# Free zone or LLC company



## APDP (Sep 8, 2015)

Hi
Iam planning to start up a company that trades in industrial spare parts & provides engineering consultancy services. 
Currently deciding on whether to form a Free Zone company or a LLC. Would prefer to form a free zone company, but have come across some posts saying free zone companies are not allowed to trade in the local market directly. This condition will limit my business, but there are some companies in free zone that are still doing this kind of business.

Would appreciate if anyone practically experienced in this kind of business can advise on the following:

1. Can a free zone company sell materials to other LLC companies in UAE directly or needs a local agent to do that.

2.If I sell in UAE market what are the additional duties i have to pay as a free zone company, other then Custom duty.

3.am i allowed to do business with government organizations as a free zone company

4. am i allowed to do engineering consultancy work for other LLC's and Government organizations in UAE as a free zone company.

5. am i allowed to undertake any construction projects work for other LLC's or Government organizations in UAE as a free zone company.

6. Is there anyway other way to setup this kind of business within UAE without forming a LLC.

Thank you


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## V.E.S. (Sep 8, 2015)

It seems that you already understand the main pros and cons of registering the company in free zone. Referring to your questions, please take into account the following:

1.	A free-zone company may sell the goods to other LLCs through local agent or distributor
2.	Normally the free-zone companies do not pay any duties except customs duty which can be between 5 and 100% depending on the nature of product to be cleared
3.	Regarding the other questions it depends on your company’s activity, the type of the project you intend to participate in, etc. But in general if you want to take part in any government projects your company should be listed in a special register of Ministry of Economy and win a tender held by the government.


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## APDP (Sep 8, 2015)

Thank you V.E.S. for your reply, it was helpful to understand some additional aspects of free zone companies & project execution.
You are right, I already understand the main pros and cons about free zone company. I was expecting, somebody who has already dealt with similar situation may be able to help me out with some practical solution to this.
It seems like i need to go for a LLC registration to be able to freely trade in the local market without the distributor.

Regards


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