How to open a UAE free zone company?

UAE offers many remarkable business opportunities not only to UAE citizens but also to foreigners. One such awesome opportunity is to open a free zone company. UAE free zones are designated areas all around the UAE that offer favorable regulatory and fiscal environment to international businesses. These zones were created to foster a culture of innovation and entrepreneurship. Moreover, free zones attract foreign investors and promote economic diversification in the UAE. A UAE free zone company differs from a UAE Mainland company. Both types of companies have their own setup process, opportunities and limitations. In this article, We will guide you through the step-by-step process of starting a UAE free zone company.

Benefits of Operating in UAE Free Zone

UAE Free Zone provides many benefits to international businesses. Some major benefits are as follows:

100% Foreign Ownership

Free zones allow foreigners to open and operate businesses with 100% ownership. To open a business in UAE mainland, there must be a UAE citizen as a partner with 51% shares. For a business in free zone, there is no such limitations. Foreigners can own 100% of the business in free zone.

Tax Exemptions

Free zone companies have tax exemptions from corporate taxes for upto 50 years. This exemption can also be renewed. Furthermore, people working in free zones do not have to pay personal income tax. UAE free zone businesses are exempt from import and export duties, that reduce the cost of trading internationally. These features make free zones an attractive area for international businesses.

Repatriation of Profits and Capital

UAE free zone allows companies to repatriate 100% of both profit and capital without any local restriactions and taxes. There are no currency restrictions for this transfer either. This feature ensures global cash flow management for multinational companies. Investors feel more confident as they are assured that they can recover their investment and profit without any bureatic hurdles.

Simplified Business Setup

Business setup in UAE free zone is a simplified process. Free zones offer comprehensive support services to guide through the documentation, licesing and visa applications. Approvals are also fast track and do not take much time. This allows businesses to become operational quickly.

World-Class Infrastructure

UAE free zones offer state-of-the-art office spaces, warehouses and logistic facilities. These spaces are equipped with advanced technology and high-speed internet. Free zones also offer on-site accommodation, conference facilities and business centers. There are many business centers for providing guidance to businesses.

Access to International Markets

UAE is situated in the crossroads of Asia, Africa, and Europe. This strategic location allows the free zone businesses to access the international markets. Free zones provide access to seaports, airports and advanced logistics networks for businesses. Additionally, UAE’s robust trade agreements and favorable customs regulations enable businesses to capitalize on regional and international trade routes effectively.

Business Support Services

UAE free zones offer many business support services. These services include legal assistance, business consultancy and networking opportunities. Free zones also offer many funding and grant opportunities for businesses to grow. These services provide a nurturing environment for businesses to grow.

Types of Free Zones in the UAE

There are 2 types of free zones in UAE, multipurpose free zones and industry-specific free zones. Details of some free zones are as follows:

Industry-Specific Zones

Industry-specific free zones in the UAE are free zones that are dedicated to meeting the needs of a particular sector. These free zones provide specialized infrastructure, services, and regulatory frameworks for a specific sector. These free zones offer opportunities for collaboration, knowledge sharing and synergy among similar types of businesses. Some examples of industry-specific zones are as follows:

Technology

Dubai Internet City (DIC) focuses on information technology companies. DIC provides state-of-the-art infrastructure, office spaces, and business support services specific to tech firms. It hosts a vibrant community of global tech giants and startups thus promoting innovation and digital transformation.

 Healthcare

Dubai Healthcare City (DHCC) freezone is specific for healthcare and wellness related ventures. DHCC offers world-class medical facilities, research centers, and education institutions. It attracts leading healthcare providers, medical professionals, and researchers to UAE.

Media and Entertainment

Dubai Media City (DMC) caters to media, marketing, and advertising companies. DMC provides modern office spaces, production facilities, and networking opportunities. The aim of this free zone is to foster creativity and innovation in the media sector.

Finance

Abu Dhabi Global Market (ADGM) is dedicated to financial related professional services providers that include banking, asset management, and fintech. ADGM offers a robust regulatory framework to enhance the UAE’s position as a leading financial hub.

Multi-Purpose Zones

Multi-purpose free zones are designed to serve a wide range of industries. They provide a versatile environment for diverse business activities. These zones offer flexible infrastructure and services for various types of businesses ranging from manufacturing and logistics to trading and services. Some famous multi-purpose free zones are as follows:

Jebel Ali Free Zone (JAFZA)

One of the largest and oldest free zones in the UAE is Jebel Ali Free Zone (JAFZA). JAFZA supports a variety of industries, including logistics, manufacturing, and trade. It offers routes to Jebel Ali Port and Al Maktoum International Airport. Access to these ports makes JAFZA a strategic location for international business operations.

Dubai Multi Commodities Centre (DMCC)

DMCC operates for commodities trading. It supports many businesses that include precious metals, energy, and agricultural products. Moreover, it provides modern office spaces, robust regulatory frameworks, and comprehensive support services to facilitate trade and business growth.

Ras Al Khaimah Economic Zone (RAKEZ)

RAKEZ hosts diverse businesses. Moreover, it offers customized solutions for industrial, commercial, and service-oriented companies. It provides flexible office spaces, warehouses, and industrial land with competitive costs and business-friendly policies.

Sharjah Airport International Free Zone (SAIF Zone)

SAIF zone is a multi-purpose zone that supports a wide range of industries. It facilitates trading, manufacturing, and services. Moreover, its proximity to Sharjah International Airport provides excellent logistics and transportation advantages.

List of Famous Free Zones

Steps to Start a UAE Free Zone Company

Starting a UAE-free zone company requires proper consultation. A UAE business registration consultation can make your journey to start a free zone company. Oak Business Consultant offers comprehensive UAE company registration services, guiding businesses through the streamlined setup process in various free zones and ensuring compliance with all regulatory requirements to facilitate smooth and efficient business establishment. Below is the step by step guide to UAE free zone company setup.

Choose the Right Free Zone

Now that you know about the free zones and their differences, the first step to starting a free zone company is to choose the free zone.  The selection of the right free zone plays a pivotal role in your business success. To select the Freezone, you need to identify your business activity. Check whether there is a dedicated free zone related to that business activity. Prefer industry-specific free zones over multi-purpose free zones, as industry-specific free zones offer tailored services related to that business. If multi-purpose free zones suit you better, evaluate them based on cost structures, strategic advantages and business benefits.

Select the Type of Legal Entity

A crucial step to starting a UAE-free zone company is to select the type of legal entity. Each legal entity has its own regulatory requirements. The three primary types of entities available are Free Zone Establishment (FZE), Free Zone Company (FZC), and Branch Office. An FZE is suitable for single shareholders. It provides complete ownership and operational control to the investor. This entity type is ideal for individual entrepreneurs or sole proprietors looking to establish a business.

On the other hand, an FZC accommodates multiple shareholders. It is a preferred choice for partnerships or consortiums that wish to benefit from shared ownership and diverse capital investment. Lastly, a Branch Office is for existing foreign companies to establish a presence in the free zone without creating a separate legal entity. It enables businesses to expand their operations while maintaining their original corporate structure. Each type of legal entity offers distinct advantages and is tailored to meet different business needs, so it’s essential to carefully consider which option aligns best with your business goals and operational strategy​ .

Choose a Trade Name

The next step is to choose a trade name. A trade name must be unique and related to the business. It can not be misleading. Moreover, make sure it complies with the naming conventions of the respective free zone authorities. It can not have blasphemous or offensive words. Additionally, it should not be related to politics. Furthermore, legal structure, FZC or FZE, should be included in the trade name. Once you have finalized your trade name according to the requirements, submit the trade name for approval to the free zone authority.

Apply for Initial Approval

You need to apply for initial approval from the free zone. Initial approval shows that your business complies with the regulatory and operational standards of the free zone. To get initial approval, you need to provide key documents, an application form, copies of the shareholder’s passport, a business plan and a brief description of proposed business activities. Once you get the approval, you can proceed to the next steps, such as legal documents and applying for an office lease and business license. Initial approval makes sure your business meets all legal and administrative requirements before fully establishing your company in the free zone.

Prepare Legal Documents

Once you get initial approval, now you need to prepare legal documents for your business. Key documents typically include the Memorandum of Association (MOA) and Articles of Association (AOA), which outline the company’s structure, purpose, and governance framework. You may require an office space in the free zone. For that purpose, you are required to apply for an office lease. Make sure to comply with the real estate regulations of the zone. Additionally, you need to submit shareholder agreements, copies of shareholder passports, and a detailed business plan. These documents may also require legal attestation. Make sure that your documents can present your business effectively and efficiently.

Obtain a Business License

Once the business documents are ready, you need to apply for the business license. You need to check which type of business license you need. It can be a trading license, service license, or industrial license, as per the needs of your business. Once the free zone authority reviews and approves your business application, you will need to pay the license fee. The cost of obtaining a business license ranges from AED 5,500 to AED 25,000 annually, depending on the specific free zone, type of license and nature of business activities. After approval and fee submission, the UAE Free Zone Authority will issue you the business license that enables you to start your business activities. Now, your business is legally eligible to operate in the UAE.

Open a Corporate Bank Account

To manage finances and transactions, a free zone company needs to have a corporate bank account. Choose a corporate bank that aligns with your business needs. You need to submit a trade license issued by the free zone authority, the company’s Memorandum of Association (MOA) and Articles of Association (AOA), passport copies of shareholders and authorized signatories, a board resolution authorizing the account opening, and sometimes a business plan or proof of physical office space. The bank will verify your documents and open your account after verification. A corporate account not only simplifies financial management but also enhances a business’s professional image and operational efficiency. With a corporate account, you can handle national and international transactions of your business in the UAE market.

Process Visa Applications

For the commencement of the business activities, you need staff. Free zones allow employment visas for businesses. Different free zones have different employment visa quotas. A standard office in a free zone allows 3 to 6 visas. Large offices and warehouses can have more employment visas. A company needs to submit employee’s passport copies, passport-sized photographs, and educational certificates. You should apply for an entry permit which allows the employee to enter the UAE. Once in UAE, the employee undergoes medical tests and obtains a residency visa. After this process, the employee needs to apply for an Emirates ID, which requires biometric scanning. The final step is the stamping of the residency visa on the employee’s passport.

Register for E-Channel Services

UAE Federal Authority for Identity and Citizenship (FAIC) offers E-channel services for online submission, processing and tracking of visa applications, residency permits and other immigration services. The e-services reduce the need for physical paperwork and visits to government offices. Once a UAE free zone business gets its business license, it needs to register for e-channel services. Documents to be included in the application are essential company details, trade license information, and authorized signatory details.

The initial setup fee ranges from AED 1,500 to AED 2,000 based on the free zone you are operating. Annual subscription fee starts from AED 1,200 to AED 1,500 per year. While the refundable security deposit ranges from AED 5,000 to AED 10,000. Upon successful registration, business gains access to a user-friendly online dashboard where they can manage all visa and immigration-related matters. The E-Channel system enhances efficiency, offers real-time updates, and reduces processing times. So that businesses can focus on their operations rather than administrative tasks.

Comply with Ongoing Requirements

Once the business is up and running successfully, business owners need to stay updated about ongoing regulations and requirements with regulatory authorities. Make sure to renew business licenses and residency visas for employees on an annual basis. You should maintain an accurate financial record and submit other financial statements when required by free zone authorities. Keep the UAE Free Zone authority updated about the company’s contact details and any changes in business activities or ownership structures. You need to adhere to employment laws which include the provision of health insurance and end-of-service benefits for employees. Compliance with these ongoing requirements will help your business avoid penalties, maintain operational continuity, and build a trustworthy reputation within the free zone community.

Frequently Asked Questions

How many free zones are there in the UAE? 

There are over 40 free zones across the UAE.

Can Dubai Free Zone Companies Do Business on the Mainland? 

Dubai free zone companies cannot directly conduct business on the mainland without additional licenses and approvals. They must partner with a local distributor, open a branch, or set up a mainland company.

How to Select a Free Zone for Your Business License? 

To select a free zone, consider your business activity and industry alignment. Evaluate the location advantages, such as proximity to ports and airports. Assess the facilities and infrastructure provided. Compare costs, including setup and operational expenses. Review the regulatory requirements and compliance needs, and look for specific incentives like tax exemptions and foreign ownership.

Conclusion

Setting up a company in a UAE-free zone offers numerous advantages, including 100% foreign ownership, tax exemptions, simplified business setup processes, and access to world-class infrastructure. By choosing the right free zone based on your business activity, evaluating location benefits, and ensuring compliance with regulatory requirements, you can leverage the strategic benefits of operating in one of the most dynamic business environments in the world. Free zones in the UAE provide a supportive ecosystem for international businesses to thrive, fostering innovation and economic growth in the region.

Ready to start your business in the UAE’s free zones? Oak Business Consultant makes company registration easy. Get expert guidance on selecting the right free zone and navigating regulatory requirements. Begin your setup today. For personalized assistance, contact us directly.

Ready to establish your UAE free zone company? Get expert guidance and seamless setup assistance today!

Unlock the potential of your business by exploring our comprehensive guide on opening a UAE free zone company. Discover step-by-step instructions, benefits, and expert insights to streamline your setup process. Ready to take the next step? Contact us today for personalized consultancy and seamless company formation assistance.

Start Your Free Zone Journey