Business Setup in UAE Free Zones: All you need to Know.
Table of Contents
Introduction
Are you a consultant looking to establish your own consultancy firm in Dubai? Each year, the UAE, particularly Dubai, attracts numerous investors and entrepreneurs from across the globe.
Understanding the guidelines for company formation is crucial. To operate a business in the UAE, foreign investors or entrepreneurs must comply with the legal formalities mandated by law. This includes incorporating a new business, registering a branch office, or setting up a free zone company.
What is a Free Zone?
The question “What is a Dubai Free Zone” may give you the indication that Free Zones are only found in this specific emirate, but Free Zones can be found throughout the UAE. The thing is Dubai’s popularity presents it as the prominent option for lucrative investment seekers.
A Free Zone, a free trade zone, or a Free Zone authority is an economic area ruled by its own specific regulations that do not apply to businesses outside the zone. Dubai Free Zone companies trade services and products, leveraging special tax and foreign ownership laws.
Establishing free trade zones was one of the initiatives the government took to diversify the economy and attract more foreign investors to Dubai and the UAE in general, allowing them to start a business within an evolving, entrepreneurial ecosystem and boost their profits.
The first Free Zone in the UAE is the Jebel Ali Free Zone, founded in 1985. Today, there are more than 40 Free Zones located in different parts of the UAE.
Setting up a free zone business in UAE
There are many free zones available in Dubai and in the UAE where foreign investors can set up their businesses. Below are some of the main features and benefits of a free zone business setup:
- 100% foreign ownership
- 100% repatriation of capital and profits
- Tax exemptions
- 100% free transfer of funds, and no foreign exchange controls
- Flexibility to operate 24/7
- A variety of commercial offices available for sale or lease
- Easy start-up and licensing procedures
- Unique industry clustering and purpose-built infrastructure.
- Exemption from all import and export duties
- Low freight charges
- Multicultural workforce and easy recruitment procedures
- The timely and streamlined immigration process.
Free Zone vs Mainland
Ownership:
While most Mainland companies may only have a maximum foreign ownership of 49%, Dubai Free Zones offers complete foreign ownership from the start.
Business Scope:
Dubai Free Zone Companies are restricted to conducting business only within the Free Zone, while Mainland companies can operate throughout the UAE.
Workspace:
Mainland companies must have a physical office of at least 200 square feet, while virtual workplaces are allowed for some Dubai Free Zone companies.
Visas:
The number of visas a Mainland company can obtain depends on the size of its workspace, while the number of visas available to Dubai Free Zone companies is determined by specific regulations of the relevant authority.
Business Setup Approvals:
The establishment of a Mainland company requires clearance from various government agencies, while each Dubai Free Zone has its own laws and regulations for its registered businesses.
Dubai Free Zones offers a diverse range of business licenses tailored to various industries and professional endeavors. Here are some of the most popular ones:
Types of Free Zone Licenses in Dubai
Industrial License
An industrial license within Dubai Free Zones is required for businesses involved in the production of goods and products, including the manufacture of machinery, chemicals, and food products.
Professional License
The Dubai Free Zone professional license is needed for businesses that offer professional services such as consulting, accounting, and legal services. This type of license is also required for businesses involved in creative industries such as graphic design, architecture, and advertising.
Freelance Permit
Dubai Free Zones pave the way for individual freelancers to shine independently. This license is designed for individuals who want to work as freelancers in Dubai. It allows you to offer your professional services as an independent contractor, rather than as an employee of a company
E-Commerce License
This license is needed for businesses involved in online trading and e-commerce activities. Tailored for Dubai Free Zones, it is important to note that this license only allows the online sale of goods.
Tourism License
This license is required for businesses involved in the tourism sector such as hotels, tour operators, and travel agencies.
Commercial License
This license is for businesses involved in trading activities such as wholesale and retail trade, import and export, and storage and distribution.
Steps to start a Free Zone Company
Setting up a business in Dubai may seem like an overwhelming task. Here is a breakdown of the steps involved:
Determine the Business Entity Type:
Begin by choosing your business activities and type of legal entity.
Choose A Trading Name:
Your business name should comply with the criteria set out by the UAE government.
Apply For a Business License:
Depending on the Free Zone jurisdiction that you will choose and/or your business activity, you may need to attach a copy of a business plan along with your license application.
Choose An Office Space:
Dubai Free Zones offer various office solutions such as a flexi-desk to support start-ups.
Get Pre-Approvals, Register Your Business, And Get Your License.
This should take a few weeks, once you have your license you are free to start your business.
Open Your Corporate Bank Account:
You would need a bank account to commence your business in Dubai.
Can dubai free zone companies do business on the mainland?
Yes, come Dubai Free Zone companies can conduct business activities in the Dubai mainland; however, this requires obtaining appropriate approvals from the respective Free Zone authorities.
It’s important to remember that many Dubai Free Zones limit their activities to international trade or interactions with entities within the same Free Zone.
In instances where Free Zone businesses aim to establish a presence in the Dubai mainland, several approaches can be considered:
- Engaging a mainland logistics partner to handle intra-UAE movement of goods.
- E-commerce companies in Free Zones can utilize courier or delivery services for distributing products within the UAE.
- Creating a branch of the Free Zone-based business on the Dubai mainland, which should share identical activities and names with the original Free Zone entity.
If you want to trade between your Dubai Free Zone company and the mainland, the appropriate course of action involves interacting with the Dubai Department of Economy and Tourism (DET)
Hiring GenZone for Business Setup Needs
Cost-effective, quick, and seamless. Those are the words investors use to describe the company registration process with GenZone.
We offer an entirely remote business incorporation process. Our team will discuss the specifications of your business with you to determine the type of license, visa package, and office space you need. We provide professional, commercial and branch licenses, in addition to many innovative corporate solutions.
Book a call with us now to get started!
