What Is a Free Zone and Why You Must Consider One for Business Setup

The UAE has been a number one investment destination for many years, owing to the favourable business environment it offers. A booming economy, world-class infrastructure, low taxes, and a business-centric government have made the country the best place to carry out company formation in Dubai.

However, there is more to the country than meets the eye. One of the biggest factors that captivates businesspersons wanting to carry out Dubai business setup is a business structure called Free Zone.

UAE Free Zone

Freezones in UAE — also known as Free Trade Zones — are one of the three major business structures that more than 90% of the companies fall under. Free Zones are economic areas scattered throughout the UAE where goods and services are traded at custom rates. Originally implemented to attract foreign investment in the UAE, free zones have become an inseparable part in setting up new business in Dubai and the other Emirates. Currently, the UAE houses over 45 free trade zones.

Ever since the first free zone was formed, there have been a plethora of piecemeal improvements that have been implemented on freezones. Many free zones were designed for specific type of activities. The Jebel Ali Free Zone serving as the biggest port in the region is a case in point. Another example is Dubai Healthcare City, which caters to the healthcare industry.

Why Free Zone is a Great Option

There are many benefits that free zones in Dubai offer over Mainland company formation. Some of them include:

Easy Setup: Starting a company in Dubai and other freezones is a simple process. But one must keep in mind that the exact procedure boils down to the type of business activity you’re going for. But in many a case, the basic documents, such as your passport and Emirates ID suffice. The entire process of starting a company in Dubai free zone takes between 1–2 weeks. The entire process also takes into account your preferences for flexi-desk and virtual office.

Tax & Duty: One of the most compelling reasons for entrepreneurs and businesspersons looking for Dubai company setup is the tax benefit. Starting a business in Dubai freezone will entail you absolutely 0% of corporate and personal taxes. Not just that, but your business will also be exempted from VAT, and import and export taxes. There also are no currency restrictions within UAE free zones.

Foreign Ownership: Owning a business in one of the many freezones comes at an advantage of sponsor-free company setup. Unlike mainland business setup, a foreigner doesn’t need a local sponsor for their freezone company formation. That is, you will hold 100% of the company’s shares and assets, unlike in mainland, where 51% of the company’s shares will be held by a UAE local sponsor.

Trading within UAE: Businesses established in UAE Free zones aren’t permitted to trade directly with the market in the UAE. The circumvention around this obstacle is to trade through a certified local distributor. At a later stage, you could also establish your free zone business branches throughout the Emirates. These branch offices can be used to conduct business within the UAE mainland.

Support and Assistance: If you’re setting up business in Dubai freezones, you’ll be guaranteed support all the way to the completion of your company setup. Many free zones not only assist with procuring visas for shareholders and dependents, but also assist in opening a bank account in UAE. Some free zones go above and beyond, and offer business advice, networking services, and access to other such resources.

Privacy and Security: There are strict rules dictating the right to privacy for entrepreneurs wishing to setup business in Dubai freezones. There is no business directory that discloses company information such as company ownership and shareholder details, making it one of the business structures in UAE.

How to Setup Business in UAE Free Zone

If setting up your business in freezone is the best option for your business activity, read on to know how you can setup business in Dubai free zone in just five simple steps.

Step 1 — Choose your business activity. There is a copious number of business activities you can choose and setup your business in freezone. You also have the option of including multiple activities under one business license. Choosing your activity is the first step in determining both the initial and complete costs for your business setup in Dubai. With this, you will have adequate information so as to choose your free zone.

Step 2 — Register Company Name. If you have a company name in mind, you’re only half done with the company registration process. The UAE has prescribed specific rules and standards when it comes to selecting your business name. Some of these rules include not using offensive language, and company names not containing any religious references or holding reference to known organizations. The naming convention has many more rules, which is why it is wise to work with a top company formation consultant in Dubai to help you select a name that follows the naming convention, and which, is available to register.

Step 3 — Finalize Paperwork and Submit Application. It’s a cinch to establish your enterprise in Dubai because a freezone company formation requires very less paperwork. Some free zones may require some appendages such as a business plan for your company. At this point, it is really crucial for you to understand the details you’re submitting. Most people work with a business setup consultant to ensure that the information they submit won’t produce any problems to them in the long run.

Step 4 — License notification and Bank Account Opening: As soon as you get your license, you can get right down to work. After you get the license, you will be able to open your corporate bank account. Your company formation specialist will help you choose the right bank for you.

Step 5 — Visa Processing. The last step is the immigration and visa processing. This step too, will be carried out by your company formation consultant. In fact, you won’t even have to reach out to anyone except your business setup consultant!

That ends your company formation and starts your business. All that’s required of you is a couple hours of your time to submit the relevant documents to your company formation specialist and voila! You have successfully established your business in the UAE.

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There couldn’t be a better time to establish your company in the prosperous Emirates than now! Start your business with our help today!

Cross Link International is one of the best business setup consultants in Dubai and will assist you in Trade Licenses, company formation, Business License renewal, PRO Services, Visa Services, free zone company formation, Golden Visa Procural, LLC company formation, Dubai Business Setup, 100% company mainland setup, and many more services that go into business setup. You can reach out to us through + 971 4321 6631 / + 971 55 744 6445 or fill-in this form to get a free consultation from us.

*Subject to company structure