Free zones company formation known as (free trade zones company formation or special economic zones company formation or free tax zones company formation). Free zones are nominated regions within UAE, where foregone investor can hold 100% of ownership of his business unlike mainland area. This makes free zone the most satisfactory site in the United Arab Emirates for international business operations. The government of UAE has given these encouragements to expatriates to bring their business in this region. UAE government is doing the best to make their free zone area the most important trading hub of the globe.

In UAE there are almost 34 Free zones. Major Free zones are accommodating more than 5000 companies. Even investors can consider Free Zones of UAE a treasure house around the world. The freedom to do business combined with no or Zero tax jurisdiction makes UAE Free Zones unique to establish companies.

Political stability, law and order, life security, fast economic growth, tax haven status, and comfort to do business are the key charms of UAE.

Dubai freezone Company setup

As a leading business consultant in UAE and Dubai, Dubai Business Centers specializes in Dubai freezone company setup and in all free zones of UAE.

We are the trusted consultants and advisors for corporates and individuals round the world who want dubai freezone company setup or want to expand their existing business in free zones. We have local expertise and global presence to advise on the best possible structure, reduce the risks and guide them with the right procedures to start up a company or business in Dubai or any free zone.

We are not just providing incorporation services but also offering the business support service such as employment visas, investor visas, trade mark registration etc.

Type of Dubai freezone company formation

in freezone company the following legal forms are available.

* Branch of Foreign Company

* Free Zone Establishment

* Free Zone Company

Benefits of freezone company incorporation

* Freezone Company incorporation allows 100% Foreign Ownership (no local sponsor required)

* No corporate tax for fifty years and can be renewable for an additional fifty years for free zones company

* Freezone Company formation is Duty free entity on goods importing into the free zones

* Freezone Company formation allows you an easy recruitment procedures, work permits and Visas

* Freezone Company incorporation enables you to own the properties

* Renewal fees for Freezone Company formation are moderate

* Business privacy is strictly maintained

* Freezone Companies are allowed to open bank account in Dubai

* There is no restriction for doing more than one activity

There are thousands of company’s functions in Dubai Free Zone. Since the Formation of these Free Zones, over the years Free Zones has generated massive amount of employment opportunities for both Nationals and Expats in UAE. The idea behind the formation of Dubai free zones is to offer companies, private business and government organizations to keep the 100% ownership in company formation in dubai free zone by himself without the need to have a UAE national partner. On the other hand LLC you require a UAE national to setup a company. Free Zone Companies do not require a UAE national as a partner.

Each Free Trade Zone has its own rules and regulations. Dubai freezone company setup procedure fluctuates between Free trade zones. In common, the procedure to setup a free zone company in UAE can be summarized in the following steps (please note that some of these steps may not be required in certain Free Zones).

Dubai freezone company setup Procedure

* Determine the type of license for Dubai freezone company formation

* Determine a legal structure Dubai free zone company setup

* Confirm the business activities for Dubai free zone company formation

* Verify the fees and other charges for Dubai freezone company setup

* Confirm the business facilities for Dubai free zone company formation

* Creating of business plan for Dubai free zone company setup

* Submit application and documents for Dubai free zone company formation

* Secure the preliminary approvals for Dubai free zone company setup

* Payment for Dubai freezone company setup

* Sign the agreements and other documents for Dubai free zones company

* Receive your License for Dubai free zone companies

Now let us have a close look at the above steps for Dubai freezone company setup

Determine the type of license for Dubai freezone company formation

The first step in Dubai freezone company formation is to decide the license type that permits your business activity. In common, Free Zones offer the following types of business license.

Free Zone General Trading License

A General Trading license for Dubai freezone company formation allows you to deal with almost all types of goods with the obvious exemption of banned goods and products that need special approvals. Normally the general trading license is relatively more expensive than the trading license.

Free Zone Trading License

A trading license for Dubai freezone company formation allows you to carry out trading activities (buying, import & export, selling) of limited number of goods and commodities. Most of the Free Zones allow trading in around 3 categories of items under a trading license.

Free Zone Commercial License

Business activities such as repairing, workshops etc would need a commercial license.

Free Zone Industrial License

Activities such as manufacturing, packaging, processing and assembling fall under the Industrial License for Dubai freezone company formation.

Free Zone Consultancy / Service License

Service businesses such as consultancy, accountancy, legal firms etc may choose a consultancy license for Dubai freezone company formation.

Determine a legal structure Dubai free zone company setup

The legal structure of dubai free zone companies varies according to the number and nature of the partners involved. Documentation required, costs etc also dubai free zone companies change depending on the legal structure of the company. Documents needed for a corporate partner (or a branch entity) would be different from those required for a single shareholder.

Confirm the business activities for Dubai free zone company formation

Not all Dubai free zones allow all type of activities. Some of Dubai free zones specialize in certain activities. So it is important that you check that your proposed activities are allowed by the Free Zone of your choice. Moreover, there are restrictions over the number activities allowed.

Verify the fees and other charges for Dubai freezone company setup

This is the most important step in Dubai freezone company setup. Many investors who demand to register their company in one of Dubai free zones go for the cheapest option available based on the clear costs. They don’t understand the hidden charges to be paid for the services that are essential for the survival of their businesses. The total cost of Dubai free zone companies can be categorized into two parts.

* First year cost for Dubai freezone company setup

* Yearly renewal costs for Dubai freezone company formation

Some of Dubai free zones offer packages that are cheaper than the normal company incorporation costs. Investors fall victim to these packages offered by certain Free Zones and consultants without understanding that they have to pay the package charges every year. The normal yearly renewal charges could be cheaper than the cost of the packages. In addition, most of these packages consist of only a business license and not office premises. This may not be very beneficial if you are serious about your business. On the positive side, your efforts to decide the real cost of Dubai freezone company setup is very limited in the case of Dubai free zone company formation packages.

If you are ready to spend some time and resources to collect the data, discover the hidden charges and test the real costs for Dubai freezone company setup, you can have substantial savings on your investment. It may take many resources, including multiple visits to various Free Zones, understanding the procedure followed by the Free Zones, asking the right questions, collecting the cost details etc. The most difficult part would be to discover the hidden cost. For starters, it would be ideal to appoint a business setup consultants in Dubai to do this job for you.

Confirm the business facilities for Dubai free zone company formation

Do not assume that all Dubai free zones offer all types of business facilities. However most of the free zones offer office space, warehouse etc availability can be an important factor. So you need to consider the availability of the important facilities provided by the Free Zone before starting Dubai free zone company formation.

Creating of business plan for Dubai free zone company setup

A practical business plan is required for Dubai free zone company setup. As a matter of fact, your business plan will not just survive the purpose of providing guide line for you, but also it is the part of your business incorporation. You would also be required to submit your business plan to the regional governing body in Dubai for approval before you can be granted business license to operate. We feel that the importance of a business plan needs to be pointed here. Many investors make the mistake of not preparing a business plan for Dubai freezone company setup. A business plan helps you to set your business targets and milestones. A proper business plan assists you to keep trajectory of the performance of your business. So a business plan is a must not only for meeting the requirements of Dubai free zone company setup, but also for efficient running of your business.

Submit application and documents for Dubai free zone company formation

The application form and other legal documents are necessary to start Dubai free zone company formation procedure. Depending on the nature of the business (establishment / partnership, branch / subsidiary, trading /industrial /services), the documents required may vary. In common you would need the following documents.

* Free Zone application form.

* Passport copies of shareholder(s).

* Business plan.

* Visa copy (if you have an existing UAE visa).

* Bank statements (to prove the capital amount).

* No objection certificate from the current sponsor (for UAE residents only).

To set up a subsidiary or branch of a foreign company in Dubai free zones, extra documents would be required.

 

Secure the preliminary approvals for Dubai free zone company setup

Currently some free zones in Dubai may call for prior approvals from other governing departments to start the dubai free zone company setup. These approvals could be from;

* Environment Department: For certain activities, particularly industrial activity, clearance certificate from the Environment Department is necessary.

* Ministry of Health: certain cases require clearance certificate from the Department of Health to carry out activities related to food products, pharmaceuticals etc.

* Immigration Department: Some Free Zones process this request for the clients; some requires the client to process it by themselves where some Free Zones do not need this approval at all. Though it beneficial to make sure that your visa application would not face any problems after the company formation, it would delay the entire process by a few weeks.

Payment for Dubai freezone company setup

Now you are ready to make the payments. With some of Dubai free zones, you have the option of making the payments in installments; however, pay attention to the total cost in this case could be higher than the normal charges by a minimum of 10% and up to 50%.

Sign the agreements and other documents for Dubai Free Zones Company

After you make the payments, the concerned Dubai free zone authority would prepare the appropriate legal documents and you would be requested to sign them in the presence of an executive/official of that particular Dubai free zone.

Receive your License for Dubai free zone companies

Once you complete all the above steps it’s time to receive your Dubai free zone company formation License. Along with the business license, some Free Zones give associated documents such as certificate of incorporation, share certificates etc. Deciding on the best free trade zone in Dubai for your business requirements depends on many factors. So it is important that you spend large amount time on calculating the options available for your business and your business requirements. For certain business activities it would be ideal to form a business outside the Free Trade Zone (mainland / local business).

Comparison of Mainland Company and company formation in dubai free zone

There are more than 20 free zones in Dubai and 34 all over UAE. Each is established to register companies in their own line of business and each one of them has different set of requirements, cost and legal structure. Choosing right jurisdiction depends on short term and long term objective of the firm and cost difference.
Rent for company formation in dubai Free Zone are somewhat higher than Mainland; the operational cost for company formation in dubai Free Zone is also high as compare to Mainland. Furthermore, dubai freezone company formation are permitted to offer services within that free zone or internationally. Whereas, companies incorporated in Mainland can offer services to local as well as global market. Operational cost, renewal cost and maintenance cost of company formation in dubai Free Zone are low. Company Setup time frame is very low in free zone as compare to mainland.
Local sponsor or local service agent is required for Mainland Company; it is individual who plays a role of Local service agent. In case of free zone “Local service agent” role is played by Free Zone authority.
To summarize the difference, the freedom of doing business internationally is more in free zone as compare to the Mainland.

COMPRESSION BETWEEN MAINLAND AND FREE ZONE – PROFESSIONAL

 MAINLANDFREE ZONE
LEGAL FORMOwnership 51% UAE National 49% Expat100 % Expat
SHARE CAPITALNot RequiredNot Required
TRADE BARRIERCan Trade Locally and InternationallyCan Only Trade Within The Free Zone Or Internationally
VISA LIMITATIONNo Limitation of number of VisasDepends on office space, i.e. 1 visa per 10 Sqm of office space
AUDIT REQUIREMENTNot RequiredAnnual Audit Is Required
OFFICE RENTMinimum AED 50,000/AnnumMinimum AED 50,000/Annum
INSURANCENot RequiredRequired For Office And Employees
OPERATIONAL COSTHighLow
TAX BarrierNo taxNo tax, but 5% Tax on a local trade
SHAREHOLDER QUALIFICATIONRequired; in applied fieldRequired; in applied field
LOCAL SPONSOR/ LOCAL SERVICE AGENTRequiredNot Required
VIRTUAL OFFICENot AllowedAllowed
FLEXI DESKNot AllowedAllowed