Setting up a business venture and operating out of one of the many free zones in the United Arab Emirates (UAE) has been a positive and altogether lucrative experience for many foreign-owned companies. Jebel Ali Free Zone, for example, with its huge port facilities and thousands of companies employing some 170,000 people between them, contributes a staggering $16 billion to the Dubai economy alone.
Dozens of free zones operate across the UAE in a variety of service and industrial sectors. Each is controlled by its own independent authority which is responsible for issuing licences and assisting companies to establish themselves. With corporate finance in the UAE playing a major part, too, free zones have literally transformed the country into an important and dynamic Middle Eastern trading hub.
If the success of a business is dependent on location then the UAE is perfectly placed in that respect, a bridge between young, emerging markets to the east and the maturer markets in the west, particularly in Europe. But other factors also play an important part in the decision whether or not to set up or relocate a business to a foreign jurisdiction. These may include the provision of good infrastructure, efficient transport links, competitive energy costs and abundant labour.
Having access to business banking which responds to both short term problems and long term expansion plans is a vital part of any company strategy. Well-known UAE bank HSBC, for example, has a strong track record in the Middle East, offering corporate accounts and other services fine-tuned to the full spectrum of business activity. Its reputation as a bank which goes above and beyond what is expected is well-known and appreciated within the business community.
The UAE government’s role in creating the right sort of framework in which business not only survives, but also thrives, cannot be overstated. Without the necessary understanding, forward planning and determination, the free zone initiative would simply have limped along at best or ran out of steam at worst.
The UAE embassy says, “Free zones contribute to and stimulate the economy by attracting foreign direct investment, generating thousands of jobs, stimulating non-oil exports, encouraging the setting up of ancillary industries, and helping in the transfer of knowledge, expertise and technology to the country.”
The major advantages in operating in a free zone are:
100 per cent foreign ownership of the enterprise.
100 per cent import and export tax exemptions.
100 per cent repatriation of capital and profits.
No corporate taxes for 15 years, renewable for an additional 15 years.
No personal income taxes.
Less documentation, mostly in English.
Assistance with labour recruitment and additional support services such as sponsorship and housing.
According to the embassy, there are over 20,000 companies in 21 free zones around the UAE. The largest free zones, by number of companies, are Jebel Ali Free Zone (6,000 companies); Sharjah Airport International Free Zone (3,900 companies); Dubai Airport Free Zone (1,300 companies); Dubai Media City (1,200 companies); and Dubai Internet City (1,000 companies).
For more detailed information about free zones in the UAE, check out the embassy’s website here.