What are these Free Zones in the UAE and what are their advantages for business formation?
Each Free zone is an autonomous body and acts as an official labour sponsor. These Freezones operate outside the Federal Law or Laws of Ministry of Labour. One of the prominent objectives of Freezones is to cut the red tape that usually exists in a bureaucracy and reduction of taxes.
Bureaucracy is almost non-existent in UAE but Freezones with their absence of Government intervention, encourages Foreign companies to set up shops and hence contributing the overall development of an economy. As far as employment is concerned, I could bet that almost 40% plus of the total work force in the UAE serve in the Freezones.
Therefore, Freezones form an important part of UAE. Please note that Freezones can only sponsor your Labour sponsor. For residence sponsor would still be your company.
Prominent Freezones in UAE are JAFZA, DIC, DMC, Academic City, Khalifa City, and so on.
Free zones are geographically confined areas within the United Arab Emirates in which no customs duties accrue upon import of products into the free zone and their re-export into countries other than the Emirates. In these special economic zones, the laws of the United Arab Emirates apply to a limited extent only. Instead, the respective free zone authorities have issued their own rules and regulations, which stipulate, for example, the requirements for company formation in the particular free zone.
Free Zones (also commonly known as free trade zone, free economic zone or tax free zone) are designed for boosting international business by providing 100% foreign ownership and single window administration convenience. Each Free Zone has its own specific requirements regarding permitted activities, office and/or warehouse space. Companies which are not registered in the Free Zones require a local sponsor and allow maximum 49% foreign ownership.