Dubai has been spearheading the development of contemporary free zones since Jebel Ali Free Zone (Jafza) started its operations in 1985. Today, the emirate is home to dozens of free zones hosting thousands of companies. They are all closely following the latest regulatory developments that shift the balance between operating within a free zone and operating in the mainland. Mohammed Al Zarooni, the head of the Dubai Integrated Economic Zones authority (Diez), which has responsibility over three local zones  — Dubai Airport Freezone (DAFZ), Dubai Silicon Oasis (DSO) and Dubai CommerCity (DCC) — and one of the key figures in the local free zones movement, sits down with fDi to reflect on the impact of these changes. 

Q: What’s your reaction to the UAE’s government decision to introduce a 9% corporate tax rate which, in certain circumstances, applies to companies within free zones too? 

A: The government’s decision didn’t have a negative impact on the free zones. We still don’t have corporate tax within free zones, except for those companies that are dealing with the mainland — the new regulation introduced the concept of qualifying income, which remains tax-free. 

Q: In this context of evolving regulatory framework ,and growing domestic and regional competition, how can Dubai’s free zones stay relevant? 

A: As the border between the free zones and the mainland becomes thinner, free zones can develop further by focusing on innovation and new technologies. Worldwide, free zones continue to be successful for the incentives they offer, as well as their one-stop-shop set-up, which makes them competitive over the mainland. For example, when the UAE government extended the possibility for foreign businesses to fully own a local company to the mainland, that didn’t impact local free zones. This shows that foreign investors always prefer free zones — they feel more comfortable in them — on top of the fact that we still offer incentives they cannot access on the mainland. 

Q: How is Diez adjusting to this evolving business landscape? 

A: Diez recorded a big leap of 42% in its operating profit and a 29% increase in total revenue in 2022 from the previous year. Diez also contributed 5% to Dubai’s gross domestic product (GDP) and 11% to the Emirate’s non-oil foreign trade. Today, more than 25,000 companies and 40,000 investor employees are based out of Diez.

We try to be different in terms of adopting innovative businesses like DCC, a first-of-its-kind free zone specialising in digital commerce, which underscores our commitment to contributing to the digital economy. We are also launching a new free zone focusing on food tech in partnership with asset management group wasl to address food security locally, regionally and globally.

Other initiatives include the ‘Talent Pass’ licence for freelance work (self-employment) for people with special skills and expertise from around the world at DAFZ, and the Mohammed bin Rashid Innovation Fund at DSO to support emerging technology start-ups in the UAE through Dubai Technology Entrepreneur Campus, the largest tech hub and co-working space in the Middle East and north Africa region. 

Q: You also chair the World Free Zones Organization. What are, in your view, the top-three priorities any free zones around the globe should be working on?

A: They always have to be close to their government. This is very important because the initiative comes from the government and it’s important they prove [what] they are doing to be sure the government can provide strong support. In particular, it’s important to focus on their contribution to the national GDP. Another element is working with multilateral organisations and respecting international rules set by the likes of the OECD, Unctad and the International Labour Organisation.  

This article first appeared in the June/July 2023 print edition of fDi Intelligence.