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Sun 3 May 2015 10:04 AM

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Sarvesh asks: about setting up his business in one of Dubai’s free zones

Dear Mr. Jafar, I have my own company in a free zone here in Dubai, UAE. I have a few questions: 1. Is there any issue with having contracts and doing business with UAE-based companies? 2. Is it possible for me to hire people to work on projects in the UAE? Thanks and regards, Sarvesh G. Khanapurkar Co-Founder and Director, AMV Software Consultants

Dear Sarvesh,


Thank you for your question.


You touch on an area that does tend to create confusion as the type of free zones you’re referring to are relatively new and governed by local rather than federal laws.


Traditionally, free zones such as Jebel Ali Free Zone were meant for doing business exclusively inside of them and with the rest of the world. They would be treated as separate geographic jurisdictions and hence anything going in and out would have to pass through customs.


The more recent free zones such as Dubai Media City, Dubai Internet City, Knowledge Village, DIFC, Healthcare City etc., which I’m assuming your business is registered in, were setup primarily to house service providers.


In that respect, there technically shouldn’t be any issues with providing services to and doing business with UAE-based companies just as any foreign company would. It is with the transfer of goods that the complication arises since these are “open” free zones that are not closed off the same way Jebel-Ali Free Zone is.


That being said, providing services to UAE based companies would be subject to the same conditions applied to any foreign company. For example, some government entities may stipulate that suppliers providing services to them are required to be locally registered in the emirate in which the service is provided. This, however, would be project-specific rather than a law.


With regards to hiring people, as I understand it you can hire people to work on projects in the UAE. They would go through similar immigration and labour department processes as any UAE-based company employee, and would have more or less the same rules that apply to them.


One thing to keep in mind is that due to the young nature of free zones in the UAE, and the UAE as a whole for that matter, it is very important to keep up to date with the changing regulatory landscape by continuously checking with the relevant authorities and/or legal advisers on such changes.


For example, the government just announced that a new UAE Commercial Companies Law has been issued on April 1st, and will come into force three months from the date of publication in the Federal Official Gazette, which is likely to positively impact the economy and clarify matters to foreign investors and entrepreneurs.