The UAE has always been a very lucrative destination for entrepreneurs from all over the world. The pro-business taxation regime, a strategic location at the heart of the Middle East, enhanced connectivity to markets, and adequate infrastructure drive up the appeal of the country’s business ecosystem. The predictable and progressive policy environment and a government committed to promoting and supporting businesses add to this appeal. Free zones are another major reason why so many entrepreneurs flock to the UAE to start their businesses. Considering the advantages and perks of starting a company in a free zone, it is easy to see why.
What are Free Zones?
Also known as the free trade zones, free zones are special economic zones where businesses can trade goods and services at preferential tax and customs rates. Free zones have their tax rates, customs, and import regimes and are governed by their framework of trade regulations. This autonomy insulates them from the policy bottlenecks of the UAE’s traditional system of trade laws.
Rolled out to boost international business and startup activities in the country, the UAE’s free zones have evolved to offer a wide range of lucrative advantages to businesses.
How SMEs Can Benefit from Free Zones
Free zones are well-equipped to address some of the fundamental issues faced by small and medium enterprises, including administrative and financial bottlenecks, concerns about setting up the company and executive offices, taxes, etc. Here are some of the advantages offered by free zones.
One of the first hurdles faced by small and medium enterprises is the difficulty in establishing the company. The process of setting up a company in a free zone is extremely straightforward and transparent. The specific steps depend on the free zone and the kind of business that you want to start. But in general, the entire process involves submitting basic documents and minimal paperwork and takes as little as a week or two. Establishing newer office spaces like virtual offices, collaborative office spaces, remote workspaces, etc., is also exceptionally easy and streamlined in the free zones.
SME-friendly Taxes and Duties
The complicated and high taxation regimes constitute a major obstacle for small companies looking to establish and grow. Setting up companies in free zones comes with an array of benefits in taxation. Most free zones offer 0% corporate and personal income taxes, and businesses in free zones are also exempt from various traditional taxes like VAT. Companies established in the business centres in Dubai and other free zones also enjoy zero import and export duties and trade without being encumbered by currency restrictions.
Favourable ecosystems offer new companies an impressive degree of support and guidance. Not only are the free zone authorities extremely beneficial and approachable for advice, but the networking potential that exists within the zones can also be taken advantage of by young businesses looking for opportunities to grow. The government also provides incentives to the startup and SME communities, giving a massive boost to the thriving SME ecosystem.
A series of business-friendly reforms in policies has enabled companies in the free zones to grow faster and network better. Healthy stimulus packages and government-led funding opportunities are also helpful in addressing the early-stage financial bottlenecks that new companies and SMEs often face. Free zones are also very popular among privacy-conscious entrepreneurs due to their non-requirement of open directories and non-disclosure of company and shareholder information to the public.
By offering business-friendly, flexible, and vibrant ecosystems filled with opportunities, the ease of doing business in the country is significantly enhanced by free zones. The perks and benefits of starting businesses in free zones are unmatched, and they help new businesses and SMEs accelerate and streamline their growth at an incredible pace.