The new savior for businesses.
UAE Free Zones have become the knight in shining armor saving the region’s economy from COVID-19 consequences on SME’s. This industry has mastered merging digitization strategies to further attract more foreign businesses during the peak of the pandemic.
Contributing Editor, Reefaya Noortaj elaborates on how UAE freezones are supporting businesses in the region.
As we enter another year of the pandemic with the global economy in shambles, miraculously UAE sees a 4.4% rise in free zone companies, mostly based in Dubai and Abu Dhabi. Nearly 60,600 companies were registered to start from the mid of February as stated by UAE’s National Economic Register. So, what is driving this surge of positive business continuity by the UAE Free Zone companies? Disaster recovery schemes were implemented by the UAE to attract foreign businesses to operate throughout the nation despite the global economic slope. UAE Free Zones climbs the profit ladder as it redesigns its business for entrepreneurs and foreign investors to move their concept forward in the country, where it is onshore or offshore. To expand on some of the benefits for companies of joining a free zone in the UAE ranges from 100% ownership without the aid of UAE sponsor, exemption from personal income tax and capital gain tax, minimal import or export duties, and lastly 0% corporate tax.
With free zones constantly pushing innovative strategies to strengthen the ecosystems for small-to-medium enterprises (SMEs), new businesses are offered lower fees and customized packages in a tentative present economy. This includes an increased number of new registrations with the technology-focused sectors seeing the highest purchase. For example, Umm Al Quwain Free Trade Zone introduced the Business LYTE packages for entrepreneurs to overcome the consequences of the pandemic. The package offers up to 50% off, which helped potential investors to continue their business ventures in the UAE. It is no secret that digital and technology-focused industries are the leading industry and rose above the pandemic, particularly e-commerce and other digital platforms contributing an enormous boost to the country’s digitization project.
Aside from being physically present at any registered free zone sight, at Sharjah Media City entrepreneurs can easily dive into the world of business from the comfort of their homes. This highlights the rising success of both valuable free zone packages by the UAE and the thriving promise of digitization that paves a smoother future for onshore and offshore companies. As of September 2020, the UAE was ranked the region’s most competitive digital economy and 12th place in an annual World Digital Competitiveness Ranking by IMD Business School. Free zones firms swiftly took the authority to revolutionize this industry as a digital-first approach.
A lax tax scheme in the UAE is highly attractive for onshore and offshore investors taking up space in multiple free zones spanning across the country, meaning it not expensive to start a SME or any business venture within the UAE. Foreign trade located outside of Dubai free zone’s alone rose to DHS592 billion in 2019 totaling DHS592.4 billion in value across the UAE. Free zones schemes are the evident economic growth, becoming the ultimate driving force to set up business ensuring flexibility, cost-effectiveness and smooth customer services to another game.
About The Editor
Born in Bangladesh and raised in the Middle East, UAE and Bahrain, Reefaya is a postgraduate from The London School of Economics in U.K. and an undergraduate from Sussex University. Having her life spent six years in England discovering the roles of International Development in various corporate fields, Reefaya joined Harper’s Bazaar Arabia (Interiors and Art division) as a Junior Assistant Editor in hopes to incorporate the influence of sustainable development in the fashion world. With an immense love for sustainable fashion, social development, and art Reefaya has additionally written multiple digital articles for HELLO! Middle East, Grazia Middle East, and AHLAN focusing on these topics.