Neil Petch said he believes a large number of foreign companies will still seek to set up shop in the UAE's free zones
The UAE’s free zones will continue to thrive despite new rules that will allow 100 percent foreign ownership of companies without a local partner throughout the country, according to the chairman of UAE-based business setup consultants Virtuzone.
Neil Petch, Virtuzone chairman, said the move is similar to the establishment of free zones in the 1980s in that it “filled the business community with confidence”.
“However, the role of free zones, now numbering over 50 in the UAE, is here to stay,” he added. “Each FZ has a sweet spot and specific segment to target and serve, but they share a low cost, light touch, low tax make-up that particularly suits start-ups.”
Petch added that the changes to onshore companies “will serve more as an obvious means for smaller companies now growing into larger ones, than as a competitor to the start-ups being incubated in the UAE’s low tax environment".
“For every company that evolves from free zones to onshore, expect five or ten to come from Europe, Asia, or the States, as the realise that the UAE’s low tax environment represents a far better choice than previous favourites Cyprus, Malta, Singapore, Hong Kong and Monaco, to name but a few,” he said.
Petch added that he hopes to see “a soft launch” of the new rules to avoid backlogs or delays due to high demand.
“We should expect a soft launch, category or activity-based, perhaps with the largest companies, and thus foreign direct investments, rightly prioritised,” he said.