There is a separate economic area called a free zone in Dubai, which can be used by both foreign and domestic investors for business setup in the Dubai free zone and also gain a tax-exempt status. Foreign investors can establish their firms in the free zones without external help of sponsors or agents. Here, the investor is the king and he is also the sole owner of his business.
There are some calculated steps that outline the whole process of business setup in the Dubai free zone. It is advisable to pick a free zone in Dubai depending on the exact nature of your business.
Let us explore the business setup process in detail
- Legal Structure– Decide on the specific type of legal entity such as LLC or limited liability company, subsidiary, or branch office. The factors that may influence your choice can include ownership status, liability, and operational needs.
- Trading Name– You need to pick a unique and specific name that suits your company and adheres to all the regulations laid down by the free zone authority. For example, if you wish to open a business at Sharjah Free Zone, then you need a unique company name and proof of compliance.
- Business Licence– Applying for a valid business licence to the concerned free zone authority will be the next stage in the process. You can obtain a business, trade, or professional licence, depending on your business. The licence will have all the details regarding your company activities and the legal status of your business.
- Office Space– Based on the business setup in Dubai free zone regulations, you may be required to select a decent office space within the free zone area of your choosing. You can have a variety of options for your office space such as shared office spaces, flexible desks, or private office spaces as per your business needs.
- Pre-Approvals– After finalising the legal status, trading name, and designated office space, you have to gain pre-approvals from Dubai’s free zone authority. You have to submit certain documents, business plan prints, shareholder details, and valid passport copies. After the approvals are passed, you may proceed with the procedure of company registration.
- Free Zone Visa– The entire processing period for a free zone visa application can take around 3 to 5 days. The visa cost may vary on the applicant’s business requirements and the specifically chosen free zone. Free zones in Dubai provide uncomplicated visa processes and keep a fixed quota of business visas.
Free Zone VS Mainland, which is best for your business?
Dubai free zone is known as a special economic zone that provides many regional benefits to businesses. It is monitored by independent authorities and entities. On the other hand, Dubai Mainland is also an economic zone monitored by a governmental entity.
- Ownership – Business setup in the Dubai free zone gives 100% foreign ownership. Dubai Mainland also gives ownership and control over the business, but you require the services of a local sponsor.
- Restrictions & Control – Dubai free zone allows businesses to conduct operations within the free zones or outside UAE. The companies are restricted within a limited area to conduct business. While businesses dealing with Dubai Mainland have zero restrictions, they can do business anywhere in the world or the United Arab Emirates.
- Setting up a company in Dubai free zones signifies that businesses can enjoy full ownership rights, but the main jurisdiction is in the hands of the private free zone authorities who can change the rules anytime. Dubai Mainland businesses are governed by legal governmental authorities and companies have to play by the rules as stated in the legal contracts.
- Cost Factor – Free zones may not necessarily be a cheap option for companies. New business entrepreneurs may find the free zones a less cost-effective alternative, but they have the option to see other free zones out of the city that may offer cheaper provisions. Dubai Mainland entrepreneurs can start their business with just 25,999 AED and one visa, in any part of Dubai City. However, free zones such as Meydan Free Zone can help you set up a business with just AED 12,500 and get a valid business licence to select from over 3500 active business operations.
Conclusion
Sundry Advantages of Free Zones
Allowing 100% foreign ownership is the most primary advantage of Dubai free zones. Unlike the Mainland businesses, you do not need a local sponsor or a local partner to set up your business. This gives total control and flexibility in operating the business. Other advantages include a complete profit repatriation clause, wherein profits can be taken outside the UAE and full transfer of capital to their homeland minus any restrictions. Small businesses with revenue below AED 375,000 do not have to pay corporate tax and those with sizable revenue only have to pay 9% corporate tax.
The import/export processes in a free zone are simplified and businesses are exempted from paying exorbitant customs duties on goods. Customs duties are levied only when goods are carried across the border. Free zones are located close to the national border, airports, and seaports. This is beneficial for businesses to move goods from one place to another quickly by paying minimal shipping costs, thus boasting a streamlined supply chain.
Other factors such as global connectivity, thriving expat population, multi-national community, and a provision of a wide range of commercial operations like trading, manufacturing, services, technology, media, healthcare, or consulting within the free zones make it a hotspot for foreign investors. Setting up a company in Dubai free zones can be time-saving and simpler with an easy registration process.
DU Digital Global can offer comprehensive assistance for business setup in the Dubai free zone. Our specialist consultants and professional team can guide you in the right direction for poring over legal entity options, trading name selection, business licence applications and more.
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