NILE TYPING

Are you planning on setting up a company in the UAE but feel unsure what type of company to incorporate?
There are a number of challenges - as well as opportunities - to navigate first. The UAE is fully committed to maintaining a stable, proactive, and business-friendly environment. A liberal, but sound regulatory framework, coupled with several business growth promotion initiatives and a favorable tax environment makes the country an extremely appealing choice for investors looking to set up a company. One of the most common questions we are asked is: “What are the advantages and disadvantages of setting up a Freezone or mainland company in the UAE?” There is no simple answer regarding which option is best. Instead, the question requires a thorough assessment and understanding of client needs and requirements to offer the right solution. When considering Freezone versus mainland companies, it depends on customer location (whether abroad or in the UAE), and the nature of the business activity to be carried out in, or from, the UAE.

As an alternative to setting up a mainland company, foreign investors can also establish a 100 per cent foreign-owned company with a corporate or individual shareholder, or a branch, in one of the various freezones across the UAE. The first UAE freezone opened in the 1980s, setting the framework for the many that followed. Today, there are around 45 freezones across the UAE. Most of the freezones are 'themed', for example Dubai Healthcare City and Dubai Internet City, and the activities permitted in the respective freezones were originally to be in line with the zone's specific theme. While DIFC and ADGM are financial freezones also offering regulated financial activities, many other freezones, such as the Dubai Multi Commodities Centre (DMCC) and JAFZA are “generalist” freezones, offering a broad and comprehensive list of licenced trading and services activities. One of the main advantages of operating as a freezone company is that it offers complete control over your business, with 100 per cent foreign ownership. While this benefit may have been eroded by the June 2021 changes in mainland company ownership, the new mainland law is not universally applicable to all business types. A freezone, by its very nature, is a clearly defined tax-free zone. Each freezone, established by an act of the competent emirate, is administered and governed by its own regulatory authorities and operates under its own rules and regulations. Companies and individuals licenced in freezones are exempted from all taxes, including income tax, (depending on the freezone) for up to 50 years. Exemption from import duties is also a key benefit. Freezone licensees are allowed to import goods or equipment into the freezone from a foreign country without payment of customs duties. While a freezone setup means you have complete freedom to repatriate capital and profits, a freezone licence is only given on the proviso of working out of the UAE or between the freezones, not for trading within the UAE. In case this would be required, freezone companies can work with locally appointed dfree zoneors. In other words, legally, you can only trade outside of the country or between freezones. There is substantially less red tape in freezone company formation. It is easier and quicker to register a company in a freezone than to set up a mainland business. Most procedures are in English, while company documents are mostly bilingual (English/Arabic). If the speed of set up is important to you, many freezones can help you register your venture in just 10 days and certain freezones can do so even in one week, usually depending on the shareholding structure.