Nowadays a number of businesses are utilising the benefits of free trade zones to amplify their profits. Flexible policies and reduced import and export duties are dragging investors, manufacturer and traders to establish their setups in isolated commercial developments. These are enclosed areas inside countries that facilitate a bunch of business activities on flexible terms and conditions. Unique tax, customs and import rules, which are totally different from the regulatory regime of commercial districts in rest of the country, are few major things attracting foreign investors across the globe. Countries whether being developed and developing are now considering to establish these kinds of zones to enhance the trading and commercial activities. Their aim is to attract entrepreneurs and manufacturers across the globe to provide more jobs for the locals and GDP growth. Enterprises are given complete ownership rights and tax-free trade on import and export of goods and products manufacturing within the boundaries of these zones. However, they are treated like foreign companies and have to face all customs duties and tariffs, if they are willing to sell their products within the country, where the zone is located. In this scenario, they can either choose a local partner or establish their own setup to market and sell products in the same country.
How free zones are accelerating profits?
Offering tax-free services is not the only benefit entrepreneurs can avail after choosing suitable UAE free zones for their businesses. Rather, they can also avail multiple benefits and endless growth opportunities that finally increase their earnings. Here I am sharing few inevitable advantages you can’t ignore while searching the destination for your startup.
Exemption from Import/Export Duties
It enables traders and manufacturers to import goods and material and re-export without paying taxes. Perhaps, you have established you plant at an FZ in a foreign state; they can conveniently import raw material and component to your site free of taxes and duties. After processing the finished product, goods can be exported again to anywhere across the world again no taxes and duties are implemented.
No more custom duties to pay on storage and imports
In addition to permitting tradesmen to store the imported goods without undergoing any custom duties, free zones also release the worries to pay lump sum custom duties soon after importing goods and materials. Even importers are not questioned to pay any fee or duties while re-exporting your products to another country. Rather, customs duty and taxes will be imposed by the territory receiving the imported goods to sell further. The deferral in paying duties facilitates businesses and enables them to manage cash flow conveniently.
Unlimited low quota-based tariffs
Generally, state authorities decide specific percentage quota-based tariffs on the trade and import of specific widget or apparatus. According to this quota rule, authorities allowed a specific number of units at the lower tax rates, this amount will be increased if the quantity exceeds from this quota. In contrast to that FZ freely allow an unlimited amount of goods and products. You don’t need to worry about exceeding the quota limits. You can store goods as long as you can to re-export them to another country, unless you are eligible to reset the quota period.
According to international rules of trade, a raw material used in the manufacturing of finished goods, underwent higher taxes, which makes it costly. The higher amount of inverted tariffs set local industrialists at a competitive disadvantage as compared to importers dealing in finished goods. In contrast, free zones give complete freedom to manufacturers to select the lowest tax rate, whether they are importing finished goods or raw materials.
Summary: Fewer regulations and low taxes are making these geographically isolated areas best for the foreign capitalist who are seeking to increase profits with cost-effective business solutions.