Dubai: The UAE has historically been a business hub and over the years the economic development of the country has been closely associated with the entrepreneurial spirit of the UAE community.
To further push innovation and foreign investment, UAE authorities have set up special economic zones which allow businesses to thrive with minimal expenses and procedures.
What is a free zone?
An expatriate wanting to start a business in the UAE has the option of either setting up a Limited Liability Company (LLC) with a license to operate anywhere within the UAE, or the company can be registered with one of the many free zones in the UAE.
A free zone, also known as a free trade zone, is a special economic zone where companies can operate and receive considerable tax and fee exemptions. Expatriate residents can also have 100 per cent of company ownership. Companies within free zones are treated as offshore companies and therefore do not need to engage with the customs authorities or Ministry of economy. Instead, they are governed by authorities designated for the specific zone.
Pros and cons
Starting a business in the free zone can come with many advantages:
1. Allows 100 per cent foreign national ownership of firm with no requirement of local sponsor or local service agent.
2. Waiver of corporate taxes (time-bound and renewable for further periods).
3. Exemption from personal taxes as well as import and export taxes.
6. Long-term leasing options (up to 25 years) available at great terms to investors.
7. Recruitment and workforce processes are simplified, faster and cheaper.
8. Easy availability of legal, housing, immigration, labour and other facilities.
9. Incorporation is faster than when done outside free zones
10. 100 per cent free transfer of funds
However, there are also certain limitations that investors should be aware of. Comapnies within a free zone are restricted to conducting business within the free zone itself. Dealing with companies outside the free zone can be done only through registered distributors. Also, as certain free zones are focussed on certain industries - gold and diamond, media or education - the type of business activity is also restricted.
Note: Gulf News is not responsible for any changed or updated information on UAE law, kindly contact the free zones or government authorities for any individual queries.
All the free zones in the UAE
There are 45 free zones across the UAE, with every emirate offering people the choice to work in a free zone environment. Here is a list of all the free zones in the UAE:
1. Dubai Airport Free Zone
2. Dubai Auto Zone
3. Dubai Cars and Automotive Zone
4. Dubai Design District
5. Dubai Flower Centre
6. Dubai Gold and Diamond Park
7. Dubai Healthcare City
8. Dubai Industrial City
9. Dubai International Academic City
10. Dubai International Financial Centre
11. Dubai Internet City
12. Dubai Knowledge Park
13. Dubai Logistics City
14. Dubai Maritime City Authority
15. Dubai Media City
16. Dubai Multi Commodities Centre
17. Dubai Outsource Zone
18. Dubai Science Park
19. Dubai Silicon Oasis
20. Dubai Studio City
21. Dubai Techno Park (New name: National Industries Complex)
22. Dubai Textile City
23. Energy and Environment Park
24. International Humanitarian City
25. Jebel Ali Free Zone Authority
26. Jumeirah Lakes Towers Free Zone
27. Dubai Production City
1. Abu Dhabi Airport Business City
2. Abu Dhabi Global Market
3. Abu Dhabi Ports Company
5. Industrial City of Abu Dhabi
6. Masdar City
1. Hamriya Free Zone Authority
2. Sharjah Airport Free Zone Authority
3. USA Regional Trade Center Free Zone
1. Creative City Fujairah
2. Fujairah Free Zone Authority
Ras Al Khaimah
1. RAK Investment Authority Free Zone
2. RAK Maritime City
3. Ras Al Khaimah Free Trade Zone
4. Ras Al Khaimah Media Free Zone
Ajman and Umm Al Quwain
These emirates have one free zone authority each; Ajman Free Zone Authority and Umm Al Quwain Free Zone Authority.
How can I start a business in a free zone?
In order to set up a business in a free zone, you need to ...
- Choose a trade name
- Apply for a business licence
- Choose an office space
- Get pre-approvals, register your business and get your licence
1. Determine the type of legal entity
Determine the type of legal entity your business would take up. In a free zone, you can 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)
You need to check with individual free zone authorities about the type of company they can register. You can also set up a branch of already existing companies in a freezone and the capital requirement in each free zone can vary.
2. Choose a trade name
You can visit the free zone's website or the economic department in the emirate to check for permitted trade names and whether it is available for registration.
There are certain regulations on which trade names are not permitted. For example, using a name that might violate the public morals or the public order of the country or contains the name of a governing authority would not get approved.
Here are some helpful links for trade name registration:
- Registering trade name in Abu Dhabi
- Search trade name in Dubai
- Trade name search in Sharjah
3. Apply for a business licence
The type of business licence you will apply for depends on the primary activity of your business. Different free zones offer different options. For example, in twofour54, you can apply for various types of businesses like publishing, production and broadcasting businesses.
Non-residents can also apply for a virtual company licence in Dubai.
4. Choose an office space
This is where operating out of a free zone can be a big advantage as free zones offer several flexible ways in which you can lease or buy office space. Free zones also offer additional spaces like conference rooms and having a postal address connected with the free zone. In Dubai Airport Free Zone, you can choose between 'Office Packages', 'Smart Desk Office Packages' and 'Executive Office Packages'.
5. Get pre-approvals, register your business and get your licence
Registration requirements can vary based on the free zone authority you are dealing with. However, these are general guidelines that you can follow.
A. Initial approval
To apply for the initial approval, you need to submit:
- Completed application form
- Business plan
- Copy of existing trade licence/registration certificate (if you are an existing company, applicable for local company only)
- Coloured passport copies of the company's shareholder/s and the appointed Manager/Director for the new company
- Specimen signature of the company's shareholder/s and the appointed Manager/Director for the new company
- 2 years' audited financial reports for corporate entity or certificate of reference from a personal bank of the individual shareholder
- No Objection Certificate from current sponsor (for individuals)
- Unit title deed
- Letter of Intent
- Registry Identification Code Form (RIC) for Manager/Director (Original and notarised)
Freelancers need to submit fewer documents. In most cases, they need to submit:
- Application for registration
- Bank reference letter
- Registry Identification Code Form (RIC) (Original and notarised)
After getting initial approval, you need to pay registration fees and licence fees. The fees depend on the type of licence required. Then, you need to submit:
- Completed application for registration
- Board Resolution appointing Manager/Director (Notarised and attested)
- Power of Attorney given to Manager/Director (Notarised and attested)
- Memorandum and Articles of Association (Notarised and attested)
- Specimen signature of Manager/Director (Notarised and attested)
- Passport-size photo of Manager/Director against white background
- Share capital information
C. Licensing and visa process
- Lease agreements will be prepared by the authority
- Then trade licence will be issued
- Visa processing will start