Free Trade Zone Entity in UAE | A Comprehensive Guide

Overview

There are more than 40 multi-disciplinary free zones in UAE where foreigners and investors can get 100% ownership of the companies. Setting up a business in a Free Trade Zone holds a lot of benefits for the owner, they can get 100% reimbursement of capital spent on the setup, supportive infrastructure, easy access to regional & global markets, and more. Continue reading to get a clear understanding of the costings, tax implications, and bank accounting opening and the duration taken to set up the business.

Can a foreigner set up a Free Trade Zone entity in UAE for global payments for services and products?

Yes, a foreigner can set up a Free Trade Zone (FTZ) entity in the UAE to manage payments and conduct global business activities. FTZ entities allow for 100% foreign ownership and are designed to support businesses operating internationally. While there are a few restrictions in free zones as well – products, goods, and services that involve exporting, storing, and transporting materials like – Flammable, radioactive materials, Weapons, ammunitions and explosives, and narcotics and derivatives are prohibited and punishable by the Unified Customs Law of the GCC countries. 

What are the setup and recurring costs for a UAE FTZ entity?

The cost of setting up a business in a Free Zone depends on the type of business license – service, trading, or industrial. Several Free Zones offer affordable setup options. For example, RAKEZ (Ras Al Khaimah Economic Zone) in Ras Al Khaimah is the most cost-effective option, with setup prices starting from 12,000 AED. This includes a one-year business license, lease agreement, MOA, certificate of incorporation, immigration file, E-channel registration, one medical test, and one Emirates ID.

Other Free Zones that offer similar packages at competitive prices include SHAMS (Sharjah Media City), SPCFZ (Sharjah Publishing City Free Zone) in Sharjah, Ajman Free Zone, and IFZA and Meydan Free Zones in Dubai. Many other Free Zones also offer attractive setup deals depending on your specific business needs.

The Recurring Costs depend on different free zones which include the license Renewal and visa fees. Annual renewal fees are applicable, varying by Free Zone and license type. Employee visas include yearly fees, medical fitness certificates, residency stamps, identity card fees, and visa processing fees.

What is the minimum time required for setting up the FTZ entity?

The setup process for a Free Zone entity typically takes around 1 month. The business license is usually issued within 5-6 working days, followed by the immigration card, which takes approximately 2-3 days. The remaining steps – entry permit, medical examination, biometrics, and Emirates ID—require an additional 15-20 days. For the medical, biometrics, and Emirates ID procedures, the individual will need to visit the UAE at least once to complete the required formalities.

What are the tax implications for the remittances & receipts in the Bank account of UAE? 

The UAE provides a highly tax-friendly environment with 0% personal income tax, 5% Value Added Tax (VAT), and 9% Corporate Tax only on annual profits above AED 375,000, while profits below this amount are taxed at 0%. Remittances from outside the UAE (for both individuals and businesses) are not taxed at the point of receipt.

To avoid paying taxes in their home countries, individuals and businesses can apply for a Domestic Tax Residency Certificate (DTRC). This certificate is available to individuals who stay in the UAE for 183 days or more in a year and businesses that operate in the UAE with proper documentation. A DTRC allows access to Double Taxation Avoidance Agreements (DTAA), helping reduce taxes in home countries.

Can a non-resident open a bank account online in UAE or is physical presence required?

To open a bank account in the UAE, the individual’s presence is required to complete the necessary formalities. However, a digital bank account can be opened remotely. If the individual is visiting the UAE to complete the Emirates ID process, they can also take the opportunity to open a bank account during their visit.

Arnifi – As Your Trusted Partner

Hope things are clear! Setting up a business in a UAE Free Trade Zone offers a world of opportunities for entrepreneurs and investors seeking to expand globally. With 100% foreign ownership, tax advantages, streamlined processes, and access to global markets, the UAE stands out as a business hub. Whether you’re considering the cost-effective options in Ras Al Khaimah or the strategic location of Dubai Free Zones, there’s a solution for every business need. Reach out to experts at Arnifi to ensure a seamless journey in making your UAE business vision a reality.

Also Read: Withholding Tax Regulations in UAE