For the past 30 years, the UAE has been leading other countries in the Middle East and North Africa when it comes to investors and new businesses thanks to the economic stability that the country enjoys and maintains. But economic stability is not the sole reason why UAE is attracting such big numbers of startups and big businesses; the credit also goes to the numerous benefits that businessmen enjoy beginning with fast business growth, manpower availability, investment support, and most importantly Free Zones.
Free Zones are one of the most popular advantages that businessmen and investors choose and enjoy in the UAE and many other GCC countries, and that’s for the many benefits it provides them with.
If you are not familiar with the term; a Free Zone refers to the areas inside a country where you can run your business without being under any custom regulations. Free Zones give businessmen and investors a lot of benefits, and that is why a lot are advised to run their business under a Free Zone, when they are starting in the UAE. However, to take such a decision, one has to know the pros and cons of a Free Zone.
Let’s start by the most important pros, that one can enjoy when registering their business as a Free Zone company.
1-Full Business Ownership
Free Zone business owners are given 100% ownership of their businesses, unlike foreign direct investment laws where the foreign business investment gets only 49% of business share.
2- Tax Exemptions
A Free Zone company lets you keep all your business profits without having to pay any taxes to the government whether it was business or income taxes.
3- Support Services
Free Zones offer assistance for business owners in many matters such as recruitment and sponsorships.
4- Faster Company Formation
The process of setting up your company in a Free Zone area is faster than setting it up in normal areas in the UAE.
On the other hand, as attractive as the pros may sound, Free Zones also have some cons. Some of which include:
1-No direct trade with the UAE market
2- A 5% custom duty is applied when trading takes place in the local market
3-No opportunities for businesses in the free zone to expand outside the area.
Free zones are available in a lot of locations in the UAE and especially in Dubai. Taking the decision of whether to choose a Free Zone area or not will always be based on the type of your business, and whether it can really benefit from Free Zones without being negatively affected or not.