Definition
A free zone company is a business entity established within a designated special economic zone that operates under its own regulatory authority, separate from the host country’s standard commercial jurisdiction. Free zone companies typically benefit from preferential tax treatment, full foreign ownership, streamlined incorporation, and simplified customs procedures, though they may face restrictions on trading directly within the domestic market.
UAE Context
The UAE hosts over 45 free zones across all seven emirates, each governed by an independent authority with its own licensing, incorporation, and compliance rules. Popular free zones include DMCC, JAFZA, DIFC, ADGM, Dubai Internet City, and SHAMS. Free zone companies enjoy zero or reduced corporate tax on qualifying income, 100 percent profit repatriation, and exemption from import and export duties within the zone. However, direct trade with the UAE mainland market typically requires a local distributor or service agent unless the company also holds a mainland licence.
Key Facts
| Item | Detail |
|---|---|
| Number of free zones | Over 45 across all seven emirates |
| Foreign ownership | 100% permitted |
| Tax treatment | Zero or reduced corporate tax on qualifying income |
| Customs benefits | Import/export duty exemptions within zone |
| Mainland trade | Restricted; requires distributor or dual licence |
Vision 2031 Relevance
Free zone companies remain a cornerstone of the UAE’s economic model under Vision 2031. Continued free zone expansion, inter-zone cooperation frameworks, and dual licensing initiatives are designed to maximize foreign investment inflows, support sector-specific innovation clusters, and strengthen the UAE’s role as a global trade and logistics gateway.