Classification Based on Business Activities Allowed

There are over 40 free zones in the UAE. Understanding the main features of various free economic zones will allow you to analyse the advantages of each of them and make the most practical decision at the stage of company registration. In light of this, in this chapter we will be comparing various free zones on the basis of business activities they offer to member-companies.

We came up with a classification, that will be easy to follow and to use, so we divided all free zones in the UAE into universal-type free zones (for example, UAQ FTZ, RAKEZ, DMCC, Dubai South), specialized (FCC, Dubai Media City, Dubai Silicon Oasis) and highly specialized (among them Dubai Health Care City, Dubai Knowledge Village, DIFC, ADGM, Dubai Design District).

Most of the free zones of the northern emirates are free zones of universal-type and they offer a broad range of commercial and consulting activities. The reason why most free zones in the northern emirates are of a universal-type is very straightforward. There are often only one, sometimes two and rarely three free zones in each emirate, therefore, where only one free zone is available, for example, in Ajman and Umm Al Quwain, most of the activities are allowed, both in trading and consulting sectors. You shall also bear in mind, that naming of business activities in different free zones may vary.

At the same time, in the northern Emirates, there are free zones, which have become specialized hubs for certain industries. For instance, in 2007, the Emirate of Fujairah established a Fujairah Creative City free zone, which became a media cluster that offered a professional environment for people and businesses working in a wide range of business areas, including media, events, consulting, education, communication and marketing, music and entertainment, design and technology. Fujairah Сreative City does not offer trading activities and registers only service companies.

However, do not allow the names of free zones to mislead you regarding their business orientation. For example, in 2017 in the emirate of Sharjah a new free zone Sharjah Media City was created. Appealing to the name of the free zone, it indicates that a new media cluster is being formed here. However, in practice, this is not quite so. In SHAMS, which is an abbreviation for Sharjah Media City, you can register businesses with a wide range of activities, including, companies engaged in retail and wholesale trade, as well as consulting.

Speaking of Dubai and Abu Dhabi, it should be noted that the clustering of the economy here is manifested to a greater extent. The creation of hubs contributes to the development of individual branches of the economy: manufacturing, logistics, trade, IT, education and others.

For example, in such free zones, as Dubai International Financial Centre (DIFC) and Abu Dhabi Global Merket (ADGM), you can get a license for banking, finance, insurance, asset management and more.

The largest industrial free zones would Jebel Ali Free Zone and Kizad.

The primary goal of creating a KIZAD free economic zone was to support the diversification of the production base of Abu Dhabi by the plans of Abu Dhabi "Economic Vision 2030". In this regard, KIZAD was to become a place of the attraction of large companies from key sectors of the economy that help to stimulate the growth of the industry. Such sectors of the economy include aluminum production, steel production, manufacturer of technical metal products, petrochemicals and chemicals, as well as pharmaceuticals and medical equipment.

Jebel Ali Free Zone is one of the oldest free zones in Dubai, specializing in trade. However, free zone went even further and entered into some contractual agreements with outside organizations, which allowed to create hubs behind the fence of the free zone. So, within the framework of cooperation with the developer of Emaar Properties PLSC, Gold & Diamond Park was established. Through creating this synergy, all privileges were granted to Gold and Diamond Park. In particular, business owners are allowed to hold 100% ownership of the company. Today Gold & Diamond Park is home to companies involved in precious metals, jewellery and watches trading.

Dubai Dragon Mart, the largest wholesale market in Dubai, also operates according to the same scheme.

The practice of building shopping centres in the UAE on the territory of the free zone is becoming increasingly popular. The first such example was the Textile Mall. Textile Mall is designed taking into account the interests of business owners. The shopping centre is equipped with all the facilities necessary for conducting trade, including customs, logistical and management support.

Speaking of Dubai, one can not but recall the TECOM GROUP (formerly known as TECOM Investments), which is a strategic factor contributing to the realization of Dubai's economic aspirations, through the creation of sectoral business communities and creating the environment of innovative ecosystems. Within the TECOM GROUP, there are 11 specialised economic zones, among them Dubai Design District, Dubai Media City, Dubai Internet City, Dubai Healthcare City and others.

Dubai Wholesale City, is also a part of the TECOM group. It is a global fully integrated wholesale trade centre with an area of more than 550 million sq. m. Dubai Wholesale City was created to become the main universal store for traders, serving all the needs of wholesalers.

In general, when you decide, which free zone to choose for your specific type of business, you will have a choice. But you will need to think through thoroughly and compare the benefit of being located in a specialized free zone vs. in a universal one. For example, if you are working in an IT sector and moving forward you will need to create synergies with other tech start-ups, such highly specialized free zones as Dubai Internet City or Dubai Silicon Oasis can be preferred. However, if you are a pretty much established brand, you will not require any synergies and you do not necessarily need to be based in an IT hub but rather be based in a convenient location with a well-developed infrastructure, you may well consider universal type free zones. In any even, the final decision will be yours.

If you want to know more about Dubai freezone company formation, feel free to get in touch with our professional consultant team and we would be delighted to assist you and help you to compare Dubai freezone company setup costs and help you to find that free zone, which would suit your business needs the most.

Disclaimer: Business Boutique UAE-Consultants.com is not affiliated with any particular government or legal entity. Business Boutique does not give professional legal advice nor any other professional advice subject to a public office in the government. This article merely sets out a simple and basic idea as to the reasons of Dubai freezone company setup and Dubai free zone company formation cost. Business Boutique in no way holds nor imposes any official governmental or legal authority and the article herein is only to be taken as a guide. All further governmental or legal issues should be addressed to the corresponding authorities.

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