The UAE provides investors with more than forty multidisciplinary free zones in which foreign investors and expatriates can have full ownership of companies. Such zones are characterized by their efficient infrastructure and distinctive services that facilitate smooth workflows, thereby saving businesses considerable time and effort. Kavan Choksi mentions that a Free Zone Company would be governed by the rules and regulations of the Free Trade Zone [FTZ] where it is registered.
Kavan Choksi shares insight into why it would be a good idea to set up a company in one of UAE’s FTZs
For last several decades, the UAE government has been playing a proactive role in bringing foreign investments to the Emirates from several parts of the world. Its visionary government, the entrepreneurial zeal of the UAE residents and business-friendly policies of the nation are some of the key drivers of economic progress in UAE. The tax related and other financial benefits provided by the UAE government to foreign investors are manifold.
The UAE market is classified into three business jurisdictions, the Mainland, Free zone and Offshore. When it comes to establishing a company in UAE, entrepreneurs have to do proper research and dwell upon all three jurisdictions. Setting up a company in one of the FTZs of UAE would particularly be a good idea. Free trade zones are special economic regions or jurisdictions that grant financial and tax exclusions, and provide operating licenses for business establishments. Free Zone Authority is the government body in charge of FTZs, and they are responsible for the pivotal activities related to free zone operations and license issuance. One can form three types of business entities in a UAE free zone, which are Free zone company (FZC), Free zone establishment (FZE) or Branch of a business concern.
There are many advantages of opening a company in a Free Trade Zone of UAE:
- Complete foreign ownership: One of the biggest and most evident benefits of establishing a free zone company in UAE is that it makes complete foreign ownership possible. This basically means that foreign investors do not have to find a UAE based national sponsor to form their company. Foreign ownership is possible regardless of the nationality of the investor.
- Absence of currency regulations: Currency regulations simply imply to distinctive currency related restrictions that are imposed by the government on the transactions of foreign currencies. Fortunately, there are no currency regulations of any kind in UAE free trade zones. Kavan Choksi, an experienced business expert, points out that the absence of these regulations makes financial transactions easier for companies in the FTZs.
- Import and Export duty exemption: There is no import and export duty applicable to the free zone jurisdictions in the UAE. This goes a long way in promoting international trade.
- Tax benefits: 100% tax exclusion is applicable for Free Zone Companies. This includes both income tax and corporate tax.
Companies in the FTZs of UAE are eligible for full repatriation benefits, which include profits and financial assets. These companies can also carry out labor recruitment with ease, and are allowed to recruit foreign nationals.