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Free zones in Dubai and the UAE - For Profitable Businesses

October 5, 2022
Author
Amal Eeckhout
free zones in uae

Free zones in Dubai and UAE - For Profitable Businesses

Free zones in Dubai offer companies the opportunity to make a profit with no to very low tax rates. These free trade zones were established to attract foreign investors. If you want to start up a business, then the United Arab Emirates (UAE) certainly offers you the opportunity to make a profit and be successful.

Free Zones in Dubai and UAE - For Profitable Businesses

What are free zones in Dubai?

There are currently 45 free zones operating in Dubai and the UAE. These zones are also called Free Zones or Free Trade Zones (FTZs). The purpose of these economic zones is to offer tax breaks, customs duties and simplified import duties to foreign investors. The FTZs each have their own administration with frameworks and regulations. Each free zone is designed for one or more industries and offers licenses only to companies that fall within such an industry.

What does such a free zone look like?

The UAE has free zones in Dubai, Abu Dhabi, Sharjah, Ras al-Khaimah, Fujairah, Ajman and Umm al-Quwain. These zones can be divided into zones with an airport, seaport, or the mainland zones. The free zones in Dubai are broadly divided into trade, services and industrial companies.  

Benefits of free zones in Dubai and the UAE

The benefits of free zones in Dubai and the UAE for foreign investors are enormous.

Unlike establishing an LLC in Dubai, with a company in a free trade zone you have 100% ownership rights. In addition, these zones offer you:

  • 100% exemption from import and export taxes
  • 100% repatriation of capital and profits
  • Exemption from corporate tax up to 50 years
  • No personal income tax

What about the regulations in a Free Zone?

A free zone is governed by a Free Zone Authority (FZA). This is an authority responsible for issuing your permits. You can start your business in the form of a Free Zone Establishment (FZE) or open a branch that has an existing parent company.

An FZE is a limited liability company (SA) that must comply with the rules and regulations of the free zone in which it is located. The provisions of the Commercial Companies Law (CCL) do not apply to an FZE - if the free zone in which the company is located has its own provisions to regulate it.

The 45 free zones in the UAE and Dubai

freezones in dubai
freezones in dubai

Source: Wikipedia

Launching a business in a free zone in Dubai or the UAE

It is quite easy to start a business in a free zone. Here are the main steps you should take:

1. Determine the type of legal entity for your business.

In a free zone, you can choose between setting up a Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZ Co.). The regulations and steps you need to take to start an LLC in the free zone are largely similar as described in our article "Setting up an LLC in Dubai - what do you need to consider?".

A Free Zone Company differs from an LLC particularly when it comes to ownership, the number of shareholders and whether the shareholder is a natural or legal person.

For both starting an LLC or an FZ Co. there may be a minimum (share) capital requirement to form the company.

Not every free zone allows you to choose which type of business you start. So make sure you are well informed before you take any steps. We at Emifast can help you with this and any other procedure you need to go through to start a business in one of the free zones in Dubai or the UAE.

2. Choose a name for your business

In our article on starting an LCC in Dubai, we described the requirements that a trade name must meet. These conditions also apply to an FZ Co. in the free zone. In addition, your trade name in the free zone must end with your company's legal form, such as LLC, FZE, DMCC, etc.  

3. Apply for a business license

After completing the above initial steps, apply for a business license. Depending on your business type and business activities, there are many types of licenses available, including licenses for:

  • Commercial trade
  • Consulting
  • Industrial
  • Educational
  • Media
  • e-Commerce
  • Offshore
  • Freelancer
  • Warehouse
  • Manufacturing

As you could read in this article, each zone has its own type of companies and licenses. It is useful to know in which free zone you can establish your business. Also the rules for obtaining licenses differ per zone.

4. Choose an office space

You can buy or rent office space in free zones. The requirements for an office depend on the type of business you have, your business activities and the number of employees.

Often packages are offered from which you can choose. In some free zones you have a choice of a flexi-desk of 20-30 sqm, a flexi-office of 200-265 sqm or multi-storey offices totaling 2000 sqm each. The Free Zone Authority of Hamriyah offers more than 100 office packages ranging in size from 15 sqm to 42 sqm with meeting and internet facilities.

Obtaining a business license in the free zones in Dubai and UAE

Below we list a few general guidelines for obtaining a license.  For initial approval, you will need among other things:

  • Completed application form
  • Business plan
  • Copy of existing trade license or a certificate of registration certificate (if you already have a business)
  • Colored passport copies and signatures of the company's shareholder(s) and the manager/director of your new company
  • Financial reports of your company for the past 2 years or a reference from your bank

For a complete list and any questions you may have, please contact us. We are happy to help you to get your business in Dubai up and running in the most efficient way.

After you have received the initial approval, you pay the registration fees and license fees. Next, you schedule an appointment with the notary to prepare the notarial deed. As a final step, you will go through the licensing and visa process. Then the rental agreements are drawn up by the free zone authority, you receive your trade license and you can have your visa updated.

The duration of the whole procedure depends on your business activities and the approval of (external) authorities.  

Get help from an experienced Dubai Business Expert

We have assisted many entrepreneurs with launching a business in Dubai and the UAE. It saves you a tremendous amount of time and budget if you go through the entire procedure right the first time. This requires knowledge and experience and the right contacts. Book an appointment to discuss the possibilities for you to start a profitable business in Dubai!