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start a business in a Dubai free zone

Guide to business setup in Dubai’s free zones

You have decided to start a business in Dubai and that a free zone is the best option for you. Next, you need to carefully understand how to start a business in a Dubai free zone. These economic zones are a really attractive option for foreign investors given their great benefits.

In this article, you will learn everything about how to get a successful business setup in a Dubai free zone. Let us observe:

  1. An overview
  2. What exactly is a free zone company?
  3. The benefits of establishing a free zone business in Dubai.
  4. What is the process for a business setup in a Dubai free zone?
  5. The simplification of the company formation process
  6. How can Connect Group help you?

1. An overview

You must decide what type of business you want to run. Will you start working as a freelancer? Or establish a Mainland or free zone company and hire employees?

Setting up as a freelancer can be a less expensive option; however, not all of Dubai’s free zones issue freelance permits, so your options are slightly limited. Meanwhile, for the free zone company option, there is a wide range of options available, including sector-specific and all-encompassing zones.

If you believe that establishing your business in a free zone is the best option for you, here is how to get started.

2. What exactly is a free zone company?

Free trade zones are economic zones in which goods and services can be traded at preferential tax and customs rates.

One common misunderstanding is that free zones and offshore companies are the same things. This, however, is not the case. FZ firms are onshore entities; and they can conduct business in Dubai if certain conditions are met.  Offshore companies, on the other hand, are formed solely to conduct business outside of their registered jurisdiction or the location of their primary ownership.

In the UAE, there are approximately 67 free zones, with new ones being added each year. Over 150,000 companies in the country are also housed in free zones. AED 11,900 is the approximate cost of establishing a business in Dubai. However, the cost will vary depending on the free zone you choose and your visa requirements.

2.1. More details

It is also worth noting that free zone companies can now open branch offices on the mainland. To do so, the investor must register his branch with the Department of Economic Development (DED) and the Ministry of Economy under the same trade name. Unlike the previous rule, which required a local partner, the branch company can be solely owned by the free zone entity.

The majority of free zones are concerned with general trade, service, and industrial sectors. However, the UAE has free zones that cater to specific industries or sectors. Some examples of such jurisdictions are:

  • Dubai Healthcare City (DHCC). It is a health industry specialist.
  • Dubai CommerCity focuses on the e-commerce industry.
  • Sharjah Publishing City (SPC) is a printing and publishing company.
  • Dubai Internet City (DIC) focuses on the technology industry.
  • Dubai Knowledge Park specializes in human resources and training industries.

Although these jurisdictions specialize in a specific industry, free zones also provide other licenses.

2.2. IFZA

If you want to establish a free zone company in Dubai, the International Free Zone Authority (IFZA) is the best option. This zone has grown to become one of the most popular free zones in the UAE over the years.

IFZA is one of the few free zones in the country that stands out for its unique benefits and investment opportunities. These are some examples:

  • The investor is not required to submit an annual audit report.
  • Owners and employees can stay for up to three years.
  • There is no need for an employee guarantee deposit to the free zone.
  • Permission to work from a virtual office.
  • There is no requirement for investors to be physically present during the formation of a company.
  • There is no need for a NOC from the current visa sponsor.

3. The benefits of establishing a free zone business in Dubai

  • Complete business ownership. Foreign investors can obtain full ownership of their company in a free zone.
  • Profit repatriation in full. Free zone companies can repatriate their entire profit outside of the UAE. So, they can transfer 100 percent of their capital to their place of origin without any restrictions.
  • 0% corporate tax. According to UAE law, companies are not required to pay corporate tax on their business revenue, allowing you to keep all of your profits.
  • Import and export procedures are simplified. FZ are exempt from all customs duties. Additionally, if you need an import-export license, we can help you.
  • Free zones are strategically located near seaports, airports, and national borders. This would almost certainly maximize trading advantages.
  • Global connectivity. Dubai has major seaports and airports, allowing you to trade both locally and internationally. The location puts you near distributors and manufacturers in the Middle East, North Africa, and South Asia.
  • Thriving ex-pat entrepreneurs. As one of the world’s busiest transit hubs, Dubai attracts millions of tourists and investors alike. The city has a multi-national community and opportunities to connect with a global business community.
  • Range of business activities. FZs offer you a variety of business activities to choose from.
  • Registration is simple and saves time. The entire process of obtaining a license is relatively quick and simple. As an investor, you will have easy access to free zone business formation as well as convenient administrative services.

4. What is the process for a business setup in a Dubai free zone?

4.1. Select a business activity (or activities)

The first step to opening a Dubai free zone business is deciding on the type of model you want to conduct, as this will influence where you can register your company. The type of license you apply for will also be determined by the activities you wish to engage in; for example, professional services, commercial, trading, and so on.

While outlining every activity you wish to pursue may appear daunting, keep in mind that there is no need to limit yourself too much here; many Dubai free zones allow for multiple business activities to be conducted under one license.

However, Dubai has some rather specific requirements regarding what activities are permitted under what license; so,  it is best to work with a company formation specialist at this stage to ensure a smooth process.

4.2. Locate a free zone

Once you have decided on your business activities, the next step is to figure out which free zone is best for you. When making this decision, you must consider several factors, beginning with whether you want to establish yourself in a sector-specific free zone. Some of the industries served by Dubai’s industry-specific free zones are:

  • Healthcare.
  • Information and communication technology (ICT). 
  • Production. 
  • Design.
  • Outsourcing. 
  • Media. 
  • Maritime. 
  • Science.
  • Finance.

There are numerous larger free zone options. Free zones such as Dubai South and DMCC, for example, are open to a wide range of activities. You should also think about where you want your free zone to be.

In addition to considerations such as access to major highways, if you rely on international trade or travel, you should also consider proximity to ports and airports.

4.3. Select a company name

Choosing a name for your business is difficult no matter where you choose to establish it. There are numerous factors to consider, ranging from the emotional to the practical. Does your name, for example, trigger an emotional response in people? And, if so, what exactly does it say? Is it reliable? Or is it high society?

And of course, there are also other naming conventions to consider in the UAE.

4.3.1. What should you do next?

The first step in selecting your UAE company name is to ensure that your business name is available for registration. There are also some rules that the name must follow, such as not using blasphemous language or making references to religious or political organizations.

Finally, if you decide to name your company after a person, there are a few more things to consider: That person must be a partner and shareholder in your company, and only full personal names, not initials or abbreviations, are permitted.

4.4. Fill out your license application

Now that you have decided what you want to do, where you want to do it, and under what name you will trade, it is time to formalize your Dubai free zone company formation by submitting your application.

They require some specific documents for Dubai free zone company formation; however, they will vary depending on the type of license you are applying for and the free zone you have chosen. As a general rule, they will ask you for some or all of the following:

  • If applicable, a color copy of the shareholder(s) passport and visa.
  • Form of application.
  • Business strategy.
  • Board decision.
  • Articles of Incorporation and Memorandum.

When establishing yourself as a freelancer, you may be asked to provide proof of invoices or work orders.

4.5. Obtaining visas

At this point, you can also begin your visa application. You can apply for your visa as well as those of your employees and any domestic workers. The process is the same whether you are applying for your visa or sponsoring someone else’s: entry permit, status adjustment, medical fitness test, Emirates ID registration, and visa stamping.

Again, a business setup specialist can assist you at this stage. This is why we recommend that you rely on the best company formation and visa services.

4.6. Open a corporate bank account

To trade, you will need a bank account. It is not always simple to open a corporate bank account in the UAE; and, of course, there are several factors to consider, not the least of which is each bank’s eligibility criteria.

You must ensure that you have all of the necessary documentation. In addition to your business license, you will most likely require:

  • Form for opening a corporate account.
  • Resolution of the board of directors authorizing the opening of the account, as well as the signatories to the account.
  • Copy of your company’s incorporation certificate.
  • Duplicate of your share certificates.
  • Duplicate of the company’s memorandum and articles of incorporation.
  • Copies of passports for all company partners.

4. The simplification of the company formation process

It only takes six steps to get your Dubai free zone business up and running. Of course, there could be potential pitfalls along the way, as with any business decision.

However, if you go in with an open mind and seek out the right guidance and advice, you should be able to get your business up and running in a matter of weeks.

6. How can Connect Group help you?

Despite what your reasons for starting a business in Dubai are, Connect Group will assist you at every step of the way. We will be with you since the moment you decide your business activity until the processes of visa application.

We will do all of the heavy liftings for you and have you up and running in less than 24 hours! In some cases, you may even be able to register your business without having to travel to the UAE.

Would you like to contact Connect Group to obtain more information about how to get a successful business setup in Dubai free zone? To help you with any inquiries and questions, call us at +971 43 316 688. You can email us at contact@connectgroup.co for assistance too. We are waiting for you!

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The Complete Guide for LLC Company Formation in Dubai

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