Setting Up a Factory in RAKEZ, Ras Al Khaimah: Industrial Licence and Cost

What RAKEZ Is and Why Manufacturers Choose Ras Al Khaimah

RAKEZ (Ras Al Khaimah Economic Zone) is the economic zone authority of Ras Al Khaimah, the northern emirate of the United Arab Emirates. It sits roughly 85–110 km from Dubai by road, about 1.5 hours; Dubai International Airport is 85 km away and Sharjah 60 km. According to the authority's own figures it hosts more than 50,000 companies across over 50 sectors and licenses in excess of 3,000 business activities.

What separates Ras Al Khaimah from Dubai for a manufacturer is the cost of land and warehousing, combined with infrastructure built specifically around industry. Saqr Port handles over 100 million tonnes of cargo a year and ranks among the largest bulk-handling ports in the region, while RAK Maritime City offers 8 million m² of coastland and 5 km of quay wall for heavy industry. The industrial zones are planned around uninterrupted government-supplied power, gas and water.

Output from a Ras Al Khaimah plant can move into the GCC customs union towards Saudi Arabia and Oman, or by sea towards the Indian subcontinent and East Africa. When you weigh free zone alternatives across the UAE, calculate logistics separately from rent rather than folding both into one number.

RAKEZ Industrial Zones: Al Ghail, Al Hamra and Al Hulaila

RAKEZ is made up of six zones: three industrial (Al Ghail, Al Hamra, Al Hulaila), two business zones (Al Nakheel, Al Hamra) and an academic zone. A factory can only be established in an industrial zone; the business zones serve office and trading activities.

All three industrial zones carry Designated Zone status for VAT purposes under Cabinet Decision No. 43 of 2019. The business zones do not, and that distinction carries consequences on both the VAT and the corporate tax side.

RAKEZ Industrial Licence and Company Structures

Production requires an industrial licence. A commercial licence permits buying and selling raw materials; only an industrial licence grants the right to transform those materials into a new product. RAKEZ also issues commercial, general trading, e-commerce, service, media, educational, professional and individual licences plus a freelancer permit, each available in free zone and non-free zone form.

Treat the fixed capital figures circulating online with caution. Regulation 32 of the RAKEZ Companies Regulations defines minimum issued share capital as «such sum as the Authority may specify from time to time»; no fixed AED amount is written into the regulations. The only binding number in the official registration form is that each share must have a par value of at least AED 1,000. Capital for an industrial licence is set at application stage according to the activity code and facility size, so ask RAKEZ to confirm it in writing.

If you are weighing the mainland instead, Federal Decree-Law No. 26 of 2020 removed the requirement for an Emirati shareholder in commercial companies, and most manufacturing activities are open to 100% foreign ownership. For a comparison, see how an industrial company is set up in Dubai.

Warehouse, Industrial Unit and Land Options

No industrial licence is issued without a physical facility. A flexi desk or shared office is not a valid facility type for production; those products serve trading and consultancy licences.

Settle two technical points before signing a lease: the connected power load in kW allocated to the unit, and the trade effluent discharge permit. For wet processes such as coating, food processing or chemicals, a standard warehouse shell is often inadequate and the fit-out cost outweighs any saving on rent.

Step-by-Step Factory Setup Process in RAKEZ

An assembly operation starting in a ready-built warehouse usually settles into an 8–12 week timeline. An investor leasing land and constructing a building should plan for 12–18 months once design approval, construction and the completion certificate are accounted for.

Documents Required for a Manufacturing Company

• Colour passport copies of shareholders and the general manager; Emirates ID for UAE residents
• Visa copy and entry stamp for applicants present in the UAE
• Business plan covering production capacity, raw material list and target markets
• List of machinery and equipment together with a process flow diagram
• Facility layout plan and, where required, an environmental impact assessment
• For corporate shareholders: trade licence, constitutional documents, board resolution and certificate of good standing
• Shareholder resolution appointing the general manager

Corporate Tax, VAT and Compliance Obligations

The phrase «there is no tax in the UAE» stopped being accurate in 2023. Under Federal Decree-Law No. 47 of 2022, corporate tax applies to financial years beginning on or after 1 June 2023: 0% on taxable income up to AED 375,000 and 9% above that threshold.

Qualifying Free Zone Person Status and the Real 0% Conditions

A free zone company can apply 0% to its qualifying income. Ministerial Decision No. 229 of 2025 expressly lists «manufacturing of goods or materials» and «processing of goods or materials» as qualifying activities, so a RAKEZ factory falls inside the regime by its nature. The rate is not automatic; five conditions must all be satisfied:

1. Adequate substance in the free zone: assets, qualified full-time employees and operating expenditure
2. Deriving qualifying income
3. Not having elected to be subject to the standard corporate tax regime
4. Compliance with transfer pricing and the arm's length principle
5. Preparation of audited financial statements

Non-qualifying revenue must stay below the lower of 5% of total revenue or AED 5,000,000. Breaching the de minimis threshold costs the status not only for that period but for the following four tax periods. Under Ministerial Decision No. 84 of 2025, every Qualifying Free Zone Person must produce audited financial statements regardless of turnover – the obligation new factories overlook most frequently.

The 15% Minimum Rule for Large Groups

UAE entities within multinational groups whose ultimate parent reports consolidated revenue above EUR 750 million are subject to a 15% Domestic Minimum Top-up Tax for financial years beginning on or after 1 January 2025. This overrides the free zone 0% rate.

VAT and Designated Zone Status

The standard VAT rate is 5%. Mandatory registration begins at AED 375,000 of taxable supplies and imports; voluntary registration at AED 187,500. Because Al Ghail, Al Hamra and Al Hulaila hold Designated Zone status, movements of goods between them can fall outside the scope of VAT under specific conditions; supplies of services do not benefit from that treatment.

On Economic Substance Regulations the burden has eased: Cabinet Decision No. 98 of 2024 lifted ESR reporting for financial years ending after 31 December 2022, though obligations for earlier periods remain. For corporate tax registration, juridical persons incorporated on or after 1 March 2024 have three months from incorporation, and late registration carries an AED 10,000 penalty. Our UAE tax consultancy team can map the compliance calendar for you.

Importing Machinery and Raw Materials: Customs and CEPA

The GCC common customs tariff is 5% on goods arriving from outside the customs union, with 417 tariff subheadings fully exempt and tobacco products taxed at 100%. Duty is suspended on goods entering a free zone and becomes payable only when the goods leave for the domestic market. Where finished output is re-exported outside the UAE, no duty arises.

The UAE's Comprehensive Economic Partnership Agreements matter to any manufacturer sourcing components abroad. The agreement with Türkiye entered into force on 1 September 2023 and covers more than 83% of tariff lines, equal to some 93% of trade value; the India agreement took effect on 1 May 2022 and the Indonesia agreement on 1 September 2023. Preferential rates depend on rules of origin: goods merely trans-shipped through a free zone do not qualify, and substantial transformation inside the UAE is required. That is the commercial argument for real production in RAKEZ, quite apart from tax.

Visa Quotas, Staffing and Labour Accommodation

Tables circulating online in the form of «flexi desk=1 visa, office=4 visas» are not drawn from RAKEZ publications. The authority does not publish a fixed quota per facility type; allocation is determined at application stage from the leased area in square metres, the activity and the organisation chart submitted. In industrial facilities the quota scales with warehouse or plot size. Have RAKEZ confirm your quota in writing before you build a hiring plan around it.

Labour accommodation is a separate budget line in shift-based production. Al Hamra industrial zone offers on-site accommodation, whereas at Al Ghail staff must be bussed in from nearby settlements – a recurring annual cost that is easy to underestimate. See our UAE work and residence visa page for permit procedures.

Cost Items and Budget Planning

RAKEZ does not publish a public tariff schedule, so quoting a single «factory setup price» would mislead. Building the budget line by line is the sounder approach:

Put the corporate account on the same timeline; banks examine supplier and customer contracts closely for manufacturing companies. Starting the UAE corporate bank account process early keeps machinery shipments and payment schedules aligned.

RAKEZ Compared With Other Industrial Free Zones

Rank the decision in this order: target market, logistics cost, facility rent, quota, infrastructure. Licence fees belong at the bottom, because across a ten-year manufacturing investment the licence is a small fraction of total cost. For the corporate structure itself, see our guide to RAK company formation.

Mistakes Investors Make Most Often

• Trying to produce under a commercial licence. If the activity code does not cover manufacturing, problems surface at customs during shipment.
• Not confirming connected power load before signing. Electrical infrastructure that cannot carry the machinery leads to a costly relocation.
• Treating 0% corporate tax as guaranteed. Fail one QFZP condition and the rate becomes 9%, with the status unrecoverable for four further periods.
• Skipping audited financial statements. For free zone companies this applies regardless of turnover.
• Overlooking rules of origin. CEPA preferential tariffs apply only where substantial transformation has taken place.

Sources

• UAE Ministry of Finance – Corporate Tax FAQ
• UAE Government Portal (u.ae) – Corporate Tax
• Ministry of Finance – Domestic Minimum Top-up Tax
• Federal Tax Authority – VAT Registration
• ICP – Customs Union for GCC States
• RAKEZ – Zones
• Ministry of Economy – UAE–Türkiye CEPA
• RAK Ports – Saqr Port

Figures were compiled from official sources as at the date of publication. Fees, quotas and legislation change, so confirm current details with RAKEZ and the Federal Tax Authority before committing to an investment.