In the UAE, free zones are geographically demarcated zones established to provide tax-exempt, and free imports duty perks to foreign investors. Such economic areas are for the purpose of promoting international trade, through the provision of 100% ownership to expatriate investors.
A special set of rules and regulations apply to each of the free zones in Dubai and the UAE. In Dubai, the free zone authority administers and oversees such economic areas. Body of law formed by a nation’s federal government and Labor ministry laws do not apply to these free zones.
A free zone company offers many unique perks over other legal forms, including the advantage of complete possession to investors and entrepreneurs. Ordinarily, when it comes to UAE mainland companies set up, the investors require a sponsor in their home country. However, when it comes to Dubai Freezone Company Setup, the investors can establish their business without the sponsor and reap cent percent of capital profits repatriation. Free zones in the United Arab Emirates provide a cent percent personal and corporate income tax perk.
Expatriates who wish to set up their companies are offered the following licenses by the majority of the free zones:
- Industrial license
- Trading license
- National industrial license
- Service license
- Branch license
Free Zones in the UAE are linked to ports or are exclusively for certain industries.
Advantages of Dubai Freezone Company Setup
A limited liability organization, a Free zone company can be owned and operated by persons or corporate bodies. The incorporation of an L.L.C and multi-stakeholder entity differs in the number of shareholders- the former one will be incorporated as a free zone establishment and the latter will be incorporated as a free zone company with up to five stakeholders.
- Following incorporation or registration, a division of a local/foreign business needs a distinct License as well.
- Unless for the initial year of operation that will begin on the day of formation, the financial year is based on the calendar year, viz. Jan.-Dec.
- Cent per cent foreign company possession is permitted
- There is no import or export tax.
- No commercial taxes.
- Cent per cent profits and capital repatriation permitted.
- Corporate profit levies and personal income levies are exempted.
There are various kinds of Freezone Companies:
Free Zone Company: One stockholder
Free Zone Establishment: Multiple stockholders
Branch Company: Branch of domestic or foreign company
Freezone Company Set Up in Dubai: Steps to Follow
After an investor opts to incorporate the company in a free zone in Dubai, he/she will need to take the following steps:
- The legal type of the company needs to be determined, ie, Free zone company, free zone establishment and limited liability company.
- The name of the company needs to be chosen.
- On the basis of the company viability and feasibility, the apt free zone for the company needs to be chosen.
- After choosing the free zone, the documents in accordance with the free zone regulations need to be presented.
- Finally, the Business license must be issued to the client by the Free Zone authority, and they should approve the application.
How to Set up a Free Zone Company in the United Arab Emirates
Here is how to Set up a free zone company in the United Arab Emirates:
Determining the Legal Type of the Company
Before forming a company, the investor must determine the legal type of the company- Free zone company/establishment and Limited liability company.
Merely a few free zones have the choice to form LLC.
Company Name Registration
After the investor determines the legal type of the company that they intend to set up, then he/she needs to register the company’s name, also called trade name registration. Additionally, the free zone authority must approve the proposed name. When choosing the name, the name must not be connected to the name of a nation/religion/government agency and more. Public morals must not be infringed by the name.
Applying For Business License
Once the company name is approved, then the investor can go for a business license application. From one free zone to another, the documents needed for company incorporation vary.
The shareholder must submit a copy of his/her passport, which must be a minimum valid for over six months, which is a basic document.
Based on the business activity, certain UAE-free zones need comprehensive business plans and external permissions.
The authority will offer an application form in which the stakeholders need to place a sign and give back, upon filing the application.
Some free zones in the United Arab Emirates allow us to set up a company from afar, but in others, shareholders need to be there personally to set up the company.
It will take the authority 10 days to approve the application, and the relevant governing body will grant the license, besides the MOA and share certificate. Upon setting up the company, the stakeholder can make a request for the company establishment card (CEC). The investor can make a request for e-channel registration after the CEC is available.
E-channel registration is needed solely by a limited number of free zones in the UAE. Upon e-channel registration being done, a visa application can be done by the stakeholder.
Moreover, after the stakeholder obtains the business license, a corporate bank account may be set up by them at any banks within or beyond UAE.
Freezones in Dubai
There are more than 30 zones in Dubai. Below are some of the free zones:
Dubai Airport Freezone Authority
Among the most vibrant Dubai free zones, the Dubai Airport Freezone Authority has more than 17000 staff and 1800 registered companies. To those company that wants to set up a branch in Dubai, the Dubai Airport free zone authority provides:
- Business-oriented regulatory and levy environment.
- 100% ownership of the company
- 100% repatriation of profits
- A variety of world-class facilities.
Dubai Design District(D3)
A zone specifically for designers, D3 belongs to the TECOM Group. New companies, business people, luxury and fashion brands are welcome in D3. Dubai’s name will be made as a premier destination for design, arts, and culture as it provides a creative environment.
Dubai Healthcare City
Dubai healthcare city, Founded in 2002 is a free zone committed to healthcare. A variety of services are offered by Dubai Healthcare city to encourage medical tourism in Dubai, such as:
- Medical education
- Medical equipment
- Pharmaceutical distribution
Dubai Internet City
Among the most vibrant Dubai free zones, the Dubai Airport Freezone Authority has more than 17000 staff and 1800 registered companies.
The innovation and tech hub of Dubai, the Dubai internet city has 24000 staff and 1600 companies. For a period of 50 years, technology companies are provided with equity, taxation, and ownership perks. Fortune 500 companies are enticed by the autonomy and adaptability of Dubai Internet City.
Dubai International Financial Centre
The Dubai International Financial Center is a free zone serving 72 nations. DIFC houses about 26000 staff members and more than 2500 companies, no wonder why it is the biggest financial network in the region.
For foreign investors, free zones are appealing. However, the nuances of the latest laws need external consulting. Offering continual support via accounting and other areas is something business consultants can offer to new business owners.