Free zones in the Middle East: How your business can take advantage of the benefits.
Establishing a company in the Middle East can reward you with many benefits, one of which is the opportunity to get your business started within a tax-free zone. While these free zones are most commonly found in the UAE, there are certain economic zones within the State of Qatar that can also offer equally valuable business setup options. Here is what we know about Free Zones in the Middle East.
What are Free Zones?
For anyone thinking about starting a business in the UAE, setting up within a free zone is a worthwhile thought. Free zones are a popular choice for companies looking to set up in the region, with the UAE boasting more than 40 free zones. On the other hand, Qatar offers only a few economic zones, with a single tax free zone. However, while there are many benefits for setting up within a free zone, there are also several considerations.
Free zones – also referred to as free trade zones – offer foreign investors the opportunity to set up their business without having to face the various restrictions placed on businesses operating elsewhere in the UAE.
Not only are there no foreign ownership restrictions, companies within free zones are governed by an independent Free Zone Authority (FZA), which is responsible for issuing operating licences and regulating the activities of each of the companies within that free zone.
There are more than 40 free zones throughout the UAE, with the majority based in Dubai, however, they can also be found in Furjairah, Ajman, and Ras Al Khaimah, to mention a few. Each free zone is designed to host one or more commercial categories, and will only offer licences to companies within those categories.
To find out where your business may fit into the free zones within the UAE, take a look at the list at the bottom of this page.
The Benefits of Operating within a Free Zone
Operating within one of the UAE free zones can provide a number of benefits. Unlike elsewhere in the UAE, where an LLC typically requires a local partner to hold a 51% stake in the business, companies that set up within a free zone can retain 100% foreign ownership.
Other benefits include an absence of currency restrictions, 100% corporate and personal income tax exemption, and 100% repatriation of capital and profits. Shareholders, directors and employees of companies within a free zone can also obtain residency visas within the UAE.
On top of that, companies can benefit from abundant and inexpensive energy, modern and efficient communications, excellent support services, and a wide variety of licensable activities.
Factors to Consider
While setting up within a free zone provides you with a local presence, it only allows you to carry out business internationally and within that specific free zone itself. For example, you won’t be able to set up within “Free Zone A” and do business with someone in “Free Zone B”, or with anyone who is set up outside of a free zone. If your intended target market is not within a free zone, you will more likely benefit from establishing an onshore company there with a local partner or agent.
There are also certain restrictions on business activities. Depending on the nature of the business, you may require external approvals from certain Ministries or regulatory authorities for activities you plan to undertake.
Free Zones & Economic Zones in Qatar
Unlike the free zones within the UAE, Qatar has only one established free trade zone in Doha, being the Qatar Science and Technology Park (QSTP). QSTP is an incubator for technology start-ups, designed to spur the development of Qatar’s knowledge economy, which you can read more about here. However, there is also the option for foreign companies to set up within the Qatar Financial Centre (QFC), which is not a free zone, but does permit 100% foreign ownership.
The greatest benefit to companies that set up under these structures is that they can maintain 100% foreign ownership of their enterprise, allowing them to do business without the red tape and restrictions that are faced by businesses who operate within free zones in the UAE. Unlike the UAE free zone rules, companies in Qatar who are under QFC or within QSTP can trade commercially across Qatar.
However, it must be noted that QFC and QSTP setups are only available to companies that work within certain industries, and companies within the QFC are not permitted to import or export goods, or employ blue-collar workers.
Evidently, there are many benefits that come with setting up under these structures. However, companies should be aware that set up in free zones and economic zones may also face higher leasing rates and other related fees pertaining to government administration and licenses.
Free Zones in Dubai
Unlike in Qatar, Free Zones in the UAE are much more widely accessible with more than 40 currently operational. Each of these Free Zones is governed by their own unique rules and regulations, and each are designed based on one or more industry categories. As such, only companies within these categories can set up within that specific Free Zone.
We’ve compiled a list of all the Free Zones in the UAE here:
Dubai Airport Free Zone
Dubai Auto Zone
Dubai Cars and Automotive Zone
Dubai Design District
Dubai Flower Centre
Dubai Gold and Diamond Park
Dubai Healthcare City
Dubai Industrial City
Dubai International Academic City
Dubai International Financial Centre
Dubai Internet City
Dubai Knowledge Park
Dubai Logistics City
Dubai Maritime City Authority
Dubai Media City
Dubai Multi Commodities Centre
Dubai Outsource Zone
Dubai Science Park
Dubai Silicon Oasis
Dubai Studio City
Dubai Techno Park (New name: National Industries Complex)
Dubai Textile City
Energy and Environment Park
International Humanitarian City
Jebel Ali Free Zone Authority
Jumeirah Lakes Towers Free Zone
Dubai Production City
Free Zones in Abu Dhabi
Abu Dhabi Airport Business City
Abu Dhabi Global Market
Abu Dhabi Ports Company
Higher corporation for specialized economic zones/ ZonesCorp
Industrial City of Abu Dhabi
Free Zones in Sharjah
Hamriya Free Zone Authority
Sharjah Airport Free Zone Authority
USA Regional Trade Center Free Zone
Free Zones in Fujairah
Creative City Fujairah
Fujairah Free Zone Authority
Free Zones in Ras Al Khaimah
RAK Investment Authority Free Zone
RAK Maritime City
Ras Al Khaimah Free Trade Zone
Ras Al Khaimah Media Free Zone
Free Zones in Ajman
Ajman Free Zone Authority
Free Zones in Umm Al Quwain
Umm Al Quwain Free Zone Authority
Getting Set Up
If you’d like to find out more about Free Zones in Qatar or the UAE, or would like to know which Free Zone may be best for your business, the team at Fusion Middle East is here to help.
We are company formation and corporate services specialists across the Middle East, and are ready to assist you to ensure your business gets off the best possible start.
Contact us today to arrange your free, no-obligation consultation, and find out what we can do for you as your local partner.