How to Setup a Company in Dubai Free Zone?
If you’re considering starting a business in Dubai free zone but don’t know where to start, this page will provide you with detailed information about setting up a business in a Dubai free zone.
The United Arab Emirates (UAE) is a popular choice for entrepreneurs worldwide. The country has experienced significant economic growth, benefiting both locals and foreigners.
Dubai, in particular, is a highly developed city that offers numerous advantages. These advantages include state-of-the-art infrastructure, low taxation, global connectivity, a thriving economy, and more. This makes Dubai an ideal location to establish and run a business.
What is a free zone company?
A free zone company, also known as a free trade zone company, operates within designated economic zones where goods and services can be traded at favorable tax and customs rates.
It is important to understand that free zone companies are different from offshore companies. Free zone companies are onshore entities that can conduct business in Dubai while meeting specific conditions. On the other hand, offshore companies are established solely for operating outside their registered jurisdiction or primary ownership location.
The UAE has around 67 free zones, with new ones being established regularly. These free zones are home to over 150,000 companies, and the number continues to grow.
The cost of setting up a business in Dubai’s free zones can vary but is generally around AED 11,900. The actual cost depends on the chosen free zone and visa requirements.
It is now possible for free zone companies to open branch offices on the mainland. To do this, the investor needs to register the branch with the Department of Economic Development (DED) and Ministry of Economy using the same trade name. Unlike previous rules, the branch company can be fully owned by the free zone entity without the need for a local partner.
While most free zones cater to general trade, service, and industrial sectors, there are also specialized free zones for specific industries. Examples include Dubai Healthcare City (DHCC) for the health and wellness industry, Dubai CommerCity for e-commerce, Sharjah Publishing City (SPC) for printing and publishing, Dubai Internet City (DIC) for the tech industry, and Dubai Knowledge Park for HR and training.
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
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.
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.
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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.
The cost of setting up a Freezone company in the UAE can vary depending on several factors, such as the chosen Free Zone, the type of license required, and additional services or facilities needed. Generally, the costs involved in setting up a Freezone company include company registration fees, license fees, office space rental, visa fees, and other miscellaneous expenses.
The initial setup costs can range from approximately AED 15,000 to AED 50,000 or more, depending on the specific requirements and preferences. It is important to note that these costs are subject to change and it is advisable to consult with the relevant Free Zone authorities or business setup consultants for the most accurate and up-to-date information.
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 open a Free Zone company in Dubai, follow these key steps:
1. Choose a Business Activity:
Determine the business activity or activities you want to engage in. Make sure your chosen Free Zone supports your desired activities.
2. Find a Free Zone:
Research and select a Free Zone that suits your business needs. Dubai has several Free Zones, each with its own advantages and focus areas.
3. Choose a Company Name:
Select a unique name for your company, ensuring it complies with the Free Zone’s naming guidelines. You may need to check name availability and reserve it with the Free Zone authority.
4. Make Your License Application:
Prepare and submit the license application to the chosen Free Zone. Provide all required documentation and pay the applicable fees. The Free Zone authority will review your application.
5. Applying for Visas:
Once your license is approved, you can proceed with applying for visas. Determine the number of visas required for you and your employees, and follow the Free Zone’s procedures for visa applications, medical tests, and Emirates ID registration.
6. Opening Your Corporate Bank Account:
Choose a bank and open a corporate bank account for your Free Zone company. Provide the necessary documentation as per the bank’s requirements.
Yes, Dubai Free Zones offer a tax-free environment for businesses. Companies operating within Free Zones are eligible for a 0% corporate tax rate unless they voluntarily choose to pay the standard UAE corporate tax rate of 9%. This tax exemption is automatically applied to businesses that meet the criteria to become a qualifying Free Zone Person, ensuring a tax-efficient environment for companies operating within Dubai Free Zones.
Yes, a Free Zone company in Dubai can open a bank account. The purpose of having a separate bank account is to facilitate the management of business transactions and to ensure a clear separation between personal and business finances. Opening a dedicated bank account for a Free Zone company enables the business owner to track and manage their business transactions more effectively. It is a common practice and an important step for businesses to maintain financial transparency and accountability.
The residency and employment visas issued by the General Directorate of Residency and Foreign Affairs (GDRFA) for Free Zone companies in Dubai are typically valid for up to three years.