WHY ARE FREE ZONE COMPANIES SET UP MORE IN DEMAND

Free Zones Companies

A free zone is an area of authority introduced to encourage the growth and interest of the individual entrepreneur in developing the business. The main focus of these sectors is on the import and export business. Free zones’ primary purpose is to remove those hindrances to trade caused by high tariffs and complex customs regulations from seaports, airports, or hoarders. The United Arab Emirates has several free zones with their norms. These Free Zone are eligible to have a bank account opened in the company’s name in any bank licensed to UAE, leading to more demand for Free Zones Companies. Once the Incorporation regulations are completed, this capital is released for the expansion of the business. 

Features of Free Zone companies: 

Companies registered in the Free Zone will be provided a Flexi desk inside the free zone. They can even select a physical space in the free zone as per their choice and have their warehouse or an office in the designated area. A free zone company will have certain restrictions when conducting business inside the United Arab Emirates. If the client registers a company in the free zone but wants to trade in the Local market of UAE, they will have to opt for a single dedicated distributor for their business transactions.

Pros of Free Zone Company

  1. 100% foreign ownership
  2. 100% repatriation of capital and profit
  3. 100% free transfer of funds
  4. 100% exemption of import and export duties.
  5. Opportunities for medium and long-term planning
  6. Easy access to EU countries
  7. No Time limitations on the storage of goods.
  8. Managing Trade activities to market demand and conditions.
  9. Access to domestic and foreign market
  10. The formation of companies is quicker than incorporation.
  11. 25 years lease options, warehouse facilities, availability of areas for production and assembling

Cons of Free Trade

  1. A free zone company is not allowed to trade directly with the UAE market
  2. The Free zone Company can trade within UAE only through locally appointed distributors.
  3. Customs Duty of 5% is applicable when the Free Zone Company sells in the local market.
  4. 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 is also significant to know which free zone fits the best as per the business criteria. The assortment of free zone also depends on the activity and the volume of the business.

To better understand this know-how, it is advisable to seek expert guidance before moving further regarding the free zone business setup process. We at  Clever Corp make the process seamless with our experience and expertise. Contact us at  +971586412031  or  +97145804048  to discuss with our experts at info@theclevercorp.com.

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