It is believed that development and prosperity of the UAE is based solely on income from oil exploration. However, since so called "black gold" is referred to exhaustible natural resources, the government of the country in the middle of 80-ies 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). In 1985 the first Free Trade Zone was established - Jebel Ali, located 30 km from the city of Dubai. Today there are more than 35 UAE Free Zones, 22 of which are located in the Emirate of Dubai. 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 business in FTZ in the United Arab Emirates are:

• full tax exemption: no corporate and personal income taxes;
• simple registration procedure without time-consuming bureaucracy;
• no customs duties on goods manufactured or imported into the Emirates, low import duties;
• 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).

It is possible to register offshore or onshore companies in Free Trade Zones in the Emirates. The possibility of opening offshore company is available only in Jebel Ali Free Zone or Ras Al Khaimah Free Zone. Onshore company can be either a company or branch of a foreign company or an independent firm. Whereas the registration of independent firm in the UAE is possible with 1 shareholder / partner.

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.

• Checked / Updated: 07.25.2022
• Published on: 07.13.2014
• Author: Nina Hukov