FOR a place like Dubai which already has a considerable reputation as a centre for free trade, one may wonder about the soundness of setting up a free-trade zone. The logic behind it is quite simple - the idea is to woo investors with even more concessions than the already substantial incentives Dubai offers. Established in 1985 with the specific objective of facilitating investment and complementing and contributing to Dubai's development and growth, the Jebel Ali Free Trade Zone (JAFZA) is regarded as a distinct legal entity. Companies operating there are treated as 'offshore' firms. Whereas previously only subsidiaries were permitted, Law 9, passed in 1992, allows companies to be incorporated in JAFZA as totally independent Free Zone Establishments (FZEs), with the liability of its single shareholder being limited to the amount of its paid up share capital. JAFZA is the sole regulatory agency for FZEs, which do not need any memorandum or articles of association but are governed solely by implementing regulations issued by JAFZA. The minimum share capital is Dh1 million (HK$2.11 million), although this may be varied in special cases. Operating from JAFZA confers on a company several unique advantages. Unlike within Dubai, companies do not need a local partner and are entitled to 100 per cent ownership. It does away with the recruitment/sponsorship problems that companies often face in Dubai. Moreover, it allows 100 per cent repatriation of capital and profits. There are no currency restrictions, no corporate taxes for 15 years and no personal income taxes. Strategically located, JAFZA offers abundant energy supplies, a host of ready-made facilities and superb communications. The success of JAFZA has now prompted the government to set up a second free-trade zone adjacent to the Dubai International Airport.