Rents in economic free zones may drop in response to proposed legislation that would relax foreign ownership requirements elsewhere in the country. Free zones across the UAE have proved to be an effective tool in attracting foreign companies, which have been drawn by the promise of tax breaks and 100% ownership of businesses they establish.

At the moment, foreign firms setting up outside these zones must have an Emirati as a sponsor and are limited to a maximum 49% ownership of their businesses. Because free zones  shed those requirements, commercial rents there have traditionally been higher than elsewhere in the country and have not fallen as much as average rents in the wake of the financial downturn.

But the free zones’ special status could be threatened by new laws under consideration which could extend the 100% foreign ownership allowance to the entire UAE. But free zones were still  likely to command higher rents than elsewhere because of easier procedures on administration issues such as visas and licensing and the “cluster effect” benefit for firms from being located next to similar companies within the same industry.

What Kind of Licenses will be issued in Free Zones?

All businesses who wish to set up in any Dubai Free Zone will have to lease either office premises or land and acquire a business/trade license from the respective Free Zone Authority (regulated by law). Dubai Free Zones do not allow to rent office/warehouse space outside their boundaries (except: If no space is available at the time of registration some of the Free Zones issue a temporary license to rent space outside until space will be available inside the Free Zone).

Strictly speaking companies with trade and industrial licenses can only conduct business within the Free Zone or abroad. To sell their products in the UAE, a UAE service agent is required by law. For service based businesses no agent is required. All new entities such as FZE or FZC (also FZCO or FZ-LLC) have to show share capital upon registration ranging from AED 50,000 to AED 1,000.000 depending on the Free Zone requirements and the structure of the company.

All licenses are valid for 1 year and need to be renewed  prior to expiry.

A number of free zones have lowered their fees to be even more attractive to international investors!

INFO
For enquiries on setting up in any Free Zone, pls. contact info@dubai-business-service.com indicating business activity and how many visa needed.

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