Free zones in Dubai have always been the preferred jurisdictions for business setup in the UAE, owing to the numerous benefits they offer. The initiative of launching free trade zones in the UAE aimed to diversify the oil-dependent economy and create business and investment opportunities in Dubai and other emirates. It is safe to say that free zones have been largely successful in attracting foreign businesses and have become sought-after destinations for business registration in Dubai.
Since the launch of the Jebel Ali Free Zone (JAFZA) in 1985, Dubai is now home to over 30 free zones, each focusing on a diverse range of sectors such as media, finance, aviation, information technology, and healthcare. These zones differ in terms of pricing, setup packages, regulations, etc., providing entrepreneurs with ample options to choose their ideal jurisdiction for company formation. Read More
Dubai Free Zone Benefits
With a host of advantages, free zones stand out as the preferred choice for obtaining a Dubai trade license. Here are the key benefits of setting up a free zone company:
- 100% foreign ownership
- Tax benefits*
- Cost-effective business setup
- Strategic geographical location
- Proximity to seaports and airports
- Business-friendly framework
- Industry-specific support
- Provisions for training and mentorship
*Subject to certain conditions
Dubai Free Zone Business Setup
Industry-Specific vs General-Purpose Free Zones
While most free zones in Dubai are industry-specific, some are general-purpose and open to a diverse range of business activities. For instance, Meydan Free Zone is general-purpose, while Dubai Media City (DMC) is industry-specific, mainly catering to media and advertising sectors. It’s important to note that most industry-specific free zones are also open to other business activities. When setting up a business in a Dubai free zone, consider factors such as location, cost, and available facilities.
Business Setup Costs in Dubai Free Zones
The cost of forming a company is a major concern for prospective entrepreneurs. Several factors influence the costs:
- Free Zone Selection: Each of Dubai’s free zones has different pricing for trade licenses, often included in packages with visas.
- Number of Visas: The number of visa quotas affects overall costs.
- License Duration: The length of your license impacts setup costs.
- Office Leasing Costs: Costs vary based on the type of workspace; for example, a flexi-desk is cheaper than a private office.
- Business Activities: The license price may increase with additional business activities.
- Minimum Capital Requirements: Some free zones require a minimum paid-up capital.
License Types Available at Dubai Free Zones
Free zones in Dubai offer various types of licenses, often depending on the industry. Common license types include:
- Professional License: For service-oriented businesses based on professional expertise (e.g., consultancy, medicine, accounting).
- Commercial License: Required for trading activities, such as import/export.
- Industrial License: Covers industrial activities like production, packaging, and segregation.
Obtaining a Dubai Trade License Through a Free Zone
Here are the steps for free zone company registration in Dubai:
- Trade Name Reservation: Reserve a trade name compliant with naming conventions set by the free zone authority.
- Application Submission: Sign and submit the application form along with the necessary documents:
- For Individual Shareholders:
- Passport copies of shareholders and managers
- Latest UAE entry stamp/visit visa copy
- Residence visa copy and Emirates ID of shareholders and managers (for UAE residents)
- Address proof
- Passport-sized photos
- For Corporate Shareholders:
- Memorandum of Association (MOA)
- Article of Association (AOA)
- Business license (for existing companies)
- Board Resolution
- Certificate of Incorporation
Note: Corporate documents must be attested by the UAE Ministry of Foreign Affairs (MOFA) and the UAE Embassy in the country of issuance. Additional documents may be required.
- Issuance of Trade License: Upon approval, the free zone authorities will issue your trade license, completing the registration process. You can then proceed with the visa application process (if applicable).
Legal Structures for a Dubai Free Zone Company
Permitted legal structures vary by free zone, but common types include:
- Free Zone Establishment (FZE): Can have only a single shareholder, either an individual or a company.
- Free Zone Limited Liability Company (FZ LLC): Protects owners from personal liability, allowing up to 50 individual shareholders.
- Branch: An extension of a parent company based in the UAE or overseas.
Dubai Mainland vs Free Zone
A free zone company offers ownership benefits such as 100% foreign ownership for expats, eliminating the need for a local sponsor. Conversely, a mainland company traditionally requires a local sponsor to own 51% of the shares. Recent changes in laws allow certain mainland companies to be wholly owned by foreign nationals, but this is limited to specific business activities.
Free zone licenses are issued by the free zone authority, whereas mainland business licenses are issued by the Department of Economic Development.
Can a Free Zone Company Conduct Business in Dubai Mainland?
In general, free zone companies cannot conduct business directly in the mainland without approvals from the free zone authority and the Department of Economy and Tourism. Some options for free zone companies include:
- Partnering with logistics providers for goods movement within the UAE.
- Opening a branch of the free zone company in the mainland.
To learn more about how to open a company in Dubai, consider exploring the options available at the Rotana Business Center.
