To attract foreign investors to set up their own businesses easily in Dubai or around the UAE, the concept of a free zone company setup in the UAE has come into existence. Free Zone Authority in the UAE is the governmental body that takes care of the complete process of free zone business setup in Dubai. The reason behind the popularity of Dubai growing into a competitive business center of the world, it has been a magnet for startups as well as established businesses looking for a tax-free zone to set up their business. UAE residents enjoy a tax-free lifestyle since it is tax-free on personal income and tax-free on profits.
What is a Free Zone Company?
Free zones are the Free Trade Zones or areas in the UAE where the foreign investors are able to base their businesses effortlessly in a short amount of time. This concept has played a very important part in making Dubai the business hub internationally. Free zone companies bring along many benefits sych as easy business setup, tax regime, complete support and assistance, lucrative incentives, trading at custom rates ownership, and a lot more.
Types of Free Zone Company in the UAE
Basically, one can start two types of free zone companies either a Free Zone Establishment (FZE) and another is Free Zone Company (FZCO). In general, companies under the free zones are Limited Liability Companies (LLC). There is a minor difference between FZE and FZCO which is as under:
- Free Zone Establishment (FZE): Company registered with one individual or corporate shareholder.
- Free Zone Company (FZCO): Company registered with two or more shareholders which can be either individuals or companies
- Branch Office: This type of company can be established according to different rules and regulations of various free zones.
What is the cheapest free zone in UAE?
At HAM we have years of experience working as business consultants in Dubai. We provide support to our client base to start their business in any free zone of UAE.
The UAE offers beyond 30 sites listed as free zones. This means that every emirate of the UAE consists of its own free zones with different rules and regulations along with 'N' number of facilities and incentives to setup businesses
Ultimately, everyone wants to opt for that free zone which offers best facilities at the minimum cost. So, as per our many years of experience, we can say that if you are just planning for free zone company setup for the first time, it's recommended to choose free zones in Dubai South or outside of Dubai Le Sharjah Ajman, UAQ, RAK, Fujairah.
The free zones mentioned above offer the best packages along with very nice incentives and facilities for easy setup of your company.
Let's take an example, at UAQFZ (Umm al Quwain Free Zone), it is possible to keep your overheads as low as possible as this free zone doesn't provide physical offices. Moreover, yearly maintenance charges are lower than other free zones in the UAE.
Additionally, Ajman Media City also offers a feasible package along with 'N' number facilities which you can't get from other free zones.
How can you start a business in a free zone UAE?
Starting a free zone company in UAE is an easy and fast process as compared to a mainland business setup. Free zone authorities are responsible for the entire process required to bring your dream free zone company into existence.
Below are the key steps that one needs to pass through for setting up a business in any free zone of the UAE
- Choose the type of legal entity
- Choose the trade name
- Application for the business license
- Acquire adequate office space
- Business registration,
- Acquiring a license
Can a free zone company in UAE do business outside the free zone?
According to the law, no free zone company is allowed to undertake any trading activities outside the free zone. In case, if any free zone business has acquired the essential licenses and documentations from the DED, the Development of Economic Department, then it is allowed to do so. Violation of any rule may result in the penalty of AED 100,000
Free zone companies can also get connected with the distributors having valid DED licenses and can-do business with the mainland companies by keeping destructors as a mediator.
Apart from this free zone companies have one more option to do business with the mainland companies through the civil work company or LLC
What are the benefits of free zone company formation in the UAE?
Let's look at the perks of company formation in a free zone business setup:
- Foreign investors have 100% ownership
- No requirement of local sponsors or local service providers
- 100% right on the capital & profit deriving from free zone business
- No need to pay any corporate tax
- Viable import & export duties
- Single window clearance for admin services
- Quick setup and licensing process
- No quick alteration on laws and regulations
- Remarkable functionalities
- Perfect communication sources
- Startup with the lowest cost
- Liberal labor laws
- No need to spend over infrastructure
- Outstanding business support services
- Convenient working environment
Different free zones have their own rules, regulations, and advantages. So, the above list is not the end. One may find some more advantages at a specific free zone which might not be offered by another free zone.