The UAE is reknown as a global and regional business hub that offers fast and efficient access to markets, world-class infrasticture and benign tax environment to operate a business. A key driver in creating the country’s economic growth are UAE Free Zones. They have played a key role in promoting this favorable business environment through offering 100% ownership, reputable governance, tax free exemptions and a wide ecosystem to support key sectors from international trading, crypto mining to e-commerce companies. Operating a Free Zone is a good option for many businesses. With over 40+ free zones across the UAE, the options are broad. All have specific benefits and legislative options such as legal and labor rules. Nevertheless all free zones fall under key elements under the Federal Law and nderstanding the tax-free exemption rules and managing compliance effectively is crucial for businesses operating in UAE zones. Overview of UAE Free Zones UAE Free Zones are special economic regions separately governed from mainlain UAE rules designed to attract foreign investment by offering favorable business conditions. There are over 40 Free Zones across the UAE, each catering to different industries, including technology, finance, media, and logistics. Each offers governance and legislative provisions to operate a specialised business. However they are subject to the same rules under the Federal Laws governing both VAT (introduced in 2018) and Corporate Income Tax (introduced in 2022). Tax-Free Exemption Rules One of the most appealing aspects of UAE Free Zones are the tax benefits they offer. These include: 1. Corporate Tax Exemption: Until the introduction of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (CT) Law has been published as of 9 December 2022, all businesses operating within Free Zones were exempt from corporate taxes for a specified period (dependent on Free Zones), typically ranging from 15 to 50 years, with the possibility of renewal. 2. Personal Income Tax Exemption: As with all UAE derived personal salary income, employees working in Free Zones are not subject to personal income taxes. 3. VAT Exemption: Goods imported and exported from Free Zones are exempt from VAT, facilitating trade and reducing costs for businesses. Not all Free Zones are eligible and the applicable Free Zones are defined “Designated Free Zones”. 4. 100% Foreign Ownership: Unlike the mainland UAE, where foreign ownership is often limited to 49% for specific types of activities, Free Zones allow 100% foreign ownership, giving investors complete control over their businesses.