Freezone Company Setup

A free zone is a designated area within a country where businesses operate under distinct regulatory and tax regimes designed to attract foreign investment, boost trade, and stimulate economic growth. In the UAE, free zones are particularly appealing due to their strategic locations, world-class infrastructure, and robust support services. Setting up a company in a UAE-free zone offers numerous benefits, including 100% foreign ownership, zero corporate and personal taxes, and full repatriation of profits and capital. These zones are located near major seaports, airports, and trading hubs, providing easy access to international markets. Additionally, the setup process is streamlined with minimal bureaucracy and fast-tracked administrative procedures, making it an efficient and cost-effective option for businesses looking to expand their operations. This guide will look into the key steps for Freezone Company Setup.

What is a Free Zone Company?

Free zones, often called free trade zones, are economic areas where products and services can be exchanged at preferential tax and customs rates. These zones foster economic activity by offering businesses various incentives such as tax exemptions, simplified customs procedures, and modern infrastructure.

A common misunderstanding is that free zones and offshore corporations are the same. However, free zone companies are onshore entities that can operate within Dubai if specific requirements are met. In contrast, offshore companies are established to conduct business outside their registration jurisdiction or the location of their principal owner.

The UAE boasts around 67 free zones, with new ones added annually. Over 150,000 enterprises are located in these zones, and the number continues to grow. Free zone companies can now also create branch offices on the mainland. To do this, the investor must register the branch with the Department of Economic Development (DED) and the Ministry of Economy under the same commercial name. Unlike the previous norm requiring a local partner, the free zone firm can wholly own the branch business.

Click here to learn more about What is Freezone in UAE.

Advantages of Freezone Company Setup in Dubai

Setting up a business in a free zone in Dubai offers several benefits for entrepreneurs and businesses. These advantages include:

Complete Ownership of Business

One of the most significant advantages of forming a free zone company in Dubai is that it allows 100% foreign ownership. Unlike mainland companies that typically require a local sponsor or partner, free zones permit full ownership by foreign investors. This provides greater control and flexibility in managing the business.

Full Profit Repatriation

Profits from free zone enterprises can be repatriated outside the UAE, allowing businesses to transfer 100% of their capital to their country of origin without any restrictions.

9% Corporate Tax

UAE laws state that companies with a revenue of less than AED 375,000 do not require corporate tax out of their business revenue, thereby helping small businesses. On the other hand, businesses with revenue of more than AED 375,000 have to pay 9% corporate tax.

Simplified Import and Export Processes

Free zones offer simplified import and export processes, relieving businesses from paying customs duties on imported and exported goods. Customs duties are taxes imposed on goods crossing a country's borders.

Strategic Location

Free zones in Dubai are strategically located close to seaports, airports, and national borders. This advantageous geographic positioning facilitates faster delivery times, reduces shipping costs, and enhances supply chain efficiency.

 Also read: Dubai Free zone License Cost  

Global Connectivity

Dubai's major seaports and airports provide easy access to local and international trade. The location provides seamless connections to distributors and manufacturers in the MENA region and South Asia.

Thriving Expat Entrepreneurs

As one of the world's most popular transit destinations, Dubai draws millions of tourists and investors. The city's multinational community enables entrepreneurs to connect with a global business network.

Range of Business Activities

Dubai free zones cater to diverse commercial activities, allowing entrepreneurs to explore various sectors. Whether trading, manufacturing, services, technology, media, healthcare, or consulting, free zones accommodate diverse business activities, aligning business ventures with expertise and market opportunities.

Time-saving and Simple Registration Process

The entire procedure of acquiring a license in a free zone is quick and straightforward. Investors have easy access to company formation and convenient administrative services, making the setup process efficient and hassle-free.

By leveraging these advantages, businesses can grow, expand their market presence, and enhance their operational efficiency in Dubai's dynamic economic environment.

How to Select a Freezone for Your Company Setup?

Choosing the right free zone for your company setup in Dubai is a crucial decision that can significantly impact your business's success. Start by identifying your business activities' specific needs and nature, as different free zones cater to various industries such as technology, media, healthcare, or trading. Consider the strategic location of the free zone, ensuring it provides easy access to major seaports, airports, and transportation networks, which is essential for logistics and supply chain efficiency.

Evaluate the infrastructure and facilities, such as office spaces, warehouses, and support services, to ensure they align with your operational requirements. Assess the costs involved, including setup fees, annual renewal fees, and other associated expenses, to ensure they fit within your budget. Additionally, consider the free zone's regulatory environment, the ease of doing business, and any special incentives or benefits they offer, such as tax exemptions or simplified import-export procedures.

Filings.ae can help you select the right free zone based on your needs, providing expert guidance and tailored solutions to ensure you make the best decision for your business.

Documents Required for Freezone Company Setup

For Individual Shareholders

• Passport Copy: Provide each shareholder and manager a copy of the passport.
• UAE Entry Stamp / Visa Copy: Include the latest UAE entry stamp, visit visa copy, or residence visa copy along with the Emirates ID for shareholders and managers who are UAE residents.
• Proof of Address: Submit proof of address for each shareholder and manager.
• Passport-Sized Photo: Include a recent passport-sized photograph of each shareholder and manager.

For Corporate Shareholders

Memorandum of Association (MOA) and Articles of Association (AOA): Provide copies of the company's MOA and AOA.

• Trade License: Submit a copy of the trade license for the existing company.
• Certificate of Incorporation: Provide the company's certificate of incorporation.
• Board Resolution: Include a board resolution authorising the establishment of the new company.

Freezone Company Setup Procedure: Easy Steps to Set Up a Company in a Free Zone

Setting up a company in a Dubai-free zone involves several key steps to ensure compliance and a smooth start to your business operations. Here are the five essential steps:

Determine the Type of Free Zone Entity

The first step is to decide the legal entity your company will take. In the UAE, a free zone company can be one of the following entities:

• Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZCO): These companies can have multiple shareholders, up to a maximum of 50. The shareholders can be individuals, companies, or a combination of both.
• Free Zone Establishment (FZE): This entity can have only one shareholder.
• Branch of a Company: A branch is an extension of an existing local or foreign company. It operates under the same name and conducts the same activities as the parent company, and it has the same legal status.

Name Your Free Zone Company

Choosing a compliant name for your free zone company is crucial. The name must:

• Align with the business activity and legal status.
• Include a suffix indicating the legal form (e.g., FZE for Free Zone Establishment)
• Not reference any religion or violate public order.
• Not include names of any UAE emirates or governing bodies
• Be unique and respectful of societal morals.

Apply for a Trade License

The type of trade license you need depends on your business activities. Licenses can be professional, commercial, industrial, or a combination, depending on your business activities and the provisions of the free zone. Some free zones, like IFZA in Dubai, allow combined licenses covering multiple activities. Free zones often offer multi-year license packages as well.

Choose an Office Space or Flexi-Desk

Free zones offer various office space options based on your budget, staff size, and business needs. Options include:

• Flexi-desk facilities: Usually free with the license
• Fixed desks: Dedicated workspaces
• Furnished/unfurnished offices: For businesses needing more permanent setups
• Shell and core spaces: Customizable office spaces
• Workshops, warehouses, and storage spaces: For businesses with specific storage or operational needs

Register Your Company and Obtain the Trade License

The final step involves registering your company and obtaining the trade license. While procedures and required documents vary across free zones, the general process includes submitting the following:

• Completed application forms
• Passport copies of shareholders and directors
• Proof of address
• Business plan
• Bank reference letter
• Articles of incorporation

Once the documentation is reviewed and approved, the free zone authority will issue your trade license, allowing you to commence business operations.

Open a Bank Account

Open a corporate bank account in the name of your Free Zone company. You will need the company's legal documents and the trade license.

Employee Visas and Labor Cards

Apply for Freezone visas and labour cards for your employees. Free zones typically facilitate this process, making it easier to hire foreign nationals.

Commence Operations

Once all the formalities are completed, you can commence business operations. To avoid any legal issues, ensure compliance with the free zone's regulations.

By following these steps, you can efficiently set up your company in a freezone, taking advantage of the various benefits and strategic opportunities available.

Conclusion

In conclusion, setting up a company in a UAE-free zone offers numerous benefits that cater to the diverse needs of entrepreneurs and businesses. Free zones present an attractive option for business expansion with advantages such as 100% foreign ownership, zero corporate and personal taxes, and full repatriation of profits and capital. The strategic locations near major seaports, airports, and trading hubs ensure seamless access to international markets. The streamlined setup process, minimal bureaucracy, and world-class infrastructure make free zones an efficient and cost-effective choice. By leveraging these benefits, businesses can achieve significant growth, expand their market presence, and enhance operational efficiency in Dubai's dynamic economic environment. 

Also read:  Dubai Free Zone Companies

Start your Company with Filings.ae!

For expert guidance and tailored solutions in selecting the right free zone and setting up your business efficiently, contact Filings.ae today. Our experienced consultants are ready to assist you in maximising the potential advantages of establishing your company in a UAE-free zone. Let us help you make the best decisions for your business setup and achieve your growth objectives.