Free zones have revolutionized the investment landscape in the UAE and are in large part responsible for the country’s economic transformation and diversification away from oil revenue.
Since the first free zone appeared in Jebel Ali (JAFZ) in 1985, free zones have offered foreign investors full business ownership, quick, cost-effective business setup, tax exemptions and access to a supportive network of other companies and individuals to help ensure business success.
Now more than 30 years after JAFZ’s inception with over 40 economic free zones in existence, all across the UAE’s 7 emirates, it can seem impossible to weigh up the pros and cons of all free zones and decide which one is best for your business venture.
This article will look at some of the key questions you should be asking yourself when choosing a free zone in order to make the most profitable decision for you and your company.
Location – where do you want to trade?
Perhaps the most crucial question to ask yourself when selecting the best free zone is where do you want to trade? One of the main limitations of free zones in the UAE is the restriction they impose on trading in the UAE mainland. In most cases free zone registered companies are only permitted to trade within the jurisdiction of the free zone itself or overseas. In order to trade in the mainland a free zone entity must engage a DED licensed distributor or establish a branch office, civil company or limited liability company.
This may not be an issue if your business is trading overseas or there is a large market for your business activities within the jurisdiction of your chosen free zone.
If you intend to trade primarily overseas and your business is involved in trading of physical goods, then you’ll want to have proximity to air or seaports or other logistics corridors. In this case, one of the UAE’s airport or seaport free zones would be most appropriate. Among the most prominent are:
Abu Dhabi Airports Free Zone (ADAFZ)
Located on an area of over 12 square kilometers close to Abu Dhabi International airport, ADAFZ offers a variety of different facilities such as commercial office space, warehousing units, hangar facilities, retail facilities and plots for development. It supports a large range of industries including but not limited to aviation, freight, logistics and technology.
Dubai Airport Free Zone (DAFZ)
Located on the north side of Dubai International Airport, DAFZ licenses activities which are considered high value – low volume. These include services companies, technology and IT companies, light industry and assembly operations.
Jebel Ali Free Zone (JAFZ)
Founded in 1985 and in close cooperation with the Dubai ports Authority, JAFZ is build around the world’s largest man-made port. The free zone is home to manufacturing, trading and services companies which cover the Middle East, the Asian subcontinent, Africa and beyond.
Sharjah Airport International Free Zone (SAIF-Zone)
The SAIF-Zone hosts nearly 400 companies of which 47 are industrial, 259 are involved in trading and 88 are service based. Facilities cater for manufacturing, assembling, packaging and import/export activities.
What is your budget?
Your available budget will also greatly influence your choice of free zone. If your business activities are more service based as opposed to trading in physical goods, then proximity to major ports may not be a priority. In fact, if your business is conducted primarily online and you are largely location independent, it may be wise to set up in one of the smaller, northern emirates. While Abu Dhabi and Dubai often steal all the limelight, smaller, lesser-known emirates such as Fujairah, Umm Al Quwain or Ajman offer great cost-effective licensing packages that will enable you to keep set up and operational costs to a minimum without compromising on your requirements.
Industry clustering – what business activities does your company carry out?
One of the great things about the majority of free zones in the UAE is the way they have been established to focus on just one or two business sectors. For example, DIFC in Dubai specializes in financial services, Dubai Media City is home to the largest local and global media companies and Dubai Design District houses some of the largest and most prominent design, luxury and fashion brands. This industry clustering ensures that companies have access to the specific facilities and expertise that is needed for success in their field.
While there are many factors that will influence your decision of the best free zone, by asking yourself the above three main questions, you’ll have narrowed down the options significantly and will make the final choice that much easier to make.
How can Global link help?
Global Link has over 16 years’ experience working with local and global business, providing bespoke consultancy services for company incorporation in Dubai and the wider UAE.
We can advise you on the best free zone that meets your operational requirements, budget and objectives and then liaise with all relevant parties on your behalf to ensure your company is incorporated quickly and efficiently.
If you need advice on free zone company setup or for any other company incorporation, visa or PRO service, please get in touch with us on +971 4 553 9901 or email us at [email protected] and we will be happy to assist you.