The UAE has long been credited as one of the most attractive business locations for entrepreneurs and foreign investors. The icing on the cake is the financial and tax incentives provided by the government. Undoubtedly, the increased global focus and government decision of diversification have fuelled the business sector. Thus, Business setup in UAE provides a promising future.
However, before you start, you must know what a free zone is and why you want to establish a business in Dubai.
Understanding the Free Zone of the UAE
Special economic zones, areas, or jurisdictions under the control of the Free Zone Authority are the ones referred to as free zones. Together with perks like financial and tax exemptions, the authority grants permit to businesses or establishments. Only the Free Zone Authority oversees the free zone’s operations and other associated matters about license granting.
Dubai is home to around half of the 45 free zones dispersed throughout the United Arab Emirates seven emirates. Multinational organizations, like the software giant Microsoft, Dubai Stock Exchange, Mumbai Financial Centre, etc are housed in Dubai’s free zones.
Top 5 Reasons Why Doing Business in a Dubai Free Zone Is So Enticing
- Total Foreign Ownership
The ability for foreign investors to fully own a business is one of the main advantages that make setting up a shop in a Dubai-free zone so beneficial. It enables overseas business people to establish companies without looking for a sponsor who is a citizen of the United Arab Emirates. The investor’s nationality is irrelevant when setting up a firm in the UAE free zone.
- Tax Exemptions and the Absence of an Annual Audit Need
Free zone enterprises are exempt from the annual accounting audit requirement. However, that applies to mainland businesses. The yearly audit of the company’s financial records is not obligatory for companies operating in Dubai’s free zones.
The amount of the audit charge differs for small- to medium-sized businesses and sole proprietorships in Mainland corporations. Large businesses incur considerably larger costs. Therefore, starting a corporation in the free zone makes complete financial sense, even if just a tiny sum is saved.
Additionally, when conducting business with entities in the same or separate free zones, the companies are excluded from paying the 5% Value Added Tax. Mainland Companies do not receive such a benefit.
- No Limitation on Repatriating Business Profits and Capital
There is no requirement to retain a specific portion of cash or business profits in the UAE free zones when conducting business. The right to repatriate capital and earnings is granted to individuals at any time and in the requisite amount.
In addition to this, the UAE has lax rules regarding overseas transactions. Because the value of the AED is linked to the US dollar, one can also profit from a stable business environment.
- There Are No Import or Export Duty Payments
The exemption of paying import and export duties for enterprises operating in free zones is another reason investing in free zones in Dubai is advantageous. Businesses that run industrial operations may find this to be a beneficial benefit. They can easily import all the industrial machinery and equipment required without worrying about paying import taxes.
Even companies in the re-export sector benefit from this exemption. To turn a profit, many businesses import raw materials from other nations, assemble them, and then export them from free zones.
5.No Labour Restrictions in Free Zones
A labour employment rule was implemented in the United Arab Emirates in September 2021. This rule requires UAE citizens to make up 10% of the workforce in private sector enterprises operating on the mainland.
For businesses located in free zones, this restriction does not apply. Any nationality can be used to hire the candidate most suited for the position. Another benefit is that there are no minimum wage regulations in the United Arab Emirates.
Why Work with SRTIP Accelerator to Establish Your Company in the UAE Free Zone?
Sharjah Research Technology and Innovation Park (SRTIP) Accelerator is a leading platform for setting up business in UAE. The organization has been helping entrepreneurs with their licensing requirements. As a result, it aids companies in starting and maintaining long-term operations. Companies can seek professional advice while ensuring the entire process of business setup in the UAE goes off without a hitch. The professionals will assist with every step, from business registration to free zone license cost estimates to obtain government permissions.
