# Free Zone's in UAE



## PaoloDubai (May 17, 2012)

Anyone have any first hand information on company set up from A-Z in a free Zone? 

And where is the best / cheapest Free Zone to set up in?

The business operation would be light manufacturing / assembly and selling from the small premises.

Thanks in advance


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## gemastar (May 17, 2012)

PaoloDubai said:


> Anyone have any first hand information on company set up from A-Z in a free Zone?
> 
> And where is the best / cheapest Free Zone to set up in?
> 
> ...


Hi PaoloDubai
I looked into this myself recently and would recommend Jebel Alley Free Zone.

Mainly beause you want to do manufacturing, you will need TWO licences.
1. Trading Licence - for all trading activities
2. Industrial Licence - to carry out manufacturing activities.

The rules are very strict on this element and you must adhere or you could loose your licence and your lease.

Jebel Alley Freezone is good for Manufacturing, and as far as I know JBR doesnt have this licence avaliable, and there are very few avaliable in the Airport Freezone to a small company, who doesnt want to take on a large manufacturing unit lease.

Best of luck


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## PaoloDubai (May 17, 2012)

gemastar said:


> Hi PaoloDubai
> I looked into this myself recently and would recommend Jebel Alley Free Zone.
> 
> Mainly beause you want to do manufacturing, you will need TWO licences.
> ...


Thanks for your advice Gemastar,

Who takes care of the trade licence process? Me? or is that part of the JAFZA package?

Is it expensive to set up a new company in JAFZA?


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## vladan (Dec 10, 2013)

Dear, please let me address to a brief question which concerns incentives in Free zones in United Arab Emirates.

I am trying to make an analyzes which concerns benefits provided to investors in UAE Free zones comparing to incentives out of borders of free zones. I visited many web sites which concern this task but still I am not clear with next issue: 

Are incentives-benefits provided to investors in certain Free zones also applicable on the territory of the Emirate to which the zone belongs to. Actually I am interested in which taxes are exempted within the border of Free zone but paid out of border of the FZ within a certain Emirate e.g Dubai VS JAFZA?

Best Regards


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## rsinner (Feb 3, 2009)

vladan said:


> Dear, please let me address to a brief question which concerns incentives in Free zones in United Arab Emirates.
> 
> I am trying to make an analyzes which concerns benefits provided to investors in UAE Free zones comparing to incentives out of borders of free zones. I visited many web sites which concern this task but still I am not clear with next issue:
> 
> ...


There are no taxes (unless you are an O&G company) in either the free zones or outside the free zone. There are obviously various fees (e.g. trade license related etc) which differ from free zone to free zone and the main land.

One key difference between the mainland LLCs and the freezone companies is the local ownership requirement (51%). Also, freezones have restrictions on what kind of activities you can carry out esp. in the mainland.


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## vladan (Dec 10, 2013)

Many Thanks Rsinner


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## saraswat (Apr 28, 2012)

One of the other fees that would need to be paid, in cases where physical goods are involved, would be the customs duty.

When goods would leave the free zone 'border', customs would assess and charge a duty on the items, based on invoiced value. This can be anywhere from 2-5% based on the type of goods.


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## vladan (Dec 10, 2013)

Thank you Saraswat
I have one more question: Is there any interest of foreign investor to open a company (e.g factory) out of a Free zone territory?

Regards


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## cautious_mover (Dec 9, 2009)

I have my own company in one of the free zones. Have been through the process from A-Z.

Light manufacturing would probably be suited for JAFZA or the new DWC free zone.

Freezones are not designed to sell into Dubai and if thats your plan you are looking at 5% tariff on import from the FZ to UAE.

If you are looking to trade in Dubai, then you need an LLC for which you will need a local partner on a 49/51% split in their favour.

If you plan to export your goods out of UAE/GCC then FZ is the way to go.

Share Capital: JAFZA and DAFZA require AED1m share capital deposited on your account before trade licence is issued. Other FZ's require less.


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## vladan (Dec 10, 2013)

Thank you cautious_mover,
If you want to place products to Dubai market, also to export goods out of UAE/GCC, what would be the best solution in terms of location of the company (in the free zone or out of it)?
Regards


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## saraswat (Apr 28, 2012)

vladan said:


> Thank you Saraswat
> I have one more question: Is there any interest of foreign investor to open a company (e.g factory) out of a Free zone territory?
> 
> Regards


As cautious has already mentioned, it really depends on your business plan. Production and then re-export, the free zone is your best bet.

But for selling into the local market, apart from the 5% duty I mentioned earlier there are other things to consider. One option cautious mentioned, of having a separate LLc incorporated in the mainland for sales of your product, is available to you. 

But on the other hand, the course of action taken by most, is the practise of having an authorized agent for their products. Basically, you produce in the free zone, and have agents in the mainland. As long as they are authorized by you (mutual agreement), and are incorporated in the mainland (within your industry), then you would just 'export' your wares from the free zone to them, after which they would turn around and sell them in the mainland. This model is especially conducive to drop-shipping and is what most of the manufacturing companies setup in the free zone are following.

Also have a look into the RAKFTZ/RAKIA industrial packages on offer, not only are they competitive, but are for the past couple of years, seriously booming with a multitude of industrial businesses setting up ....


p.s: excuse the typos and grammar, on my phone :S ....


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## cautious_mover (Dec 9, 2009)

vladan said:


> Thank you cautious_mover,
> If you want to place products to Dubai market, also to export goods out of UAE/GCC, what would be the best solution in terms of location of the company (in the free zone or out of it)?
> Regards


My company doesn't trade with UAE clients as we are a commodities company. We are in the DMCC (JLT) free zone, so I don't have experience in your business structure.

All of the FZ's have customer service offices and they can answer all of your questions.

If you have an idea and are thinking about a business, make a good business plan and go for it.


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## vladan (Dec 10, 2013)

Thanks Erichg,
I have one more question:
Is there a table which shows fees/taxes paid in the free zone comparing to same fees/taxes payed on the land outside the free zones in Dubai (e.g for production activities). Is there a difference of rates of fees/taxes in and out free zone at all. For example in my municipality investors are exempted of some fees for construction of production facility in the free zone but not exempted for the same fees out of border of free zone in the same municipality. What is the situation in Dubai in general reference to this issue?

Regards
Vladan


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