a trade name? Are there rules?
A trade name should be chosen while choosing the type of legal entity for your business. It is advised to check with the respective free zone authority or with the Department of Economic Development (DED) if the name is already registered.

For example, twofour54 Abu Dhabi doesn’t allow the use of ‘Abu Dhabi’ and/or ‘United Arab Emirates’ in the name of the FZ-LLC or the branch

List of restricted trade names (DMCC):
DED will approve the proposed trade name if the following requirements are met:

1. Must not violate the public morals or the public order of the country
2. Must be followed by the legal form of the company, for example (LLC, FZE, DMCC etc.)
3. Not been previously registered
4. Compatible with the required type of activity and legal status
5. Must not contain names of any religion, or governing authority, nor names or logos of any external bodies.artment of DED about the permitted trade names and whether the intended name has already been registered.

7. Which type of business license should I apply for?
This will depend on the primary activity of your business. Here are some types of business license:

• Commercial/trade
• Consultancy/services
• Warehousing
• Manufacturing
• Industrial
• Educational
• Media
• eCommerce
• Offshore
• Freelancer

8. Which types of business activities can I open in free zones?
Here are some of the business types you can open in twofour54 Abu Dhabi:

• Content production
• Advertising
• Animation
• Corporate Film production
• Corporate Print Material
• Film production
• Gaming development
• Graphic design
• Illustration
• Software development (e.g. applications)
• Songwriting and composing
• TV production
• Web design and development (e.g. portal, search engine, community site, web production, online library)
• Mobile media (e.g. content for interactive media services on mobile phones)
• Music production and recording
• Music videos
• Digital content production (e.g. CGI, 3D etc)
• Educational content material
• Photography/videography
• Print content production (e.g. magazines, journals, periodicals, newsletters, guides, and handbooks etc.)
• Radio content production
• Script writing
• Online electronic content production (e.g. websites, e-books, travel guides etc.)
• Performing arts and theatre

Other types of business include:

• Branding Agency
• Post Production (e.g. Film, TV, editing services)
• Professional Association (e.g. non-profit)
• Public Relations
• Events/Festivals
• Marketing Communications
• Media content management (e.g. digital archiving)
• Rights Management
• Exhibitions/Conferences
• Information Services (e.g. media related market research)
• Training (media related)

Publishing and broadcasting

• Book
• Magazine
• Newspaper
• Broadcast a satellite/terrestrial television channel
• Broadcast a satellite/terrestrial radio channel

Similarly, you can choose from over 600 business activities ranging from over 20 sectors such as energy, commodities, gold and diamonds, technology, constructions, FMCG, healthcare, aviation, shipping, education, media, professional services, financial services and personal and community services in DMCC.

On the other hand, you can conduct financial and non-financial businesses in DIFC . Financial businesses include banks, insurance, wealth management and capital markets. Non-financial businesses include retail shops, restaurants, five-star hotels, art galleries and academic institutions.

9. How to lease an office space in free zones?
You have two options in acquiring an office space – buy or lease. The office requirement depends on the number of employees and type of business activity of your company.

In DMCC, you have the following options:

• flexi desk of 20-30 sq. m.
• flexi office of 200-265 sq. m.
• offices running through multiple floors totalling up to 2,000 sq. m. each

The following options are available in Dubai Airport Free Zone:

• Office Packages
• Smart Desk Office Packages
• Executive Office Packages

Meanwhile, Hamriyah Free Zone Authority provides over 100 executive offices suits ranging in size from 15 m2 to 42 m2 with conferencing and internet facilities.

10. What are the requirements for initial approval, registration, and licensing and visa process?

Each free zones have their own rules and companies established in these free zones are bound to follow these rules. The list of documents and requirements varies on the type of business activity, company and free zone authority requirements.

Here’s a guideline of documents required:

A. Initial approval

• Completed application form
• Business plan
• Copy of existing trade licence/registration certificate (if you are an existing company, applicable for local company only)
• Coloured passport copies of the company’s shareholder/s and the appointed Manager/Director for the new company
• Specimen signature of the company’s shareholder/s and the appointed Manager/Director for the new company
• 2 years’ audited financial reports for corporate entity or certificate of reference from a personal bank of the individual shareholder
• NOC from current sponsor (for individuals)
• Unit title deed
• Letter of Intent
• Registry Identification Code Form (RIC) for Manager/Director (Original and notarised)

For freelancers, you need to submit the following document:

• Application for registration
• CV
• Bank reference letter
• Registry Identification Code Form (RIC) (Original and notarised)

C. Licensing and visa process

• Lease agreements will be prepared by the authority
• Then trade licence will be issued
• Visa processing will start

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20 Designated Free Zones with VAT Exemption

As per the UAE’s Federal Tax Authority (FTA).There are 20 designated free zones exempted from Value Added Tax (VAT). This means that the transfer of goods between designated zones, which are defined as specific set geographic areas with security measures in place to monitor the movement of goods and people, are tax free.

Abu Dhabi:

• Free Trade Zone of Khalifa Port
• Abu Dhabi Airport Free Zone
• Khalifa Industrial Zone

Dubai:

• Jebel Ali Free Zone
• Dubai Cars and Automotive Zone (DUCAMZ)
• Dubai Textile City
• Free Zone Area in Al Quoz
• Free Zone Area in Al Qusais
• Dubai Aviation City
• Dubai Airport Free Zone

Sharjah:

• Hamriyah Free Zone
• Sharjah Airport International Free Zone

Ajman:

• Ajman Free Zone

Umm Al Quwain:

• Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
• Umm Al Quwain Free Trade Zone on Sheikh Mohammed bin Zayed Road

Ras Al Khaimah:

• RAK Free Trade Zone
• RAK Maritime City Free Zone
• RAK Airport Free Zone

Fujairah:

• Fujairah Free Zone
• Fujairah Oil Industry Zone (FOIZ)