Dubai draws a lot of attention from prospective UK investors and business owners. Before building a business in Dubai Free Zone, there are several things to consider. The goal is to figure out which choice is best for you and your company. Overseas investors like to engage in free zones specifically. However, around this, there are many misconceptions about what a Dubai-free zone is and how to operate a business in one.
What Is a Free Zone?
Free zone areas, also known as free trade zones in Dubai, are designated commercial zones that are tax-free for the enterprises that operate within. There are no residential houses in these districts that entrepreneurs can use for business. Establishing a business in a free trade zone is ideal for international enterprises and company owners that do most of their work outside of the UAE but want to use the UAE for regional production and supply.
Moreover, the government established particular laws and regulations to establish such free zones in Dubai.
As a result, there are several advantages for anybody to invest in setting up business in Dubai free zone. Furthermore, non-free zone enterprises required a local sponsor who held 51 percent of the company until recently.
Foreign investors are eligible to own 100% of the enterprises in Dubai-free zones. Although there has been a change in these restrictions recently, a considerable number of international investors still opt to operate from Dubai’s free zones due to the attractive tax incentives.
Business in Dubai Free Zone
Many individuals wonder how they may begin a company in the Dubai free zones. Below are a few procedures to follow, followed by a full explanation of what to consider before free zone company formation in Dubai
- Examine the legal entity that your business will be.
- Choose a business brand name
- Make an application for a business license.
- Pick a commercial building in one of Dubai’s free zones to start a business.
- Pre-approvals, registration, and license.
Types of UAE Free Zones
There are two types of free zones in Dubai.
- Free Zone Limited Liability Company (FZ LLC)
- Free Zone Establishment (FZE)
The number of stockholders and their legal status are the only differences between the two. Each Dubai free zone has its own set of restrictions, and business owners must make sure that their company’s position corresponds to the legal criteria of the zone they take interest in. You must first fulfill the legal conditions before the legal authorities that authorize you to operate a company in the Dubai-free zone.
Business and Licensing
Before you make any tangible moves toward launching a business in one of Dubai’s free zones, you must first decide what type of business you wish to run. That is when you’ll be able to take full advantage of this opportunity. Also, consider if you want to work as a freelancer or build a business and recruit employees.
Freelancers do not have permission to access all Dubai free zones. Moreover, applying as a freelancer, on the other hand, is costly. Second, you’ll need to figure out what kind of license your company requires. Multiple operations have the permission to run in Dubai-free zones under a single license. However, those operations or activities are covered by the same permission as stipulated by the granting body.
Name of the Business
Naming your company is one of the first decisions of your business formation. It’s essential to think about its emotive plea. The name should appeal to the market group you’re aiming for. You must, however, follow some naming rules.
The first step is to determine whether or not the name is eligible for registering. You may do it yourself or hire specialists by going to the Emirate government’s website. Words having religious or political connotations are strictly prohibited.
The Right Free Zone
The setting of your Dubai free zone is critical to your company’s success. The first step is to figure out what kind of company you want to start. The second stage is to evaluate which Dubai-free zone is best for your business based on this information.
In some Dubai free zones, only specific industries have the permission to operate. Furthermore, you must select the Dubai free zone as per the goods and services you intend to market in the industry.
You need due diligence even from the perspective of possible operations. It would be more difficult to flourish in a zone recognized for a different industry. The sales drive would be more difficult, and expenses would rise. On the other hand, if there are too many comparable choices to pick from, the market may be considered saturated. As a result, before opting to operate a business in Dubai free zones, all of these criteria must be considered.
What Are the Essential Documents Required To Start a Business in Dubai Free Zone
Additionally, to obtain office space in a Dubai-free zone, you must legally register your company by applying. Dubai free zones have particular requirements for each license. However, the following papers are often necessary for pre-approval:
Pre-Approval Documents Required for Opening a Free Zone Business in Dubai
- If necessary, a color copy of the shareholder’s passport and visa.
- Business plan application form
- A copy of your current business license/registration certificate
- Specimen signatures of the company’s shareholder(s) and the new company’s designated Manager/Director
- year audited financial records or a certificate of reference from an individual shareholder’s bank
- Furthermore, deed of title to the unit.
- Manager/Director Letter of Intent Registry Identification Code Form (RIC) (Original and notarized)
- Additionally, freelancers have their own set of demands. They only need the application form, RIC, CV, and bank reference letter.
Requirements for Registering a Free Zone Business in Dubai General Documents
Once you receive pre-approval, you’ll need to submit the following paperwork to register your firm in a Dubai-free zone.
- Submit registration application
- Manager/Director is appointed by a Board Resolution (Notarised and attested)
- Manager/Director is given power of attorney (Notarised and attested)
- Moreover, you need to get Articles of Association and Memorandum (Notarised and attested)
- Manager/Director signature sample (Notarised and attested)
- Submit a photo of the Manager/Director in passport size on a white backdrop.
- Information about the capitalization of the company
- Also, you require a corporate bank account to start a business in the Dubai-free zones.
Here are the key steps to set up a business in a free zone.
- Determine the type of legal entity.
- Choose a trade name.
- Apply for a business license.
- Choose an office space.
- Get pre-approvals, register your business and get your license
To conclude, Dubai’s free zone experiment appears to have been a success. They were established to attract foreign direct investment from overseas, and they have succeeded in doing so. This strategy has benefited many international investors and company owners as well as the citizens of Dubai by generating jobs and income.
These are special economic zones established to provide tax breaks and customs duty exemptions to foreign investors. These Zones allow foreign-owned enterprises with business permits as well as low business setup cost free zone.
Nevertheless, before making any critical judgments, you must be perceptive in your approach and go through a thorough diligence procedure. Starting a business in a free zone may appear simple, but it requires a significant amount of effort. Hence, Shuraa UK Branch is here to help you select the cheapest free zone in UAE, walk you through the paperwork, and get all approvals and licenses for your business setup.