There are several differences between a mainland and a free zone. The main differences lie in the nature of ownership, extent of liability, involvement of UAE nationals as partners or agents and nature of trade and economic benefits that can be reaped.
If you do not wish to partner with a UAE national or you do not know any UAE national to partner with, you can set up a business in a free zone. Free zone offers 100 per cent foreign ownership of the enterprise.
What is a free zone?
According to the website of Dubai Multi Commodities Centre, a free zone or free trade zone or free economic zone, is a designated geographical area where certain taxes or restrictions on business, employment or trade do not apply in the same manner that they apply to the country in which the zone is located.
In a free zone, goods may be landed, handled, manufactured, reconfigured or re-exported without the intervention of the customs authorities. Only when the goods are moved to consumers within the country in which the zone is located do they become subject to the prevailing customs duties.
A free zone is often organised around major seaports, international airports, and national frontiers – areas with many geographic advantages for trade.
Benefits of setting up a company in a free zone
Some of the other benefits of setting up a business in the free zone include:
- 100 per cent import and export tax exemptions
- 100 per cent repatriation of capital and profits
- No corporate tax
- No personal income tax
- No import/export tax
- Easy start-up and licensing procedures
Benefits could vary with respective free zone authorities.