It is believed that the development and prosperity of the UAE are based solely on income from oil exploration. However, since so-called "black gold" is referred to as an exhaustible natural resource, the government of the country in the middle of the 80s of the last century started to think about diversifying the economy. One of the directions of such policy includes direct investments, which are currently the second most important source of income for the Emirates.

In an effort to get rid of dependence on oil, the United Arab Emirates authorities created the concept of free trade zones (free zones). The first free trade zone, Jebel Ali, which is 30 kilometers from Dubai, was created in 1985. There are more than 40 free economic zones located in different emirates in the UAE. The largest number of them is concentrated in Dubai, Abu Dhabi, and Sharjah. Each free zone specializes in certain types of activity and has its own regulatory body. Each free zone has its own distinctive features and is focused on specific activity. 

Advantages of Free Trade Zones in the UAE

Strong incentives for starting a business in an FTZ in the United Arab Emirates are the following:

• In most free zones, businesses pay no corporate tax on their qualified income, as long as they follow the free zone rules and meet the economic presence requirements. At the same time, in the UAE there is a federal corporate tax (9%) and VAT (5%), which are applied in accordance with the legislation.
• a simplified registration procedure compared to mainland companies; however, the process includes mandatory stages: obtaining a Free Zone Authority license, company registration, opening a corporate bank account and meeting the requirements for economic presence (ESR), AML/KYC and accounting;
• exemption from customs duties on goods imported into the free zone or re-exported from it. When delivering goods to the UAE mainland, standard customs duties and import procedures are applied;
• possibility of 100% business ownership by foreign nationals;
• simplified procedure for recruitment of employees, reasonable costs for skilled labor;
• stable economic and political situation;
• highly developed infrastructure;
• high level of transport service: ground, air, sea;
• stable and reliable financial and monetary system of the UAE;
• free export of currency from the Emirates to other countries (100% repatriation of profits and capital).

Free Zone companies (Free Zone Establishments – FZEs, Free Zone Companies – FZCOs, or branches of foreign companies) are registered in the UAE's free zones. Offshore companies registered in specialized free zones (such as JAFZA Offshore or RAK ICC) are also considered free zone companies. Offshore companies in the UAE are registered in specialized offshore jurisdictions, such as JAFZA Offshore and RAK ICC. These structures are used primarily for international asset holding and are not intended for operating in the UAE. Companies registered in free zones can exist as free zone establishments (FZEs), free zone companies (FZCOs/FZ-LLCs), or branches of foreign companies. Conducting business in the UAE mainland may require registering a mainland company or engaging a local distributor. In most free zones, company registration is possible with a single shareholder (FZE). The number of shareholders may vary depending on the regulations of a specific free zone.

Establishment of FTZ has attracted investors from around the world to the UAE that, in turn, had positive impact on the economy of the country. Currently, the United Arab Emirates is the most attractive state for investments in the Middle East. FTZ are operated by independent entities; they issue licenses to foreigners for doing business in the UAE as well as maintain stable operation of registered companies. 

Assistance with business registration in the UAE free zones

The registration of a company in a UAE free zone is an easy and straightforward process, however; the practical application involves electing proper jurisdiction, type of license, and legal structure. Every free zone has its own set of local rules, and business operations, office infrastructure, visa counts and corporate guidelines. So selecting an ideal free zone is crucial for a successful business launch. We offer full support for company registration in the UAE free zone. More details about it read here.

There are three types of free zone companies available for business in UAE, according to their budget and nature of the business. Our experts help to select the right type of license (trade, service, industrial or other) and the legal form of the company Free Zone Establishment (FZE), Free Zone Company (FZCO/FZ-LLC) or branch offices of foreign companies. 

We take care of preparing all documents and submitting them to the free zone administration and help our clients from company name reservation, license acquisition as well as incorporation documents preparation and business registration. We assist clients to open a corporate bank account, consult on residency visa applications for founders and employees, arrange accounting services and compliance with UAE laws governing business activity including (newly introduced in 2023) corporate tax and reporting obligations. With this integrative method, we free up our clients to develop their business while our specialists take care of all necessary registration and administrative procedures.

• Checked / Updated: 05.17.2026
• Published on: 07.13.2014
• Author: Andrey Melnichuk