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Everything You Need to Know About Starting a Business in Freezone

By Shivangi - 24 Mar 2022 Last Updated: 05 Aug 2022
Everything You Need to Know About Starting a Business in Freezone

Table of Contents 

  1. 1. What is a Freezone Company?
  2. 2. Kinds of Entities Permitted for UAE Free Zone Company Formation
  3. 3. Kinds of License available in UAE Free Zones
  4. 4. Advantages of Establishing a Freezone Business in Dubai
  5. 5. What are the Steps for Starting a Freezone Business in Dubai?
  6. 6. Documents required to open Business in Dubai Freezone
  7. 7. List of the Freezones in UAE
  8. 8. Conclusion

The UAE is a popular destination for entrepreneurs from all over the world. The country has seen significant economic progress that has benefited both locals and foreigners.

Dubai, in particular, is a developed city with numerous advantages. These advantages include world-class infrastructure, low taxation, global connectivity, a thriving economy, and many others. As a result, the city is one of the best places to do business. This blog will go over the specifics of establishing a free zone business in Dubai.

What is a Freezone Company?

Freezone are also referred to as free trade zones. These jurisdictions are essentially economic zones in which goods and services can be traded at preferential tax and customs rates.

One common misunderstanding is that free zones and offshore companies are similar. This, however, is not the case. Free zone companies are onshore entities that can conduct business in Dubai if certain conditions are met. On the other hand, Offshore companies are formed solely to conduct business outside of their registered jurisdiction or the location of their primary ownership.

In the UAE, there are approximately 67 free zones, with new ones being established each year. Over 150,000 companies in the country are also located in free zones. Furthermore, this figure is rising over time.

The cost of establishing a business in Dubai is approximately AED 11,900. The cost, however, will vary depending on the free zone you choose and your visa requirements.

Kinds of Entities Permitted for UAE Free Zone Company Formation

Business setup in the UAE free zones is simple. The UAE government has simplified the company formation process to attract the greatest number of foreign investors with the least amount of capital investment.

In the UAE free trade zones, three types of entities can be established, namely.

  • A branch of a foreign or domestic company
  • A single shareholder owns a Free Zone Establishment (FZE).
  • With 2 to 5 shareholders, a Free Zone Company (FZC) is formed.

Kinds of License available in UAE Free Zones

The formation of a business in the UAE free zones is incomplete without acquiring a business license. Applicants in the UAE free zones can obtain the following types of business licenses-

General Business License

Enables investors to trade in a wide range of products

Commercial/Trading License

Allows you to perform industrial, commercial, or consulting activities for a set period.

Service Permit

It allows for the operation of law firms, accounting firms, and business consulting firms.

Industrial Permit

It allows for the importation of raw materials, the manufacture of goods, and the exportation of finished goods across international borders.

Warehousing Permit

This license allows investors to lease warehousing facilities for the distribution, packaging, and storage of goods.

Manufacturing Permit

Allows applicants to manufacture goods.

Advantages of Establishing a Freezone Business in Dubai

Advantages of Establishing a Frezone Business in Dubai are as follows-

Complete Business Ownership

Free zones allow foreign investors to obtain 100 percent ownership of their company.

Profit Repatriation in Full

Free zone companies can repatriate their entire profit outside of the UAE. This entitles them to transfer 100 percent of their capital to their place of origin without any restrictions.

0% Corporate Tax

According to UAE law, companies are not required to pay corporate tax on their business revenue, allowing you to keep all of your profits.

Import and Export Procedures are Simplified

Unlike the mainland, free zones are exempt from all customs duties.

Strategic Location

Free zones are strategically located near seaports, airports, and national borders. This would almost certainly maximize trading advantages.

Global Connectivity

Dubai has major seaports and airports, allowing you to trade locally and internationally. The location puts you close to distributors and manufacturers in the Middle East, North Africa, and South Asia.

Thriving Expat Entrepreneurs

Dubai, as one of the world's most popular transit destinations, attracts millions of tourists and investors alike. The city has a multi-national community and opportunities to connect with a global business community.

Variety of Business Activities

Free zones allow you to engage in a variety of business activities.

Time-saving and Simple Registration Process

Obtaining a license is a relatively quick and simple process. As an investor, you will have easy access to free zone business formation and convenient administrative services.

What are the Steps for Starting a Freezone Business in Dubai?

Steps for Starting a Freezone Business in Dubai are as follows-

Determine the Licence type and Business Activity

Before deciding on a free zone in which to establish your business, you must first decide on the type of license you require. This is because since certain free zones may or may not provide the license of your choice.

The type of license you need to apply for will be determined by the nature of your business and the activities you intend to engage in. Obtaining your license will take less than a week, and renewals are required once a year.

Choose the Best Freezone for your Company

Each free zone caters to a specific industry. You can determine which free zone allows the license and all related activities based on the nature of your business.

Choose the Type of Corporate Structure

In a free zone, you can establish the following legal structures

  • Limited Liability Company in a Free Zone (FZC LLC)
  • Establishment of a Free Zone Limited Liability Company (FZE LLC)
  • The Branch Corporation
  • Free Zone Corporation
  • Establishment of a Free Zone

Application and Submission of all Required Documents

After you have completed the preceding steps, you must obtain the following

  • Application
  • Identification card
  • Permit to Enter
  • Stamping, medical examination, and Emirates ID

Select an Office Location

Most free zones will necessitate the use of physical office space. You can choose the best option for you based on the nature of your business and the number of visas you require.

Create a Bank Account

Finally, you will need to open a free zone business bank account to keep track of your business transactions. A free zone bank account would allow the investor to easily track their company's expenses, calculate tax liabilities, and better manage cash flow.

Once you have completed all of the preceding steps and received preliminary approvals from the appropriate authorities, you can obtain your license and proceed with your business ventures.

Documents required to open Business in Dubai Freezone

The following documents must be submitted to open a business in the Dubai Freezone-

  • Copies of passports
  • Copy of a visa
  • Copy of Emirates ID (if applicable)
  • Photograph for a passport
  • Business Plan (only applicable for certain free zones & certain activities)

Depending on the free zone you choose, you may be required to complete additional steps and submit additional documents.

List of the Freezones in UAE

Here is the following list of freezone to learn which businesses are most likely to prosper, as well as how easy it is to set up a firm in the UAE.

Conclusion

Identifying the best free zone in the UAE to set up your business may appear complicated given the various free zones in the UAE. However, we at Dhanguard can make the entire process easier for you.

We will handle all of the necessary procedures, from pre-approvals to assisting you in obtaining your trading license. Our goal is to make it as easy as possible for you to establish a business in the Dubai Freezone.

For more information regarding the Freezone Business in UAE,

connect to Dhanguard, and we will gladly assist you in every aspect.

Dhanguard provides the business setup and company formation services in Dubai, UAE with the guidance of our professional team of consultants. Faster and hassle-free company setup in Mainland and Freezone in UAE.

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