How to Setup a Company in Dubai Free Zone?
Company Setup in Dubai Free zone can act as a launchpad to international entrepreneurs into one of the most dynamic business centers globally. Dubai, its modern infrastructure, its forward-looking regulations and the strategic placement of this city have made numerous businesses thrive, in large part, by the opportunities they have brought about by free zones.
What is a free zone company?
A free zone company also known as a free trade zone company is an establishment that is registered in certain economic regions in the UAE. The zones are tailored to promote business and investment by providing attractive taxes, simplified custom processes and easy requirements to establish a company. Contrary to offshore companies which are incorporated mainly to conduct business abroad, free zone companies are onshore enterprises which can conduct business in Dubai under some requirements.
Why Choose a Dubai Free Zone?
Company setup within the Dubai Free zone is a popular choice of set up a business. Here are several advantages:
- 100 percent foreign ownership – no local sponsor is required.
- No corporate and personal tax.
- Complete remittance of profits and capital.
- No import and export duties.
- World-class infrastructure and logistics access.
- No limitation against foreign hiring.
- Scalable office (between virtual and real workplaces) solutions.
There are almost 70 free zones in Dubai, and one can appeal to more than 150,000 companies that represent different spheres. Every free zone is specialized in certain areas of business, e.g. technology, media, healthcare or commodities. Among the names worth mentioning are the Dubai Multi Commodities Centre (DMCC), Dubai internet city, and the International Free Zone Authority (IFZA) which can be applied to different business needs.
Read Also: What is the Costs of Opening a Free Zone Company in Dubai
Types of Licenses Available
In case of Company Setup in Dubai free zone, the entrepreneurs are able to choose among several types of licenses:
- Trading License: To purchase, sell, distribute within and outside of the free zone.
- Service License: In the case of professional services (consulting, IT, etc.).
- Industrial License: To manufacture or assemble.
- Professional License: It is used by those like engineers, doctors, and consultants.
It’s worth noting that free zones offer licenses beyond their specialized industries.
For those interested in setting up a free zone company in Dubai, the International Free Zone Authority (IFZA) is a highly recommended option. IFZA has become one of the most popular free zones in the UAE, offering numerous advantages to investors. These advantages include:
- no annual audit report requirement
- no paid-up share capital requirement
- up to 3 years of visas for owners and employees
- no employee guarantee deposit to the free zone
- permission for virtual offices
- no requirement for physical presence during company formation
- no need for a No Objection Certificate (NOC) from the current visa sponsor.
Most Suitable Locations For Business Setup in Dubai Free zone
Dubai South Freezone
Jabel Ali Freezone
Dubai Silicon Oasis
Dubai Airport Freezone
Dubai Multi-city Commodities
Dubai Media City
Business Setup in Dubai Free zone: Step by Step Process
Advantages of Free Zone Business Setup in Dubai
Dubai is currently the attraction of countless businessmen and entrepreneurs from all around the world. This is due to the advantages of owning a business in one of the free zones in Dubai.
These benefits can be found in all of the free zones in the UAE. Some benefits are exclusive to a few free zones. This is because each free zones cater to the needs of specific businesses.
Here are some of the common benefits of free zone company formation in Dubai:
- 100% exemption from all corporate and personal taxes.
- 100% ownership of businesses.
- 100% exemption from quotas and tariffs for export and import.
- Easy business formation process.
- Outstanding infrastructure and state-of-the-art technology.
- You are not required to have a physical office space in the free zone (or a NOC) during the free zone company setup in Dubai.
- You get 100% repatriation of profits and capital for businesses in free zones.
- No need to look for local sponsors to share ownership.
- Free zone company setup in Dubai receives in-house office and warehouse benefits.
- Free zone business setup in Dubai has the option to be set up by an individual.
- Free zone business setup consultants in Dubai provide impartial consultation to get you started.
Step-by-Step Process for Dubai Free Zone Company Setup
Company Setup in Dubai Free zone follows the following systematic process to start:
1.Determine Business Activities
Prepare the essential business operations in order to find out which of the free zones fits your model and business sectors.
2. Select the Right Free Zone
Select a free zone and licensing that provides the most suitable facilities and licensing that meets your business requirements. Specialized industries are Dubai Media City where media companies are located, Dubai Healthcare City where medical facilities are located, among others.
3. Choose Your Company’s Legal Structure
Choose whether to incorporate as a Free Zone Establishment (FZE), Free Zone Company (FZC/FZCO) or as a subsidiary of an existing business. Legal form can be based on the particular number of shareholders; FZEs have one shareholder whereas FZCOs may have many shareholders.
4. Select a Company Name
Choose an original, conforming name of the company. Free zone governments are known to keep directories of acceptable and unacceptable words. Ensure that your trade name does not interfere with the existing names or adopt reserved names.
5. Apply for Initial Approval
Present your business plan, copy of your passports of all shareholders and application form to the appropriate free zone authority. There are free zones that need a NOC or bank reference.
5. Gather and Submit Documents
The company setup documentation required in the Dubai free zone is:
- Copies of shareholder(s) passport.
- Signed application forms
- Board resolution (of corporate shareholders)
- Memorandum of association: Original, signed and registered on the company basis.
- Articles of association: Original, signed and registered on the company basis.
- Lease contract or flexi-desk contract.
- Power of attorney (in case of appointment of manager)
- Stakeholders photos in color.
Precise requirements may depend on free zone and type of company.
7. Pay Setup and Licensing Fees
Once the documents have been submitted, make payment of application fees and licensing fees. The cost of licensing varies between AED 10, 000-50, 000/year based on the free zone and business operations.
8. Receive the Business License
When approved, your business license and establishment card as well as other necessary permits will be provided to you by the free zone authority. This process will typically require between 5 and 15 working days.
9. Open a Corporate Bank Account
After registration, submit your license and papers to open a business bank account in a local or international bank in Dubai.
10. Apply for Visas
Through free zones, investors and employees are able to acquire residence visas. The size of the office leased or the nature of business is generally associated with the number of visas. Based on a legitimate company license, you can sponsor visas of employees, dependants or business partners.
Key Locations for Free Zone Business Setup
In Dubai, there are numerous free zones, which have different advantages:
- Dubai South Freezone: Logistics, aviation and e-commerce.
- Jebel Ali Freezone (JAFZA): Manufacturing, trade, logistics
- Dubai Airport Freezone (DAFZA): Aviation, trade, pharma industries.
- Dubai Internet City (DIC): IT and communications.
- Dubai Media City: Publicity, advertising, media.
- DMCC (Dubai Multi Commodities Centre): Commodities, gold, energy.
Dubai Free zone Company Setup Cost
The prices vary by the free zones, and the type of license, requirement of office and the quota of visa. The starting rate could be as low as AED 5,750 with a basic package without visa and elaborate packages involving office space and visa packages could reach AED 50,000 and beyond. Other expenses like the annual renewal fee, renting an office, and other services (like PRO support or visa processing) can also generally affect the pricing.
Required Documents for Free Zone Company Registration
Common documents include:
- Copies of passports of individual shareholders/managers.
- Proof of address
- Passport-sized photos
- Business plan
- Power of attorney (if needed)
- Board resolution and MOA for corporate shareholders
- No Objection Certificate (NOC) from sponsor (if already in UAE)
Documents requirements might vary when it is an individual shareholder or corporate with additional approvals required on corporate structures.
Additional Notes
Several of the free zones, including IFZA, do not impose annual audit and paid-up capital requirements, meaning that companies can be founded without physical presence and without an introduction or nomination by the previous sponsor. Special packages on startups and discounts are also available in many zones to new applicants of licenses.
The first step in your business process can be Company Setup at the Dubai free zone, which can offer regulatory flexibility, tax incentives, as well as the world-class infrastructure. Things that you can look at when choosing your free zone and package include long-term business considerations, expansion capabilities, and requirement of compliance. To get expert help and ensure that the process goes smoothly, hire the services of company setup consultants who are aware of the free zone ecosystem in Dubai.
Documents Required for Free Zone Company Setup Dubai
For a Business License
- Copy of your passport and copies of the passports of any other partners should you have any.
- A completed form for corporate account opening.
- A resolution sanctioning the opening of the account by the board of directors and the signatories to the account.
- Copy of the company’s certificate of incorporation.
- Copy of the company’s draft of the Memorandum of Association, also known as MOA.
- Copy of the company’s share certificate should you have one.
For Opening a Bank Account
- Completed application form.
- The complete business plan.
- The board’s resolution.
- The Memorandum of Association (MOA).
- Color copy of your passport and color copies of the passports of your partners should you have any.
Business consultancy Packages
Want to Know The Document
Documents Required for Shareholder Free Zone Companies in Dubai
| For Individual Shareholder | For Corporate Shareholder |
|---|---|
| Copy of the national ID card of your UAE national partner. | The original board resolution made for setting up the company with the Power of Attorney that was legalized and notarized from the UAE Embassy. |
| If any shareholder is in the UAE on an employment visa, then they will be required to produce a No Objection Certificate (NOC) from their employer. | List of shareholders in the Arabic No Objection Certificate (NOC) from the free zone or the offshore authority should the company be a shareholder in the proposed LLC. |
| Copies of the visa page and entry stamp (when the individuals entered the UAE) from the passport of the shareholders, directors, and managers. | Exact copy of the certificate of incorporation of the Memorandum of Association (MOA)/ Memorandum and Articles of Association (MAA) that is legalized from the UAE Embassy. |
Difference Between the Individual and Corporate Shareholder
The main difference between an individual shareholder and a corporate shareholder is their state of being. An individual shareholder is a natural person whereas a corporate shareholder is an entity. An individual shareholder is a person who bought a corporation’s stock. And a corporate shareholder is a corporation that has bought another corporation’s stock.
Frequent Ask Questions
‘FZE’ is the abbreviation for Free Zone Establishment. FZE or Free Zone Establishment is one of the legal forms of businesses you can form in Dubai and the UAE. It is a combination of a sole proprietorship and a limited liability company.
An FZE can only be established in the free zones of Dubai and the UAE. You can establish an FZE easily with the help of a free zone business setup consultants Dubai.
Free zone businesses have the freedom to engage in trade with companies within their own free zone and internationally. However, they are not allowed to directly trade with customers located in Dubai or the UAE mainland.
Company setup cost in Dubai Free zone would scale between AED 9,000 and AED 30,000 when it comes to a basic service company with a single visa. This cost is an estimate of registration, license fees (AED 10,000 to 50,000, based on the activity and free zone), office space (flexi-desks range between AED 4,000 to 15,000 per year), and administrative cost. The visa charges cost between AED 3,500 and 7,000 per person, and some special business activities and choice of location can make them even higher. Some areas such as the IFZA and the RAKEZ offer affordable packages and entry-level licenses.
Different types of free zones cater to the needs of different types of businesses. For example, an IT company will find that Dubai Internet City (DIC) is the best free zone for them, whereas a logistics business will find Dubai Airport Free-Zone is best for them.
You can seek help from free zone company setup consultants Dubai. There are over 30 outstanding free zones in Dubai and the agents will help you select the one that is best for you.
While the costs of setting up a Free Zone company in Dubai can vary, some Free Zones are generally considered more cost-effective than others. Among the affordable options in Dubai are Dubai South (formerly known as Dubai World Central), Ajman Free Zone, and Fujairah Free Zone. These Free Zones offer competitive pricing for company formation, licensing, and related services. However, it’s important to note that the affordability of a Free Zone also depends on the specific business requirements and the services required. It is advisable to thoroughly research and compare the costs, benefits, and facilities provided by different Free Zones to determine the most cost-effective option for your business needs.
To establish Company Setup in the free zone of Dubai, you have to take the following steps in a sequence:
- Identify definition of business activity and choose an appropriate free zone.
- Select the type of legal establishment (FZE, FZC or branch).
- Register a trade name and make applications with copies of passports and necessary documents.
- Pay first set up fees and receive your trade license.
- Open a business bank account.
- Employee and owner process visa.
- Get office space where needed by the selected free zone.
Despite the many advantages associated with Company Setup in Dubai Free zone, it has a few limitations which should be taken into consideration:
The free zone corporations usually cannot trade directly with the companies of the UAE mainland without a local distributor or without certain permits.
The specialization of each free zone means that the business activity might be restricted by the industry of the free zone.
Recurrent expenses can include annual renewals and renting office.
Firms, whose growth exceeds free zones privileges (i.e., wish to go beyond the free zones), will be subjected to further compliance and licensing procedures
The free zone companies enjoy 0 percent corporate and personal income taxes on qualifying income during a given period of time (renewable). Nevertheless, there are also forms of income that could be subject to taxation at the UAE corporate tax rate of 9 percent, including the income that could not be considered under the regulations of the UAE. The trading of goods in free zones is duty-free, however, there is a 5 percent VAT or duty on goods supplied to the mainland.
No, a business located in a Dubai free zone is able to purchase property but only in special freehold zones. The free zone companies may own commercial and residential properties up to some extent, as per the emirate property ownership laws. It is important to always enquire with the selected free zone and the Dubai Land Department regarding allowed zones and processes.
