Hamriyah Free Zone (HFZA)

This blog is part of a series on Free Zones in UAE. Here we will address all your questions pertaining to setting up business in Hamriyah Free Zone (HFZA) in detail, benefits of having license in Hamriyah Free Zone and Liquidation of a company in Hamriyah Free Zone (HFZA).

 

Q) Discuss about Hamriyah Free Zone (HFZA) and what are the advantages of setting-up a company in HFZA?

Hamriyah Free Zone Authority was established as a Free Zone powerhouse by an Emiri decree issued in November 12, 1995. Being located at Sharjah in the UAE, Hamriyah Free Zone has a time zone advantage, and a multi-access to neighbouring and global countries through land, Sea and Air.

It aims to provide the international business investor with a unique investment opportunity in a free market environment, thus leading the Emirate of Sharjah into a new age of industrial and free zone development.

Superior quality and supreme service are at the heart of the organization’s reputation and credibility. Hamriyah Free Zone (HFZA) best infrastructure facilities and high-quality services attract foreign investment in various sectors like manufacturing, trade and services, which in turn has augmented the gross domestic product (GDP) of Sharjah by more than 11% annually in the last 5 years.

 

Note: The fees details and documents requirements mentioned in this article are extracted from the official source of HFZA at the time of publishing this article, they are subject to change anytime, hence we request you to reconfirm before you take any decision.

 

Few advantages of setting-up a company in Hamriyah Free Zone (HFZA):

General advantages:

• Set up your business in less than 1 hour
• Full foreign ownership permitted
• Repatriation of capital and profits
• Variety of licenses, including commercial, service and industrial
• Convenient online service for renewals, visas and other applications
• Renewable long-term and short-term lease

Tax related advantages

• No import, export, re-export and custom duty
• Special VAT advantages

Logistics and transport advantages

• Strong land, air and sea connectivity
• Access to a 14-metre-deep port and 7-metre-deep inner harbour
• Access to the UAE and GCC markets

Other facilities provided (only available in Hamriyah Free Zone (HFZA))

• Low-cost energy
• Cost-effective workforce
• 24-hour security within the Free Zone
• Onsite labour accommodation
• Onsite customs facilities
• Prime industrial & commercial land including plots facing the sea
• Land sizes starting from 2,500 Sq.mt onwards
• Fixed land lease rates for the first 10 years
• Plots can be developed up to 60% by investors to suit their requirements
• Ready infrastructure with excellent electricity & water supply Electricity: .13 USD (.45 AED) per KWA, Water: 8.18 USD (30 AED) per 1,000 Gallons
• Leases can be for up to 25 years Renewable for a further 25 years

 

Q) What are the types of Licenses offered by Hamriyah Free Zone (HFZA)?

Hamriyah Free Zone (HFZA) provides three kind of trade Licenses as mentioned below:

Licenses	Purpose of License
Industrial License	1) This License includes the Processing, assembling, packaging and manufacturing of the goods. 2) This also allows to import the raw materials for the purpose of manufacturing. The finished products are either exported outside the UAE or sold in the UAE market. 3) If sold in the UAE market then the license holder will need to this through a local distributor or a local agent.
Commercial License	This includes the general trading, Specific trading (up to 3 to 5 activities) and E-commerce
Service License	This license allows the holder to carry out the services that are specified on the license within the Hamriyah Free Zone (HFZA) only. Hamriyah Free Zone (HFZA) provides the Marine and port related services, which is a unique service compared to other free zones in UAE.

 

Important Points:

• It is not possible to have the office outside the Free zone, holing a license from Hamriyah Free Zone (HFZA).
• There are no restrictions on import and export of Goods that are approved as per the terms of your License.
• The Basic cost for a license is AED 11,000/-.

 

Q) What are the types of Companies allowed in Hamriyah Free Zone (HFZA)?

• Free Zone Establishment

It allows only 1 shareholder

• Free Zone Company

It allows 2 to 5 Shareholders

• Branch

It allows the branch of a Local Company and Branch of an International Company

 

Q) What kind of Facilities are offered by Hamriyah Free Zone (HFZA)?

Hamriyah Free Zone (HFZA) offers you different solutions to suit your business requirements and here are the details with the packages:

• HBC office Packages

Hamriyah Free Zone (HFZA) provides different type of packages in support of the new business setup-

Details	Package 1	Package 2
Fees	AED 11,000 yearly or USD 2,998 yearly	AED 17,000 yearly or USD 4,633 yearly
Legal Status	FZE (1 Shareholder)	FZE (1 Shareholder)
Type of License	Commercial/ Service License	Commercial/ Service License
Activity	Import and Export trading of upto 3 Product Categories / 3 Service Activities	Import and Export trading of upto 3 Product Categories / 3 Service Activities
Office	Business Centre (HBC)	Business Centre (HBC)
No. of Visas	Provision to apply for 1 Visa	Provision to apply for 4 Visas
Bank Letter	No Bank Letter for Share Capital required	No Bank Letter for Share Capital required

 

• E-Office Packages

There are 3 types of office packages provided in Hamriyah Free Zone (HFZA)-

Details	Package 1	Package 2	Package 3
Fees	AED 20,000 yearly or USD 5,450 yearly	AED 25,000 yearly or USD 6,812 yearly	AED 35,000 yearly or USD 6,812 yearly
Legal Status	FZE (1 Shareholder) or FZC (2-3 Shareholders)	FZE (1 Shareholder) or FZC (2-5 Shareholders) or Branch or Subsidiary	FZE (1 Shareholder) or FZC (2-5 Shareholders) or Branch or Subsidiary
Type of License	Commercial/ Service License	Commercial/ Service License	Commercial/ Service License
Activity	Import and Export trading of up to 3 Product Categories / 3 Service Activities	Import and Export trading of up to 5 Product Categories / 5 Service Activities	General Trading / Investment of own resources
Office	E-Office (10Sq.Mts)	E-Office (10Sq.Mts)	E-Office (10Sq.Mts)
No. of Visas	Provision to apply for 4 Visas	Provision to apply for 6 Visas	Provision to apply for 7 Visas
Bank Letter	No Bank Letter for Share Capital required	No Bank Letter for Share Capital required	No Bank Letter for Share Capital required

 

• Warehouses

Details	Package 1	Package 2	Package 3
Fees	AED 95,000 yearly or USD 25,957 yearly	AED 135,000 yearly or USD 36,785 yearly	AED 170,000 yearly or USD 46,322 yearly
Area	276Sq.mts	416Sq.mts	614Sq.mts
Features	1) 250 m² of warehouse / factory space 2) 26 m² space includes – one office, two toilets and pantry 3) Car parking bays in front of each unit	1) 328 m² of warehouse / factory space 2) 88 m² space includes – reception area, three offices, three toilets and pantry 3) Car parking bays in front of each unit	1) 500 m² of warehouse / factory space 2) 114 m² space includes – reception area, three offices, three toilets and pantry 3) Car parking bays in front of each unit

 

• Lands

Land of various sizes starting from 2,500 m² for short-term and long-term leases with the prices starting from AED 30/Sq.mt are offered by Hamriyah Free Zone (HFZA).

 

Important Points

1. VAT may be applicable on some of the packages mentioned above
2. Visa related costs are not included in the package prices mentioned above
3. PO box number is optional with approximately AED 1,000 fee annually.
4. Facilities in Hamriyah Free Zone (HFZA) cannot be purchased and they can only be leased.

 

Additional Fees:

Additional Charges are applicable subject to the proposed activity of business. Few payments are made yearly and few of them are paid on onetime, they are as follows:

 

In relation to Executive offices

Commercial License-

1. Trading up to five specified products – AED 3,500 to be paid yearly
2. General trading / E-commerce – AED 12,000 to be paid yearly

Service License-

1. Up to five service activities – AED 3,500 to be paid yearly
2. Service Fee – AED 5,000 to be paid yearly

Project management / Turnkey Management / Investment own resources – AED 12,000 to be paid yearly.

 

In relation to Warehouses –

Commercial License or Industrial – AED 3,500 to be paid yearly

Service fee – AED 5,000 to be paid yearly

In both the cases, the following are the One-time fees to be paid

Refundable Deposit – AED 5,000

Incorporation Fee – AED 9,000

 

Q) What is the procedure for Setting-up of a company in Hamriyah Free Zone (HFZA)?

Setting-up of a Company in Hamriyah free zone (HFZA) can be done in 1 working day.

1. The following documents are submitted along with the signed application for company incorporation:

Free Zone establishment or Free Zone Company	Branch or Subsidiary Company
1) A copy of the shareholder’s and manager’s passport and 2) A copy of the shareholder’s and manager’s visit / tourist visa or 3) An attested “No Objection Letter” from your current sponsor (if you hold a UAE employment visa)	1. A copy of the parent company’s license 2. The parent company’s certificate of incorporation 3. The parent company’s memorandum and articles of association 4. A board resolution for opening the branch or subsidiary in Hamriyah Free Zone, mentioning the appointed director, manager and authorized signatory and 5. Copies of the directors and manager’s passport and visa

 

1. After the submission of the documents make the payment of fees for the license you applied for, through cash, cards by master card or Visa
2. Collect your Trade license in your registered email or logon to your Hamriyah Free Zone (HFZA) Investor profile.
3. The documents you get after company registration are electronic. Only Memorandum and Lease agreement will be handed over to you as hard copies.

 

However, Warehousing registration will take a bit longer, because you need to provide a business plan for approval.

 

For some activities it’s required to get a third-party approval, for example Ministry of Health approval for medical goods trading. It will also take additional time.

 

Q) What are the time limits for the Incorporation of Company in Hamriyah Free Zone (HFZA)?

1 day – Company name and Activity approval

1 day – Visit to Hamriyah for Company formation

1 day – Visit to Hamriyah for Establishment card application

1-3 weeks – Establishment Card

1 Week – Entry Permit

• day – Medical Check-up and Emirates ID

3 days – Visa Stamping

 

Q) What is the procedure for License Renewal of Companies in Hamriyah Free Zone (HFZA)?

• All the companies in Hamriyah Free Zone (HFZA) should renew their trade licenses on a yearly basis.
• Renewal can be done without personal presence of the shareholder.
• There is a government requirement to provide audit report at the time of renewal. You need to start auditing after the 2-nd year of operations.
• There is an option to sign a waiver off letter and pay a fee of 1000 AED if you cannot submit the audit report.
• Company amendments usually can be applied by the business owner or a person holding a Power of Attorney.

 

Q) How to Liquidate a Company in Hamriyah Free Zone (HFZA)?

Hamriyah free zone UAE company liquidation in a step-by-step process:

1. Required to obtain the NOC (No Objection Certificate) from Customs department for Commercial Licenses.
2. Filled Company Termination Form & Board resolution signed by all the shareholders
3. Submission of all original Company Documents (Trade Licence, MOA, Tenancy etc)
4. Lease cancellation and surrender the Office Keys back to the Hamriyah Free Zone (HFZA) authorities
5. Settlement of all outstanding payments, Termination fee and Late liquidation Fee.
6. Visa & Immigration Card cancellation.

 

Time frame of Liquidation depends on the facility rented. Flexi-offices take 1 day. If you have a warehouse you need to submit a 3-month notice, for plot of land 6-month notice.

 

The cost of the liquidation is 5,999 AED for the licence.

 

The deposits you paid under the visas and office or warehouse facilities will be returned once the company is closed.

 

Other Important points:

• Officially an office of a free zone company has to be located only within the free zone where this company was registered. If you need an office in Dubai, you have an option to rent a space in a business centre and use it either a few times per month or daily, depending on the package that you choose. However, the free zone minimum required space (flexi desk) cannot be cancelled.

 

• A flexi desk is an obligatory requirement for any company eligible for resident visas. UAE government obliges to have it because it’s the minimum physical office space, that a company who has any individual under its visa must have. And also, flexi desk is helpful for bank account opening. The compliance department of the banks needs to see that a company has some kind of office or at least a small physical seat, where it can be working from.

 

• Personal visit is required to open a bank account in UAE, it is to make sure that the client is known by the bank. It is a requirement of a UAE Central bank which all local banks have to follow.

 

• Normally a debit card will be issued for a newly opened company if there is only one shareholder. They can also have a credit card, but it will be given against a fixed deposit. As for the loan, it is possible to get it, but you need to show company operations and profits to the bank. Upon checking your company’s turnovers and profits, a bank may approve a loan.

 

• UAE is free from income tax and corporate tax. It has only imported tax 5% for the goods that you bring into the country and VAT 5% for the trading or service transactions that happened in UAE.

 

• VAT obligations of the company depend not only on the place of its registration, but on the place where its business takes place. VAT comes into picture once your taxable turnover reaches 375 000 AED. Taxable turnover means the turnover which was done in the UAE. If your company is registered in a Free Zone, but the trading takes place abroad (for example you sell goods from India to Africa), that turnover is not considered taxable, because the transactions are taking place out of UAE. It means that you do not have to pay VAT. But if you have a free zone company and import goods to UAE, you have to add 5% VAT to your Invoices and pay VAT. If your company is registered in a designated free and sells the goods to another designated free zone or within the same zone, VAT does not appear.

 

Corporate tax applicability to the companies in Hamriyah Free Zone:

Corporate tax law is going to be applicable for all the companies registered in UAE including the free zones in UAE. The UAE Corporate tax is going to be effective for the financial year beginning on or after 1 June 2023 for the businesses in UAE. Corporate tax will be levied at zero percent on the taxable income (adjusted net profit) of the businesses in the free zones as long as they comply with all the regulations of the respective free zone and do not do any business with the mainland companies, otherwise there is a possibility of levying 9% corporate tax on the taxable income (adjusted net profit) in excess of AED 375,000. Hence companies in the Free Zones need to make sure that they are complying with all the regulations of the free zone and do not do any business with the mainland entities to enjoy the benefit of zero percentage of UAE corporate tax.

 

{NOTE: Kindly note that the authenticity of this article is limited to the day of publishing this blog. As policies and rules pertaining to each free zone keeps changing from time to time based on the necessity of the respective authority, it is hereby advised you to check the website of the concerned free zone directly to get the latest update on the same. We do not assume any liability if you have taken any decision based on the information provided in the article. We have ensured that the presented information to the visitor is legible to the maximum extent possible so that all the information is available in one page, at one go. Thank you.}

 

Q) Why choose Spectrum Auditing?

Spectrum Auditing is an expert firm in the Company Formation and Company Liquidation process across various Free Zones in UAE. Our passion and heart lie in serving the clients and we aim at utmost client’s satisfaction. We are registered Auditors under the Ministry of Economy UAE and also registered Tax Agent from Federal Tax Agency UAE, Dubai providing dedicated Audit, Accounting, Tax services and various Business Advisory Services complying regulatory requirements.

Reach us to have a frills free life in your journey in Dubai, UAE. We at Spectrum will assist you in taking care of all the legal procedures involved in the registration and de-registration of your company in Hamriyah Free Zone (HFZA). Call us today for any kind of assistance at +971 4 2699329 or email us at [email protected] to get all your queries addressed. Spectrum is your partner in your success.