Dubai is one of the most popular and investor-friendly destinations in the Middle East. Its proximity and easy entry to Asia and other nations make it an excellent investment center.
The UAE has numerous free zones, most of which are located in Dubai. The high quality of life and excellent infrastructure in the Dubai Free Zones draw investors to this futuristic city. Dubai’s free zones give a regulated and stable business environment in which a vast range of business activities can be licensed. These free zones boost the economy, facilitate foreign investment, and accelerate expansion for investors and entrepreneurs hence paving the path for Dubai free zone company formation.
Free zones in Dubai are business zones where companies operating in them are free from all types of taxation such as VAT, Income Tax, Corporate Tax, and Customs. The purpose of these zones is to motivate foreign investment and improve economic activity in the city.
Advantages of Setting up a Business in the Dubai Free Zone
Every free zone is regulated by an independent free zone authority, which is accountable for sustaining free zone operating licenses and helping businesses in establishing operations in the areas. The following are some of the benefits of a Free Zone:
- Repatriation of capital and profits
- Exclusion of corporate income tax and personal income tax
- Easy immigration and labor recruitment processes
- Wide range of activities that can be licensed
- Unlimited and low-cost energy
- High efficiency in logistics
- 100% ownership for investors
- 100% tax exemption on personal income and corporate income
- Exclusion from all import and export duties
- Handy warehouse facilities
- Option for a company set up by a person
- Absolute privacy of operations
- Flexibility to engage in global business
- Low renewal charges
- Ability to hold properties and participate in numerous activities in Dubai
- The possibility of liquidating anytime
List of Free Zones in Dubai
There are more than 20 Free Zones operating in Dubai, which include the following:
- Dubai International Free Zone Authority (IFZA)
- Dubai Airport Free Zone
- Dubai CommerCity
- Dubai Design District
- Dubai Healthcare City
- Dubai International Academic City
- Dubai Internet City
- Dubai International Financial Centre
- Dubai Logistic City
- Dubai Knowledge Park
- Dubai Maritime City
- Dubai Gold and Diamond Park
- Dubai Media City
- Dubai Multi Commodities Centre (DMCC)
- Dubai Production City
- Dubai Science Park
- Dubai Studio City
- Dubai Textile City
- Dubai World Central (Dubai South)
- Dubai Silicon Oasis
- Dubai World Trade Centre
- International Humanitarian City
- Jebel Ali Free Zone
Types of Licenses Available for Business Setup in Dubai Free Zone
It is essential to be aware of the several incentives that free zones in Dubai give to license holders, for instance, the International Free Zone Authority (IFZA) allows the combination of up to seven activities that may belong to a single license or different license types.
The following licenses are given by free zone authorities for Dubai free zone company setup:
- Industrial License
Industrial License is acquired for manufacturing units and production activities.
- Trading License
This license is issued for import, export, distribution, and storage business, and it can also be applied for the sale of the products within the United Arab Emirates market through a local distributor.
- Service License
Applicable services are cited in this license and the holder of the license is allowed to carry out those services within Dubai free zone as well as all around UAE.
- General Trading Activities
This license can deal with the trading of all types of goods, with an exemption on a few prohibited products which need special authorization with this license.
Types of Business Entities Allowed in Dubai Free Zone
The UAE’s free zones are the most important basis of the country’s growing economy, and there are three types of firms that can be established in a free zone:
- Free Zone Establishment (FZE)
This is a limited liability company with a single stakeholder.
- Free Zone Limited Liability Company (FZ LLC)
This is a limited liability company with a maximum of five shareholders.
- Branch Office
A business that has a company incorporated in the UAE or a foreign land can have a branch in one of the free zones of Dubai.
It is relatively easy to start a business in a free zone as the authorities of the free zone only require the bare minimum of paperwork and time.
How to Open a Company in Dubai Free Zone?
Setting up a business in the Dubai free zone might be a tricky process, so it’s highly recommended to seek professional guidance and advice on the several incorporation and registration requirements.
Dubai offers attractive options for company formation to investors, to set up their business anywhere in the UAE depending on the type of their business, area, budget, ownership preferences, and other factors. There are particular formalities and procedures to be finalized in order to set up a business in Dubai free zones. And these formalities need acute planning, understanding of local culture, and government standards, and detailed decision-making, through various business setup phases. Don’t be put off by all that, your Damalion expert is always here to help.
Procedure to Set Up a Business in Dubai Free Zone
The following are the necessary steps to starting a business in a free zone.
- Specify the legal entity’s business activity.
- Find an eligible Free Zone
- Select a business name for the activity.
- Gather necessary documents
- Open a Business Bank Account
The steps are explained below:
- Specify the legal entity’s business activity.
Determine the business activity you wish to carry out, as the type of license you apply for will depend upon the nature of the business activity. Most Dubai free zones authorize multiple business activities, so have many choices to explore.
- Find an eligible Free Zone
Once you have decided on a business activity, the next step is agreeing on which free zone is right for you. Research before selecting a particular zone.
- Select a business name for the activity.
Before settling on a name, you need to confirm that your business name is available to be registered on the Dubai free zone authority portal. There are specific standards that the name must adhere to, including avoiding any irreverent language or references to religious or political institutions.
- Gather necessary documents
After determining the business activity and registering the trade name at the portal, the next important step is to apply for a license. The type of license you’ll apply for depends on the business activity. To apply for the license, you have to fill out the application form and gather the necessary documents, as cited in the form. You can also make a visa application during this process.
- Open a Corporate Bank Account
Opening a bank account is a simple process. But to do so, you have to gather the documents and your business license and submit it to the chosen financial institution.
Documents Required for Dubai Freezone Company Formation
For a business license:
- Colour copy of shareholder passport and visa, if relevant
- Completed application form and letter of Intent
- Business strategy
- Board Resolution
- Memorandum and Articles of Association
For opening a bank account:
- corporate account opening form
- board of directors’ resolution sanctioning the opening of the account, and the signatories to the account
- duplicate of your company’s certificate of incorporation
- duplicate of your share certificate
- duplicate of the company’s Memorandum and Articles of Association
- duplicates of passports for all partners in the company
Dubai Free Zone License Cost
Dubai free zones give exclusive packages to aid business owners. The cost of setting up a business in Dubai depends on many factors but free zones cost is relatively less. So it is not easy to sum up the total cost of Dubai free zone company formation as the last figure is made up of many components. Along with the cost of the free zone license itself, one also expects to consider the cost of premises if needed as well as visa costs.
Why Set Up your company in Dubai Free Zones?
There are many benefits of setting up a business in a Dubai free zone. One of the largest is 100% ownership of the business and 100% tax exemption. The tax exemption is an excellent option for foreign companies and business owners who want to use the UAE for regional manufacturing or as a distribution base.
Dubai’s free zones are very popular among entrepreneurs and business owners for company setup because of their reputation of being tax-free zones with free trading ports that can be exclusively owned by the person who sets them up. Also, Dubai free zone company formation does not have a limitation that requires the presence of a local sponsor, which is also a motivation for increased foreign investment. Dubai free trade zone company registration process is very smooth and needs only that the share capital arrangements are made before applying for a license.
Freedom of doing business, large tax savings, and excellent government policies direct s investors and businessmen to set up their operations in Dubai free zones.
Before you begin setting up a business in one of Dubai’s free zones, make sure you have the appropriate resources in order. Better still, seek professional guidance and advice on the several incorporation and registration requirements. To set up your Dubai company, please contact your Damalion experts now.
