The UAE economy is clearly divided between two sectors: the "onshore" sector, which is dominated by local business interests and restrictions foreign ownership, and the "offshore" sector, which consist of a number of freezones.
While there are no taxes both onshore or offshore, 100% foreign ownership and customs privileges make free zones a very favorable locations for international operations in the Middle East.
There are, however, several limitations to operating a business in a free zone. These include the inability to trade directly with the UAE market, unless through locally appointed distributors. A custom duty of 5% is applied to these local businesses. Although all free zones provide several unifying benefits, not all are the same when it comes to infrastructure and facilities offered. Free zone rules and regulations may also be subject to change.
Despite these limitation, UAE free zones offer several benefits, including:
- 100% foreign ownership;
- No corporate taxation for 50 years, renewable for an additional 50 years;
- Complete freedom to repatriate capital and profits;
- No personal income tax;
- Full exemption from importation and exportation duties;
- No currency restrictions;
- No bureaucratic red tape;
- Faster incorporation;
- Few or no labor recruitment restrictions;
- On-site customs inspection;
- A state-of-the-art infrastructure.
At Emirates Zone, we help our clients determine whether or not working in a free zone is right for their business and help them determine which location would be best for their needs.