What are the Free Economic Zones in the UAE, and why are they needed?

What are the Free Economic Zones in the UAE, and why are they needed?

It is known that the main source of success for the UAE in the international market is oil production. Revenues from this type of activity exceed all others. However, the main pitfall is that this resource is exhaustible, and oil and gas reserves are irreplaceable in the shortest possible time. The government of the United Arab Emirates in the distant 80s began to introduce a diversification approach to the economy. It was decided to use foreign investment as one of the main components of capital for diversification. Today, direct investments are in second place in terms of the amount of the country's income.

The main goal facing the government was to get rid of oil dependence. For this, Free Economic Zones were created. The first FEZ Jebel Ali originated in 1985. Over the years, more than 30 Economic Zones have been created in the entire UAE. There are 22 Free Economic Zones located in the Emirate of Dubai. It is noteworthy that each FEZ was not created for all types of activities, but only for certain ones, and has its pros and cons for businessmen who decided to develop their business and register a company there.

The main advantages of FEZ in the UAE, which is stimulating an increasing number of businessmen to open a business in the Emirates, are:

    • tax exemption: you will not pay corporate and income taxes;

    • simplicity of the company registration process;

    • exemption from tax on import and export of goods;

    • foreign investors can 100% own a business;

    • relatively cheap labor and low wages;

    • stability in the economic and political sphere;

    • constantly evolving infrastructure;

    • you can freely export any currency from the UAE.

In the FEZ of the Emirates, the opening of offshore or onshore companies is allowed. You can register an offshore only in the Jebel Ali Zone or in the SEZ of Ras Al Khaimah. An onshore company may be either a representative office of a foreign company or an independent company. Registration of an independent company in the UAE is possible with 1 shareholder / partner.

Free Economic Zones are attracting more and more foreign investors. It is very good for the economy as a whole. Today, the UAE can be called a leader in attractiveness for investing in business.