UAE Free Zone Companies

Like offshore vehicles, free zone companies are also exempt from any taxes, import and export duties. A free zone company conducting its operations within free zones or outside of the UAE, is also exempt from the VAT which has been introduced in the UAE in 2018. However, if a free zone company sells its goods or services to the local companies, these become subject to 5% VAT.

Companies registered in Dubai free zones are required to deposit a minimum registered share capital on their newly opened bank account which may be used straight after the incorporation. There are also a number of free zones outside Dubai which do not require the companies to pay in any share capital. Annual audit and accounts filing requirements also vary depending on the free zone.

Free zone companies enjoy other benefits which offshore companies do not have, such as:

• UAE tax resident status;
• physical presence in the UAE (office, warehouse, land, etc.);
• right of shareholders and employees to obtain UAE resident visas;
• opportunity to take out a loan or mortgage;
• a broader choice of banks.

Shareholders of any free zone company are entitled to obtain resident visas and may become UAE tax residents. UAE banks treat free zone companies and their shareholders as UAE residents. That means that information about them may not be passed on to the tax authorities in their respective home countries.

UAE Free Trade Zones

What is a free trade zone?

Free zones are trading hubs that enable foreign investors to operate within a country while maintaining their international status and operating procedures. They obviate the need to involve a local sponsor in any foreign business and ensure that 100% of profits are maintained within the company. With benefits including tax-free trading, they are intended to encourage foreign businesses to make investments within the region and to increase the overall economic growth.

Benefits of free zones