Ras Al Khaimah emirate is one of the most prominent industrial emirates in the UAE. It is responsible for 26% of the UAE gross domestic product. In order to attract foreign investors, Ras Al Khaimah emirate established a special geographic-economic area, namely, Ras Al Khaimah Free Trade Zone (RAK FTZ). The free zone hosts 8.600 businesses in over 50 sectors. Advantages offered by RAK FTZ include: (1) a strategic geographic location which connects Asian, African, and European markets; (2) a timely and efficient business set up procedure based on one-stop-shop approach; (3) a tax free environment; (4) permission for 100% foreign ownership; and (5) availability of a wide variety of business support services in the fields of recruitment, corporate materials, and translation. Moreover, RAK FTZ maintains four free zone parks offering tailored business solutions to prospective investors in specific sectors, namely, (1) a business park including offices for rent, (2) an industrial park for companies engaged in industrial and heavy manufacturing, (3) a technology park that offers facilities for trading companies and light manufacturers, and (4) an academic zone designed for educational institutions.
What activities? RAK FTZ is not designed for a specific business sector. Therefore, a wide variety of activities can be carried out within RAK FTZ, except for trading of certain chemicals that may cause environmental and health safety issues. In order to operate in the zone, companies have to obtain a business license. RAK FTZ authorities issue four types of licenses, namely, a commercial license, a consultancy license, industrial license, and educational license. Companies that engage in import, export, warehousing, and distribution of goods should obtain a commercial license. Companies providing consultancy services need to obtain a consultancy license. Companies engaged in manufacturing and processing of products must obtain an industrial license. Educational institutions need to obtain an educational license in order to conduct activities in RAK FTZ. The licenses issued by RAK FTZ are valid only within the area of RAK FTZ.
What types of companies? For establishing in RAK FTZ, entrepreneurs can register four types of legal entities. A new company can be set up either as (1) a Free Zone Establishment (FZE) with a single shareholder or (2) a Free Zone Company (FZC) with 2-5 shareholders. The minimum capital requirement for FZE and FZC is AED 100.000 (about EUR 24.000). Two types of branches are also available in RAK FTZ, namely, a branch of a local UAE parent company and a branch of a foreign parent company. For registering a branch, there is no minimum share capital requirement. However, the parent companies of such branches should be active for at least a time period of 1 year.
Offshore companies in RAK FTZ. The legislation of RAK FTZ also permits formation of offshore companies within the zone. The offshore companies should appoint special agents registered with RAK International Companies Registrar. The offshore companies are allowed to conduct any lawful business activities and enjoy favorable free zone regime that includes reduced tax liability, permission for 100% foreign ownership, asset protection, and other benefits.
However, a number of restrictions apply to offshore companies. To begin with, offshore companies are not allowed to conduct business neither in RAK FTZ nor within the UAE. Hence, all activities of such companies should be carried abroad. Furthermore, offshore companies are prohibited from conducting business with UAE residents and engaging in banking, financial, and insurance activities. Offshore companies operating within the area of RAK FTZ are restricted to conducting the following activities in RAK FTZ: (1) using services of UAE accountants, consultants, and similar specialists, (2) maintaining company’s records; (3) hosting meetings for company’s directors and members; (4) maintaining a bank account; and (5) owning the rights to immovable property in RAK designated areas.
How to register a company? RAK FTZ uses one-stop-shop approach for setting up companies, which ensures that the entire registration procedure can be performed in a timely and efficient manner. Firstly, the founders of a prospective company have to choose an appropriate business form, an applicable license, and desired business facilities. Afterwards, an initial application form along with the required documents has to be submitted to RAK FTZ authorities. If such application form is approved, the founders are permitted to proceed with paying applicable registration fees. The final procedural step relates to issuing registration certificate and the applicable business license.