How-to-start-a-business-in-Dubai-free-zone

A detailed guide on starting a business in a free zone

Thinking about starting a business in a free zone but don’t know where to begin? This blog will inform you about free zone business setup in Dubai in detail.

The UAE is one of the favorite destinations for entrepreneurs from all across the globe. The country has witnessed major advancements in the field of economy benefiting locals as well as foreigners.

Dubai, in particular, is a highly developed city with numerous benefits. These benefits range from world-class infrastructures, low-taxation, global connectivity, flourishing economy, and many more. Hence, this makes the city one of the best places to run a business.

 

What is a free zone company?

Free zones are also commonly known as free trade zones. These jurisdictions are essentially economic zones where goods and services can be traded, usually at favourable tax and customs rates.

One of the common misconceptions is that free zones and offshore companies are the same. However, this is far from the truth. Free zone companies are onshore entities that can carry out business in Dubai while meeting certain conditions. On the other hand, offshore companies are solely set up with the aim of operating outside its registered jurisdiction or the location of its primary ownership.

There are about 67 free zones in the UAE with new ones being introduced every year. Free zones are also home to over 150,000 companies in the country. Moreover, this number is on the rise with progressing time.

The cost of setting up a business in Dubai would cost approximately AED 11,900. Although, the cost would vary depending on the free zone you opt for and as per your visa requirements.

It is also worth noting that free zone companies are now permitted to open their branch companies on mainland. In order to accomplish this, the investor needs to register his branch using the same trade name with the Department of Economic Development (DED) and Ministry of Economy. The branch company can be solely owned by the free zone entity unlike the former rule where it was a requirement to have a local partner. 

Most free zones generally deal with general trade, service and industrial sectors. However, there are free zones in the UAE that cater to specialised industries or sectors. Some such jurisdictions include:

  • Dubai Healthcare City (DHCC) specialises in health and wellness industry 
  • Dubai CommerCity specialises in e-commerce industry 
  • Sharjah Publishing City (SPC) specialises in printing and publishing industry 
  • Dubai Internet City (DIC) specialises in tech industry
  • Dubai Knowledge Park specialises in HR and training industry

Although these jurisdictions do specialise in a particular industry, free zones do offer other licenses too.

To know more about some of the best free zones in the UAE, click here

If you’re looking to set up a free zone company in Dubai, International Free Zone Authority (IFZA) is the ideal option. Over years, IFZA has grown to one of the most popular free zones in the UAE. This is because of the numerous advantages that investors can benefit from when setting up a company in the free zone.

IFZA is one of the few free zones in the UAE that stands out for its unique benefits and the opportunities it provides investors. These include:

  • No requirement for the investor to submit an annual audit report
  • No paid-up share capital requirement
  • Up to 3 years visa for owners and employees
  • No requirement for employee guarantee deposit to the free zone
  • Permission to have a virtual office
  • No requirement of investors to be physically present during company formation
  • No NOC required from the current visa sponsor

 

Advantages of free zone business setup in Dubai

  • Complete ownership of business: Free zones enable foreign investors to attain 100% ownership of their company.
  • Full profit repatriation: Free zone companies can repatriate all their profits outside the UAE. This gives them the rights to transfer 100% of their capital to their place of origin without any requirements.
  • 0% corporate tax: The UAE laws state that companies do not require to pay corporate tax out of their business revenue, thereby allowing you to keep all your profits.
  • Simplified import and export process: Unlike the mainland, free zones are exempt from all customs duties.
  • Strategic location: Free zones are strategically located near sea ports, airports and national borders. This would inevitably maximize trading advantages.
  • Global connectivity: Dubai has major sea ports and airports that enable you to trade locally and internationally with ease. The location provides you easy access to distributors and manufacturers in the MENA region as well as South Asia. 
  • Thriving expat entrepreneurs: As one of the world’s most popular transit destinations, Dubai attracts millions of tourists and investors alike. The city is home to a multi-national community and provides opportunities for you to connect with a global business community.
  • Range of business activities: Free zones give you the freedom to undertake a range of business activities.
  • Time-saving and simple registration process: The entire process of obtaining a license is fairly swift and easy. As an investor, you can get easy access to free zone business formation and convenient administrative services.

 

Steps on how to start a business in Dubai

Determine the type of license and business activity

Before you choose the free zone you want to form your company, you will have to pick the type of license. This is because certain free zones may or may not offer the license of your choice.

The type of license you need to apply for will depend on the nature of your business and activities you wish to conduct. The process of obtaining your license will take less than a week and renewals need to be done on a yearly basis.

Choose the ideal free zone for your business

As mentioned earlier, each free zone caters to a specific industry. Depending on the nature of your company, you can identify which free zone permits the license and all related activities.

Determine the type corporate structure

The types of legal structures that you can form in a free zone are:

  1. Free Zone Company Limited Liability Company (FZC LLC)
  2. Free Zone Establishment Limited Liability Company (FZE LLC)
  3. Branch Company
  4. Free Zone Company
  5. Free Zone Establishment

Application and submission of all required documents

Once the previous steps are complete, you must acquire the following:

  1. Application
  2. Immigration card
  3. Entry permit
  4. Stamping, medical test & Emirates ID

The various documents that you must submit to open a business in Dubai free zone are:

  • Passport copy
  • Visa copy
  • Emirates ID copy (if applicable)
  • Passport photo
  • Business plan (only applicable for certain free zones & certain activities)

Depending on the free zone that you opt for, you may have additional steps and documents that you will have to submit.

Choose an office space

Most free zones will require you to have a physical office space. Depending on the nature of your company and the number of visas you require, you can opt for one that is most suitable to you.

Open a bank account

Lastly, you will need to open a free zone business bank account to keep track of your business transactions. A free zone bank account would enable the investor to track their company’s expenses, calculate tax liabilities effortlessly, and regulate cash flow more effectively.

Once all the above steps are complete and you get initial approvals from the relevant authorities, you can obtain your license and move ahead with your business ventures.

 

Get started with your free zone company with Shuraa, now

Among the many free zones in the UAE, identifying the ideal free zone to set up your company may seem burdensome. However, we, at Shuraa can simplify the entire process for you.

We will sort out all the necessary procedures from pre-approvals to helping you obtain your trading license. Our goal is to enable you to start a company in the Dubai free zone smoothly. Contact our corporate advisors to learn more about starting a business in a free zone

Call us at +97144081900 or send a WhatsApp message on +971507775554. Additionally, you can also drop in an email at [email protected] and get answers for your queries in no time.