Have you been thinking about starting a business in UAE? Setting up in one of the many free zones offers the perfect way to launch and grow your company internationally. This blog will explain what free zones are, their key benefits, how to choose the right one, the step-by-step process of company registration, visa options and more.
What is a Free Zone?
The United Arab Emirates (UAE) has become a global hub for international businesses because it attracts entrepreneurs and investors worldwide. Numerous UAE free zones are one of the significant factors that contribute to the business-friendly environment.
Free zones in the UAE provide attractive options for foreign investors to set up a business. Every free zone area is considered a different geographical location. In addition, each of them follows rules and regulations unique to its specific free zone.
Choosing the Best Free Zone for Business in the UAE is essential for the success of your business. With more than 50 free zones available in this country, selecting the right free zone area for your business might be overwhelming for foreign investors.
Benefits of Setting Up in a UAE Free Zone :-
100% Business Ownership
Unlike mainland UAE where you need a local Emirati partner, free zones allow 100% foreign ownership of your company without needing a sponsor. You can fully own and control your business.
Fast & Easy Setup Process
Registration takes only 1-2 days with faster approvals compared to mainland companies. You don’t need lengthy paperwork or complex processes.
Full Repatriation of Profits
You have complete freedom to transfer all the profits you make in UAE back to your home country. No restrictions on money transfers globally.
Tax Incentives
Enjoy 100% corporate tax exemption for 15-50 years in many free zones like JAFZA, DMCC, ADAFZ etc. Also, no import or export duties within UAE.
Choosing the Right Free Zone for Your Business
With over 45 options, here are the main factors to consider when selecting a free zone:
Industry Focus
Analyze which free zone caters best to your industry. For instance, media firms fit DMCC, tech companies suit DTEC and manufacturing units align with Kizad.
- Location & Infrastructure
As an example, if you need access to ports & airports, Jebel Ali Free Zone is ideal. For a cost-effective office-based setup, TECOM free zone is better.
Costs and Ownership Rules
Registration fees, license costs and ownership rules differ across free zones. Select based on your budget and specific business needs.
Step-by-Step Process to Setup Your Company
1. Consider business activities
Business activities are one of those factors that can help you choose the perfect UAE Free Zone. Each free zone in the United Arab Emirates has different guidelines related to the business activities that may be performed within the area. These zones also have their own set of permissible business activities.
There are also different rules in each free zone in UAE regarding how many business activities are allowed within the particular free zone. Remember, the more activities you choose, the more license costs will increase. Sometimes, you must obtain two or more business licenses for the same company. Therefore, you must carefully assess the nature of your business activities and choose a reliable free zone.
2. Choose the facility types you need.
Facilities are among the top factors in choosing a reliable free zone. Remember, a company registered within the free zone can only have the facility within the free zones where it is registered. The free zone offered a range of facilities for businesses in their area. The facility you choose to set up your businesses in UAE free zones must be aligned with your business needs and budget.
When starting a business, you must plan for the future. If you are not planning for a big company expansion in the following years (increasing the number of employees), you must obtain a shared or flexi desk at a co-working space. These free zones also have the minimum facility requirements for a business or trade license in the UAE.
Most free zones offer numerous options for work and storage space. Free zones, like Meyden Free Zone, offer premium facilities, like luxurious hotels, golf courses, racecourses, and more. While holding a physical space is essential for most free zones, certain free zones, like IFZA, are exempted. Therefore, you should choose a free zone as per your facility requirements.
3. Ensure the Free Zone’s location is suitable for your business.
Location is another essential criterion in selecting the free zone for your company in the UAE. The Free Zone’s location must be reliable for your line of company. The connectivity of the free zones with airports, seaports, and roads must be evaluated.
If you want to set up an export or import business, a popular sea-air hub like JAFEZA would be suitable for your business. While DWTC might be your best choice for your central location, DAFZA might be reliable if you are looking for proximity to airports. In addition, you must pay special attention to the Demographic of the region because it attracts the right pool of skilled workers and clients. You should choose a free zone where your employees, clients, and suppliers easily locate your business.
4. Understand the tax incentives and custom benefits.
A favourable tax environment is one of the main attractions of the UAE Free Zone. Many free zones offer 100 percent foreign ownership and exemptions from personal and corporate tax based on specific requirements. Before choosing the Best Free Zone for Business in the UAE, you must research the specific tax incentives and custom benefits that you can enjoy by selecting that free zone.
While performing research, you should consider factors like customs duties, export and import process, and VAT regulation of these free zones. Remember, these perks may significantly impact your business’s competitiveness and profitability.
5. Consider the Type of legal entity.
Most free zones allow numerous types of legal entities for the formation of your business. Indeed, you have guessed it right! The types of legal entities are another crucial factor in choosing a reliable free zone for your business.
You can set up your business known as Free Zone Company (FZ Co.)” or Free Zone Establishment (FZE). Remember, the type of legal entity you choose will have a limitation on the number of shareholders that your company will have. This also depends on whether a shareholder is a natural or legal person.
Each free zone authority has its own guidelines on the types of legal entities you can register. For instance, the DMCC allows the creation of a limited liability company (LLC), which could be a newly created entity with one or multiple shareholders or a completely owned subsidiary of a local or foreign business or company.
Conclusion
UAE free zones offer unparalleled advantages for businesses looking to establish a presence in the region. From tax incentives to simplified regulations and strategic locations, these zones provide an ideal environment for growth and expansion. By leveraging the benefits of UAE free zones, businesses can unlock new opportunities and achieve success in the dynamic Middle Eastern market.
FAQs
You will need passport copies, Emirates ID (if resident), address proof, detailed business plan, owner photographs etc.
Yes, most zones have tie-ups with major banks to provide financing options like loans, credits etc if required.
Costs vary widely from zone to zone – starting from AED 7,500 in RAK to over AED 100,000 in Dubai. Lower tier packages only charge a few thousand dirhams.
