How to Set Up a Company in the UAE Free Zone?

The UAE is becoming a significant business hub and an excellent location for establishing a company. Moreover, the government continues to introduce business-friendly reforms for both – foreign and local investors to foster a harmonious working environment for all. A lot of companies prefer setting up a company in a UAE free zone that enables 100% foreign ownership. 

A free zone is a special economic zone where an investor can enjoy reduced tax rates and a favorable trading ecosystem. There are now over 40 free zones in the UAE and the government is working on introducing more such zones. In this blog, you will learn all there is to know about free zone company formation in the UAE. So, let’s dive in.

Why should you set up a company in the UAE free zone?

Setting up a company in the UAE free zone provides you with a physical presence, without requiring a local sponsor. It is great for entering the market. Besides getting 100 percent foreign ownership, the free zone company setup in Dubai offers the below advantages as well. 

1. 100 percent repatriation on capital gains and profits 

2. Corporate, personal, and income taxes are excluded to the full extent of the law 

Moreover, import and export duties are exempted as well 

3. There are no restrictions on the flow of funds as well as foreign exchange controls 

4. Besides low labor and freight costs, it also offers a simple recruitment procedure 

5. Communication is effective, and administration is managed through a single point of contact 

6. Government policies, as well as the legal framework, are liberal 

7. Office space is available for purchase or lease in a freehold building 

8. Simple licensing and startup processes 

9. Clustering of industries and infrastructure designed specifically for them 

10. There are no limits on recruiting expatriates 

Also Read: How to Legally Protect a Small Business

Types of licenses available in the UAE Free Zones

One foundational document necessary to do business in a free zone is a free zone business license. The license entitles enterprises of all sizes to enjoy a plethora of benefits to operating in Dubai. Furthermore, procuring a business license is a key step in Freezone company setup in Dubai. You can obtain the below-mentioned types of business licenses in the UAE free zones: 

1. Commercial/trade 

2. Consultancy/services 

3. Industrial 

4. Educational 

5. Media 

6. eCommerce 

7. Freelancer 

8. Warehousing 

9. Manufacturing 

Key Steps to Set Up a Business in a Free Zone

The authorities of the free zone require the bare minimum of paperwork and time. Thus, a Free zone company setup in Dubai is considerably easy. Here are some important steps to set up a company in free zones. 

1. Determining the type of legal entity

Firstly, free zone company formation requires you to determine the type of legal entity. For this reason, the free zones allow you to set up one of the two types of companies: 

  • Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZ Co.) 
  • Free Zone Establishment (FZE) 

The number of shareholders is the foundational difference between the two legal entities. Also, whether the shareholder is a natural or legal person. The amount of capital required for such a firm is determined by the free zone in which it is formed.

For instance, At twofour54 Abu Dhabi, there is no least capital requirement. But, in KIZAD, you can register a limited liability company (LLC) with a minimum paid-up capital of AED 150,000. 

2. Choosing a trading name

You need to choose a trading name after deciding on the type of legal entity for your company. Companies should use trade names that the Department of Economic Development approves.

Additionally, you should verify whether the desired trade name is already registered. Finally, the companies must keep in mind that they cannot use ‘Abu Dhabi’ and/or ‘United Arab Emirates’ in the name of the FZ-LLC or the branch. 

3. Getting pre-approval, registering your business to get your license

Get the pre-approvals and any additional business approvals from the appropriate authorities. Companies based in free zones are subject to the rules of the free zones in which they operate

Hence, you need to apply the documents to the concerned authorities to get the approvals. The whole registration process takes 2-4 weeks. 

4. Choosing an office space

After obtaining the business license, you can either buy or lease office space. To assist start-ups and budding entrepreneurs, free zone authorities offer flex-desk office services.

Hence, depending upon your business activity and the number of employees, you can decide upon your office requirements. 

5. Applying for a business license

After choosing a business name and registering it on the Free zone authority’s website, you must apply for a trading license. The license you want to apply for will depend upon the primary activity of your business. Moreover, different free zones allow different types of activities.

For instance, you can pick from over 600 business activities at DMCC, spanning over 20 industries. But, in DIFC, you are permitted to conduct financial and non-financial businesses. When applying for a license, you must submit supporting documentation. 

Documentation Required for Setting Up a Company in UAE Free Zone

Complete documentation is a mandate to begin the process of forming a free zone Firm.  Thus, all shareholders/directors of the company must provide documents and due diligence.  

Here are some documents that need the approval of the Gulf Cooperation Council or the Arab embassy: 

1. Form for obtaining a license that is properly filled 

2. Contact person’s business card 

3. A duplicate copy of the business plan 

4. Memorandum of Association (MOA) in addition to Articles of Association that are notarized and attested (AOA) 

5. Copies of the partners’ as well as business managers’ passports 

6. Original bank reference letters and, if applicable, the license of the partner’s existing company 

Setup your Free Zone company in Dubai Today!

The business-friendly government regulations, tax exemptions, and lower establishment costs make setting up a company in the UAE free zone very rewarding. With Shuraa Business Setup, you can bring your company ideas to life without any hassles.  

Shuraa’s experts will not only assist you in beginning your business but also provide you with end-to-end business support. Be it the paperwork, licensing, banking, or anything else – we manage it all.