The concept of a “Free Zone” or “Special Economic Region” has been developed internationally as a model to help develop and promote business in many countries.
The UAE (and Dubai in particular) are established Free-Zones to attract trade and export companies, with a high degree of success. Many new Free-Zones have since an within the UAE.
There are 2 main types of Free-Zone corporate entities, namely:
- Free-Zone Establishment (FZE)
- Free-Zone Company (FZCO or FZ-LLC)
The main difference between an “Establishment” and a “Company” is the number of shareholders required. An “Establishment” is a single-shareholder (either a person or a company) while a “Company” is actually a Limited Liability Company and generally requires 2 or more shareholders. Both offer the same operating benefits. Depending on the Free Zone there may also be differences in the share capital requirements.
A Free Zone company can also be a Branch Office of another company. As such, the Branch Office is not a separate company but an extension of the parent company, based in the Free Zone. Branch Offices are NOT an FZE or FZCO/FZ-LLC.
The initial share-capital requirements vary between Free Zones depending on the stated purpose of the company but as a general rule the paid-up capital amount can be from AED 50,000 (approximately the) to AED 300,000 (the USD $82,000) for the majority of Free Zones. It is not required to deposit the share capital in the account. It will be a determined share capital in the MOA.
Key benefits of Incorporation within a Free-Zone are:
- 100% ownership by Expatriates
- No currency restrictions
- All capital and profits may be repatriated
- No corporate, personal or capital gains tax
- Excellent infrastructure & communications
- Wide variety of labour readily available
- Residency visas available