Updated
GL-F-06
Glossary · Structures and trusts
Free zone - business incentives with limits on the local market
01 / In 30 seconds
The short answer
- What it is
- A special economic area with a preferential regime for business
- What it gives
- Tax incentives, simplified registration, full foreign ownership
- The main restriction
- Operating on the country’s domestic market is usually restricted or requires separate conditions
- What to check
- The type of licence, permitted activities, office and visa requirements
- A common misconception
- That a company in a free zone automatically gives a residence permit
02 / In plain words
What Free Zone means
A free economic zone is a special area with a preferential regime for business. Companies registered in such a zone usually receive tax incentives, a simplified registration procedure, the possibility of full foreign ownership and an easier procedure for obtaining work visas for employees.
In return, a key restriction applies: activity on the country’s domestic market, outside the zone, is as a rule restricted. Working with local clients may require a separate licence, a local partner or registering a company outside the zone. The format is aimed primarily at international trade, services and export production.
Two practical points. First: the type of licence determines what exactly the company may do — trading, services, manufacturing; going beyond the licence breaches its conditions. Second: a company in a free zone does not in itself equal a residence permit. Residence visas are usually linked to the company, but this is a separate procedure with its own requirements for the office, staff and activity.
A case from practice
A client registered a company in a free zone, planning to work with local clients. The licence conditions did not allow this, and the structure had to be rebuilt. The question could have been settled in a five-minute conversation — before registration.
When this format is considered
- International trade and services
- Export manufacturing
- A company’s regional office
- Full foreign ownership of the business
- Obtaining residence visas for employees
- Entering a new market
03 / What it covers
What to check
Licence
- Permitted activities
- Type of licence
- Scope for expansion
Conditions
- Tax regime
- Cost of registration
- Annual renewal
Presence
- Office requirements
- Visa quota
- Staff
Restrictions
- Operating on the domestic market
- Banking services
- Reporting
04 / How it works
How to choose a zone
Define the activity
Trading, services or manufacturing, and where the clients are.
Select the zone and licence
A zone and licence for your activity.
Check the office requirements
The office size sets the number of visas.
Register the company
Registration and licence with the zone authority.
Arrange visas and an account
Residence visas, a bank account.
05 / Key facts
What you need to know
01What it gives
Incentives and simple registration
Tax benefits, full foreign ownership and simpler work visas.
02The limit
The domestic market
Working with local clients outside the zone usually needs a separate licence, a partner or another company.
03The licence
Defines the activity
Trading, services or manufacturing - going beyond the licence breaches its terms.
04Residence
A separate procedure
Visas are linked to the company but have their own office, staff and activity requirements.
Common mistakes
Choosing a zone on registration price alone
Compare annual renewal, office requirements and the visa quota.
Planning local business without checking the rules
Confirm what is allowed outside the zone before registering.
Taking a licence that does not match the real activity
Pick the licence type that fits what the company will actually do.
Expecting the company to bring residence by itself
Plan visas as a separate step with office requirements.
06 / Expert advice
How to prepare in advance
Start with the activity and the market: if the clients are within the country, the free zone format may not suit. Then compare zones by licences, office requirements, visa quotas and renewal costs. And check the banking question separately — opening an account depends on the zone and the type of activity.
What we do for you. We work through the format for your actual activity: where the clients are, whether the domestic market is needed, how many employees, whether visas are needed. A free zone is a good tool, but only for the right task.
Dmitry NagyTax consultant, international taxation and compliance (ex-Big4)
07 / Questions
Frequently asked questions
A special economic area with a preferential regime: tax incentives, simplified registration, full foreign ownership.
As a rule, only to a limited extent. Working with the local market usually requires a separate licence or a company outside the zone.
Not automatically. Residence visas are linked to the company, but this is a separate procedure with its own requirements.
By the type of activity, available licences, office requirements, the visa quota and running costs.
It depends on the zone and the activity. The banking question should be clarified before registration, not after.
Licence renewal, office or workspace rent, visa costs, accounting and reporting.
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