COMPANY FORMATION IN HAMRIYAH FREE ZONE (HFZA)

Hamriyah Free Zone Authority (HFZA)

Hamriyah Free Zone Authority was established by an Emiri decree issued on November 12, 1995. It is located in Sharjah, the United Arab Emirates, which gives the free zone a unique geographic and time zone advantage backed by a secure and fully convertible currency and a multi-access to neighbouring and global countries through land, sea and air. Hamriyah Free Zone is fast becoming one of the cornerstones of the United Arab Emirates industrial development. As the Next Generation Free Zone, Hamriyah Free Zone is ensuring that its management is flexible and dynamic besides being an investor-oriented free zone.

Advantages of Registering a Company in Hamriyah Free Zone :

• Access to 14-meter deep water port and 7-meter deep inner harbour;
• Land lease for 25 years renewed for a similar period;
• Pre-built warehouses, factories and office units for lease;
• Executive office suites in the International Business Center for lease;
• On-site accommodation for investors’ personnel including recreation centre and health club;
• Transportation via road, 3 seaports and Sharjah International airport;
• Highly developed infrastructure and telecommunications links;
• Abundant and inexpensive energy (Electricity: $0.05 per KWA, Water: $8.17 per 1000 Gallons);
• Liberty for personnel recruitment and economical workforce;
• Affordable cost of living.

Type of business licenses in Hamriyah Free Zone:

1. Industrial License: This license will allow the holder to import raw materials for the purpose of manufacturing, processing and/or assembly of specified products. The finished products may be exported outside the UAE. If the finished products are sold in the UAE market then the License holder will need to do this through a local distributor or a local agent.
2. Commercial License: This license will allow the holder to import, export, sell, distribute and store items specified on the license. If the finished products are sold in the UAE market then the License holder will need to do this through a local distributor or a local agent.
3. Service License: This license allows the holder to carry out the services which are specified on the license within the Hamriyah Free Zone only.

Business Benefits in Setting up a Company in Hamryiah Free Zone:

• 100% Foreign company ownership is allowed
• 100% Import and Export tax exemption
• 100% Exemption from all commercial levies
• 100% Repatriation of capital and profits allowed
• 25 year leases available, renewable for a further 25 years
• No corporate profits tax No personal income tax
• Strategic location to access global markets
• Access to the UAE and GCC markets
• Attractive investment incentives
• Abundant and inexpensive energy
• Developed infrastructure
• Land for lease for investor development
• Purpose-built office accommodation, warehousing and factory units
• Three seaports and international airport
• Favourable low-cost living conditions
• Low labour costs

Value Added Tax (VAT):

Value Added Tax (VAT) has been introduced across the UAE on 1 January 2018 at a standard rate of 5%.

Who should register for VAT?

A business whether situated in designated zone or non-designated zone or outside free zone should register for VAT if the taxable supplies and imports exceed the mandatory registration threshold of AED 375,000 within preceding 12 months or it is anticipated that the total value of taxable supplies exceeds AED 375,000 in the next thirty 30 days. Upon registration, a tax registration number (TRN) would be issued to business by the Federal Tax Authority.

What is a designated zone?

A Designated zone is a specified fenced geographical area having security measures and customs controls in place to monitor entry and exit of individuals and the movement of goods to and from the area. Following free zones are declared as designated zones.

a. Free Trade Zone of Khalifa Port
b. Abu Dhabi Airport Free Zone
c. Khalifa Industrial Zone
d. Jebel Ali Free Zone (North-South)
e. Dubai Cars and Automative Zone (DUCAMZ)
f. Dubai Textile City
g. Free Zone Area in Al Quoz
h. Free Zone Area in Al Qusais
i. Dubai Aviation City
j. Dubai Airport Free Zone
k. Hamriyah Free Zone
l. Sharjah Airport International Free Zone
m. Ajman Free Zone
n. Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
o. Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road
p. RAK Free Trade Zone
q. RAK Maritime City Free Zone
r. RAK Airport Free Zone
s. Fujairah Free Zone
t. FOIZ (Fujairah Oil Industry Zone)

What is a non-designated zone?

Any free zone which is not declared as designated zone is a non-designated zone. In other words a non – designated zone is any geographical area within UAE which does not have any security measures and custom controls in place to monitor entry and exit of goods and individuals. Eg. DMCC, Dubai Media city, DIFC and Dubai Internet city.

What transactions are subject to VAT within Designated zones?

a) Goods transferred between designated zones shall not be subject to VAT. However goods supplied by an entity in the designated zone to entities outside the designated zone are subject to 5% VAT.
b) Services provided by an entity to other entities inside the designated zone or outside the designated
zone are subject to 5% VAT.
c) Professional fees for services are subject to VAT @ 5%.

What government/free zone fees (License/Visa/rent) are subject to VAT?

In case of designated zones the trade license fees, visa fees, lease rentals will not be subject to VAT. And in case of non-designated zones the trade license fees and visa fees are not subject to vat however rent is subject to 5% VAT.