UAE FREE ZONE
If foreign companies do not wish to cooperate with a UAE national or you do not know any UAE national to partner with, they can set up a business in a Free Zone. Free zones offer 100 percent foreign ownership of the enterprise. The most known ones include Fujairah Creative City Free Zone, Ajman Free Zone, Dubai Multi Commodities Centre Free Zone (DMCC), Dubai Media City, TECOM, Jebel Ali Free Zone (JAFZA), DIFC and RAK Free Trade Zone.
WHAT IS A FREE ZONE?
It is a free economic zone or a free trade zone, which is a designated geographical area where the application of taxes, restrictions on business, employment or trade is not the same as in the rest of the country. In a free zone, operations involving goods’ landing, manufacturing, handling, and reconfiguring may be conducted without the intervention of the customs authorities. The goods become subject to the customs duties only when they are moved to customers through the country in which the free zone is located. Free zones are usually located near seaports, international airports, and national borders. The main benefits of a company’s formation in the UAE free zone are:
• No import/export tax
• No personal income tax
• No corporate tax
• Total repatriation of capital and profits
• Easy licensing procedures
Different free zones may guarantee different benefits, as well as some business may not be permitted in an area rather than the other.
HOW TO START A BUSINESS IN UAE FREE ZONE?
There are five key steps to set up a company in a free zone.
Firstly, it is necessary to determine the type of legal entity of the business. In a free zone, it is possible to set up two types of companies:
Free Zone Limited Liability Company (FZ LLC)
Free Zone Establishment (FZE)
The differences lie in the number and entity of shareholders (natural or legal person). You need to check with individual free zone authorities about the type of company they can register.
The next step is the choice of a trading name. The Department of Economic Development must first accept the name and respect the following requirements:
• Must not violate the public morals of the country
• Must be followed by the legal form of the company
• Has not been previously registered
• Is compatible with the required type of activity and legal status
• Should not contain names of any religion or governing authority or logos of any external bodies
Once that the company has been named, it should apply for a business license and choose an office space. The type of license depends on the primary activity of the business; as well, office requirements depend on the number of employees and type of business activity of your company. The office can be owned by one or more individuals or a corporate entity where all shareholders are of the same family.
In the end, the company should get a pre-approval, register his business, and get the business license. To get the pre-approval, it is needed to apply with the documents required; the list of this document may vary on the type of activity, the type of company and the requirements of the free zone authority. In exceptional cases, certain activities may be subject to further by external authorities.
If you want more information about setting up your international company in UAE, read our analysis about setting up a business and Import and Export activities.