Legal counsel for companies operating in UAE free zones.

DIFC (Dubai International Financial Centre) and ADGM (Abu Dhabi Global Market) are financial free zones with their own common-law legal systems, courts, and regulations modelled on English law. Companies incorporated in DIFC and ADGM are governed by English-law-influenced company law and can access the DIFC Courts and ADGM Courts — full-service commercial courts with English-language proceedings and internationally enforceable judgments. By contrast, JAFZA (Jebel Ali), DMCC (Dubai Multi Commodities Centre), Dubai South, and other commodity/logistics/trade free zones are regulated by UAE federal and emirate-level law, and disputes typically go to the onshore Dubai or Abu Dhabi courts (or to arbitration). The choice of free zone affects your legal forum, applicable employment law, and contractual risk profile significantly.

Employment law in UAE free zones depends on the free zone: DIFC companies are governed by DIFC Employment Law 2019 (as amended), which is closer to a common-law employment regime and includes explicit wrongful dismissal claims and statutory notice periods. ADGM companies are governed by ADGM Employment Regulations 2019. All other free zones — JAFZA, DMCC, Dubai South, RAK ICC, etc. — are governed by UAE Federal Labour Law (FDL 33/2021 as amended), exactly as onshore companies are, with the MOHRE dispute resolution process available. End-of-service gratuity, annual leave, and maternity/paternity provisions under FDL 33/2021 apply in full to non-DIFC/ADGM free zone employees. We advise on both regimes and manage employment disputes across all UAE free zones.

UAE Corporate Tax (Federal Decree-Law 47/2022) applies from the company's first financial year starting on or after 1 June 2023. Free zone companies can elect Qualifying Free Zone Person (QFZP) status, entitling them to a 0% rate on Qualifying Income. However, QFZP status is forfeited for the entire tax period (and the following 5 periods) if: (i) the company fails the substance requirements in Ministerial Decision 139/2023; (ii) it earns income from non-qualifying domestic UAE sources (e.g., onshore UAE real estate); or (iii) the 9% rate applies to non-qualifying income and its total revenue exceeds AED 3M (de minimis). Structuring revenue flows correctly — particularly for mixed free-zone/onshore operations — is essential before the first filing.

Yes, but the rules differ by free zone and by activity. Most free zones permit free zone companies to sell goods or services to onshore UAE customers, subject to customs duty on goods entering onshore UAE. However, conducting business activities onshore (i.e., having a physical presence, staff or operations outside the free zone) without a mainland licence or distributor is prohibited and can attract regulatory action. For UAE Corporate Tax purposes, providing services to mainland UAE customers can constitute non-qualifying income, risking QFZP status. Many free zone companies establish a mainland branch or subsidiary to handle onshore activity, keeping the free zone entity for international and free-zone activity. We advise on structuring onshore/free-zone operations correctly.

DIFC Courts have jurisdiction over: (i) disputes where both parties are DIFC-registered entities; (ii) disputes where the contract expressly selects DIFC Courts jurisdiction; (iii) civil and commercial matters where the claim value exceeds USD 100,000 and there is some connection with DIFC. ADGM Courts have equivalent jurisdiction within Abu Dhabi Global Market. Both courts issue common-law judgments enforceable internationally and have Memoranda of Understanding for reciprocal enforcement with various jurisdictions including England & Wales, Singapore, and several GCC states. Importantly, DIFC Courts now serve as an enforcement gateway for foreign judgments into the UAE — a foreign judgment can be recognised in DIFC Courts and then enforced against onshore UAE assets via the DIFC-Dubai Courts Joint Judicial Committee. We litigate in both DIFC and ADGM Courts.