Meydan free zone is a solid attraction for international investors and firms looking to do business in the UAE. But what precisely are they, and what advantages can they offer?
Until the introduction of the Foreign Direct Investment Law in late 2018, there was a government requirement for at least 51 per cent of a firm’s shares to be owned by a UAE person. Consequently, Meydan free zone were developed to entice international enterprises to the area desiring complete control of their operation.
What is a free zone?
Free zones are physically delimited regions inside the UAE (even though most of them are not walled or gated), enabling 100 percent foreign ownership and are, in most instances, allocated to a particular sector. They were created to promote strategic change in major sectors (e.g. banking), and many are developed with public money and feature state-of-the-art amenities.
For instance, the Dubai Media City – a free zone in the emirate of Dubai – includes infrastructure and licencing geared to the demands of the media business. Similarly, the Dubai Worldwide Financial Centre (DIFC – see below) draws enterprises in the financial services industry, attracting insurance, financial services, investment firms, and banks aiming to extend their international client base.
Accordingly, each Meydan free zone has specialised standards involving minimum capital needs, office or warehouse space and authorised operations, with each holding the required permits and applicable regulations to enable its technical business to grow.
Benefits of free zones
With more than 50 distinct free zones around the UAE and many more under construction, free zones have helped make the UAE an appealing alternative for international enterprises wishing to move or extend their worldwide presence. The typical advantages of conducting business in a UAE free zone include:
- Access to world-class logistic facilities
- Availability of a broad pool of multicultural, talented professionals
Benefits from economies of concentration (given the zones allocated to industry) (given the zones dedicated to industries)
Ease of hiring overseas staff, with all free zones offering one-stop-shop services for work visas
Tax breaks – generally guaranteed for 15 or 50 years
100 percent import and export tax exemption
100 percent repatriation of capital and earnings
Qualification for the UAE Tax Residency Certificate
Setting up a business in a Meydan free zone benefits business owners because they have complete control over business decisions about their company. These zones are designated areas in a country where foreign businesses are governed not by local trade laws but by the World Federation of Free Zones. The local government will still have rules and restrictions inside these free zones, but they will be less stringent than for enterprises outside of the free zones. This also implies that firms inside the free zones are not bound by local trade barriers, tariffs, or quotas and that company owners will not have to pay Local Corporation or personal taxes during the first fifty years of the agreement.