A Free Zone is a Jurisdiction which is introduced to encourage the interest and growth of the individual entrepreneurs in developing the business. This sector is majorly focused in the Import and export business. Free zone has been an efficacious podium for the individuals on the trading sector with the benefits on the customs and the taxation. There are several free zones in the United Arab Emirates, each having their own norms’ to own a business. One such requirement is the paid up capital. The amount of the capital differs from the authority chosen. These Free Zone Companies are also eligible to have a bank account opened in the name of the company in any bank that is licensed to the United Arab Emirates. In certain free zones it is mandatory to physically produce this capital in the bank. Once the Incorporation regulations are completed this capital is released for the expansion of the business.
Companies registered in the Free Zone will be provided with a flexi desk inside the free zone itself or can even select a physical space in the free zone as per their choice and have their own warehouse or an office in the designated area. A free zone company will have certain restrictions when conducting business inside the United Arab Emirates. In case if the client registers a company in the free zone but wants to trade in the Local market of UAE, will have to opt for a single dedicated distributor for their business transactions.
Pros and Cons of Free zone company Establishment:
Pros:

  • 100% foreign ownership
  • 100% repatriation of capital and profit
  • 100% free transfer of funds
  • 100% exemption of import and export duties
  • Free zone company formation is quicker than incorporation
  • Inexpensive workforce and easy recruitment procedures
  • 25 years lease options, warehouse facilities, availability of areas for production and assembling.

Cons:

  • A free zone company is not allowed to trade directly with the UAE market
  • The Free zone Company can trade within UAE only through locally appointed distributors.
  • Custom Duty of 5% is applicable when the Free Zone Company sells in the local market.
  • Employees with visas from Free Zone Companies are expected to work only from the company’s offices within that free zone.

Despite the mentioned pros and cons of the free zone establishment, it also significant to know which free zone fits the best as per the business criteria. The assortment of a free zone also depends on the activity and the volume of the business.
To better understand the know-how of this, it is advisable to seek an expert guidance before moving any further regarding the free zone business set up process. We at Clever Corp make it process seamless with our experience and expertise. Contact us at +971586412031 or +97145804048 to discuss with our experts today info@theclevercorp.com