BUSINESS SETUP IN DUBAI FREE ZONES

In Dubai, foreign investors have two main options for setting up a business: 'the Mainland' and 'Free Zones'. There are a variety of reasons why ex-pat businessmen prefer Dubai free zones to the mainland, including easy business setup procedures, comparatively lower costs, and most importantly, 100% ownership within the company without the necessity of a neighboring sponsor.

Dubai's free zones play a vital role in boosting and diversifying the economy and creating more employment opportunities. As a result of their highly efficient and independent regulatory structure, free zones are one of the most attractive options for foreign investors looking to establish companies in Dubai.

WHAT IS AN AREA & WHAT PURPOSE DOES IT SERVE?

Since the Jebel Ali free port (JAFZA) was founded in 1985, Dubai is the first emirate within the UAE to have developed a country model within the entire UAE. There are special free zones for landing, handling, manufacturing, and modifying products. It is a system in which certain tax, employment, and trade regulations are applied differently than in mainland jurisdictions.

The free zones in Dubai are generally located near seaports or airports to facilitate imports and re-exports, the most common business activities within the free zones. JAFZA, for instance, can be found at Jebel Ali port, while DAFZA is near Dubai International Airport. Additionally, free zones are not allowed to trade directly within the UAE market without appointing a local distributor.

DUBAI FREE ZONES OFFER NUMEROUS ADVANTAGES TO FOREIGN INVESTORS

Due to the numerous advantages that a country business setup in Dubai has over a mainland business setup, business setup consultants in Dubai recommend it to foreign investors. The following are the most notable features of company formation in Dubai.

1. 100% Ownership, No Local Sponsor

The option of setting up companies on the mainland in Dubai is a horny business setup option, however the requirement for a neighborhood sponsor (UAE National) to hold at least 51% shares has been a deal breaker for foreign investors. Expat businessmen whose client base is outside the UAE prefer the country business setup in Dubai due to the highly attractive 100% ownership structure.

2. Most Free Zones in Dubai are Industry-Specific

Most of the ex-pat entrepreneurs prefer to register their company in Dubai free ports because they want the option of launching their business in a very free zone that's dedicated to their industries. Media business investors can form a corporation at Dubai Media City, and IT companies can be incorporated at Dubai Silicon Oasis (DSO) and Dubai Internet City. Due to its Fintech businesses, Dubai Financial Centre (DIFC) also focuses on the finance industry. Other well-known free zones catering to specific industries include Dubai Healthcare City, Dubai Outsource City, Dubai Design District, and Dubai Textile City.

3. 100% Repatriation of Profits & Significant Tax Exemptions

As an organization operating in Dubai, the entrepreneur will be able to take his profits back home. Due to the UAE's tax-free status, businesses can even enjoy significant tax exemptions. The oil and banking industries, however, are subject to company tax. Moreover, businesses with taxable supplies exceeding AED 35,000 are required to register for consumption tax. As well as guiding businesses on how to register for VAT, the best business setup consultants in Dubai can also assist with company registration.

4. Independent Regulatory Bodies

Regulatory authorities oversee geographical trade zones that are designated as free zones. Corporations are incorporated according to the policies and regulations of each country's authorities. DMCC Authority, for example, is the administrative body of the Dubai Multi Commodities Centre (DMCC). DIFC is regulated by the DIFC Authority, DFSA, and DIFC Courts. Investors have more flexibility in incorporating a corporation in Dubai-free zones thanks to the independent rules and regulations.

HOW TO CHOOSE THE PROPER AREA FOR COMPANY INCORPORATION IN DUBAI?

The ideal place to register a company in Dubai is an important part of every investor's work trip. Almost thirty of them are located in Dubai (including the free zones within Abu Dhabi and the Northern Emirates). Following certain factors is the most effective way to choose the right free port. By identifying the appropriate free zones, the simplest business setup consultancy in Dubai will assist you in establishing a successful business.

1. Consider the Business Activities in Dubai Free Zones

When foreign investors decide to start a business in Dubai, they should look through the activities listed by the free zones to identify which free zones offer the business activity they are looking for. Often, this is a tough task, but investors can call up the simplest business setup consultants in Dubai who will suggest the best free zones to match their endeavors. For company incorporation in Dubai, investors can choose either general-purpose or industry-specific free zones.

2. Select the Free Zones with the simplest facilities

There is a wide range of facilities offered by the free ports, so entrepreneurs must carefully select the free zone that provides the most appropriate facilities for their business. The entrepreneur who is setting up a startup with a smaller workforce can rent a co-working space (Flexi Desk) at any of the free zones in Dubai.

A business with an outsized staff or conducting frequent client meetings is the right choice for an investor with a long list of employees. In most of the areas, Flexi desks and office spaces include state-of-the-art infrastructure. Land and robust warehouse facilities should be available to manufacture companies.

3. Ensure that the free port is strategically located

Dubai's country business setup is focused on imports and re-exports, so the situation plays a major role. Investors should ensure the area is connected by air, sea, and land. While choosing an area, proximity to international airports and seaports should be the primary criteria.

4. Find out the Share Capital Requirement in Dubai Free Zones

For Dubai company formation, a share capital amount is required. Investors should check, however, if the free zones require the deposit of the share capital amount. The Northern Emirates' free zones aren't very strict about this requirement, but the free zones in Dubai require the deposit of share capital. Hiring the easiest business setup consultants in Dubai will equip the investors with sufficient information about this requirement, which varies from freeport to freeport.

HOW CAN YOU START A BUSINESS IN DUBAI FREE ZONES?

Comparatively to setting up a business on the mainland, incorporation in Dubai free zones is a simple process. Investors must only adhere to the principles and regulations set by the respective free ports. Investors should know, however, certain elements before setting up their businesses in Dubai free zones, such as licenses and legal structures, etc.

TYPES OF COMPANIES REGISTERED IN DUBAI FREE ZONES

The type of company that can be registered in Dubai free zones is determined by the number of shareholders. In Dubai, there will be several different styles of legal structures. Below are the most important ones.

1. Area Establishment

One shareholder may form a country establishment (FZE). Dubai-based business setup consultants help investors get established with an FZE in a Dubai-free zone by supplying the required documentation.

2. Freeport Company

Dubai Free Zones allows investors to form an area company with 2-50 shareholders. Register a free port company with the simplest business setup consultants in Dubai.

3. Branch of an Existing Company

A branch company may be formed as a local branch or as a remote branch of an existing company in a Dubai-free zone. Companies outside the UAE can expand their global reach by opening a branch in a very Dubai-free port. Likewise, an organization operating in the UAE can set up a branch within the free zones.

TYPES OF LICENSE IN DUBAI FREE ZONES

In Dubai free zones, investors can obtain a license that falls under the categories of business, commercial, and professional. In many free zones, the country licenses may appear under different names. The following are the main types of free port licenses available in Dubai:

· General Trading License

· Service / Consultancy License

· Trading / Commercial License

· E-Commerce License

· Education License

· Industrial License

· Freelance Permits

· Manufacturing License

COMPLIANCE REQUIREMENT FOR BUSINESS ESTABLISHMENT IN DUBAI FREE ZONES

With an open heart, the UAE welcomes foreign businesses with an open economy. However, the country introduced a number of regulations designed to make the economy more transparent in line with global standards. Companies are being incorporated in Dubai because of its transparent economy, which is why the regulations are welcomed by investors. In order to comply with subsequent regulations, investors must adjust.

a) Economic Substance Regulations in Dubai Free Zones

The UAE government enacted the Economic Substance Regulations (ESR) to curb harmful tax practices and effectively end its previous status as a state. Due to this, companies in the free zones, offshore, and the mainland of the UAE are required to demonstrate adequate economic substance within the activities they conduct within the UAE. Banks, insurance companies, investment funds, shipping companies, lease companies, repair shops, head offices, and company businesses are all relevant.

b) National Economic Register within the UAE

The UAE National Economic Register (NER) is an online platform that enables the combination and sharing of corporate data at the national level. By using the UAE NER, any interested party can check the small print of prevailing companies' business licenses and economic activities within the UAE. In the UAE, NER has provided a means for banks, the government, and businesses to access comprehensive, accurate, and timely information. In ending the secrecy haven label, the NER laid the foundation for a more transparent environment of company incorporation in Dubai.

c) Anti-Money Laundering Compliance in Dubai

UAE enacted the Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations in order to combat the illicit flow of cash which has become a major threat to the world economy. To conform to the world standards set by the Financial Action Task Force (FATF), the UAE implemented the AML/CFT regulations.

BENEFITS OF REGISTEREING A COMPANY IN DUBAI FREE ZONES

1. Setup is simple and cost-effective

Due to the countless requirements and external approvals, mainland company incorporation in Dubai often appears off-putting to foreign investors. As for corporate registration, the free zones are regulated by their respective authorities and their regulations are generally more flexible than those on the mainland. Furthermore, the cost of setting up a business in Dubai is cheaper than on the mainland.

2. Strong Labour Force

Investments in free zones can find and recruit the desired workforce at affordable rates. In addition, foreign investors may consider Dubai free zones to be a great blessing since they do not restrict foreign labor for hiring purposes.

3. Option for checking account Opening in Dubai Free Zones

While establishing a corporation in Dubai-free zones, investors can open a company checking account. During the account opening process, businesses must adhere to the KYC and due diligence procedures.

4. Easy Visa Processing & Sponsoring of Dependents

In Dubai, the investor gets a visa that confirms that he is a resident of the UAE after completing the method of company registration. Dubai-free zones allow entrepreneurs to sponsor their family members and domestic staff by simply fitting their company in. Our Dubai business setup consultants can handle the visa processing with ease.