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Why are Free Zones a Prevalent Form of Business Setup in the UAE?

Free zones or free trade zone in the UAE were introduced to make the company formation process of foreign investors simpler. 100% ownership for foreign investors, lucrative facilities, and Flexidesks have made free zones a prevalent form of business registration in the UAE. Free Zones in the UAE have special tax-free exemptions and low trade restrictions where goods can be manufactured, imported/exported, traded without paying any customs duty. These special trade zones are strategically located close to national borders, international airports and major seaports to encourage trading for investors.

Every free trade zone in the UAE has a different focus area, setup costs and paperwork. However, the basic requirements to set up a business in free zones are the same.

Types of Licenses Available in the UAE Free Zones

A business license is essential for company formation in the UAE free zones. The different types of business licenses you can obtain in the UAE free zones are:

  1. General Trading License: Investors can trade in all products.
  2. Trading/Commercial License: Allows time-limited permission to perform industrial, commercial, or consulting activities.
  3. Service License: This license approves services like – legal consultancy, financial companies, business consultancy and other similar services
  4. Industrial License: It allows importing raw materials, manufacturing, and exporting finished products worldwide.
  5. Warehousing License: Investors can avail of warehousing facilities on lease for distribution, packaging, and warehousing of goods
  6. Manufacturing License: Allows applicants to manufacture products

Entities that are Allowed to Form a Free Zone Company in the UAE

The three types of entities an investor can set up in the UAE free trade zones are:

  • Branch of a foreign or local company
  • Free Zone Establishment (FZE), with a single shareholder
  • Free Zone Company (FZC), with 2 to 5 shareholders

Benefits of Business Setup in UAE Free Zones

There are many benefits of starting a business in the UAE, and the UAE free zones offer some additional advantages. Here are they:

  • 100% foreign ownership
  • Full repatriation of capital and profits
  • Exemption from corporate, personal and income taxes
  • Free transfer of funds and no foreign exchange controls
  • All import and export duties exempted
  • Low freight charges
  • Efficient communication process
  • Single-window administration
  • Investor-friendly government policies and straightforward legal formalities
  • Easy company formation and trade licensing processes
  • Easy recruitment procedures
  • Flexible working environment
  • Freehold offices available for sale or lease
  • Ready-to-used workspaces, factories, and warehouses
  • You get a 3-year UAE residence visa
  • Sponsorship and visas for the skilled workforce
  • Very efficient immigration procedure
  • No restrictions on hiring immigrants
  • Focussed industry clustering
  • World-class infrastructure

Process for UAE Free Zones Business Setup

Free Zones in the UAE are not within the jurisdiction of the UAE, and each one has set its own rules and regulations. Setting up a company in UAE free zones is easy and simple.

  • Determine the Entity Type

Decide the type of entity you want to set up in any free zones. The capital requirement for any entity depends upon that particular free zone where you want to set up your company.

  • Choose a Trade Name

Next is choosing a trading name for your company. Again, make sure your trade name is permitted in your free trade zone, and also it should not be a duplicate name.

  • Apply for a Business License

After choosing a trading name, you will have to apply for a business license. You can find out what suits you best from the list of different business licenses mentioned above. Your business license type will depend on the primary activity of your business. Submit the supporting documents when you apply for the license.

  • Choose an Office Space

You will find Flexidesk office service in free zones to support new entrepreneurs and start-ups. You can also purchase or lease office spaces in free trade zones. But, again, your office space requirements will depend upon the number of employees and the business activities.

  • Get Pre-Approval, Register your Business, and Acquire the License

Finally, take all necessary approvals from the concerned authorities, register your business with the free zone portal, and acquire your license. The entire process takes just 2-4 weeks. After you get your license, you can start your business activities.

Necessary Documents for a Business Setup in the UAE

Several documents need to be translated into English, attested, and notarised by the Gulf Cooperation Council (GCC) or the Arab Embassy.

  • General Documents
  • Duly filled application license form
  • Business card of the contact person
  • Copy of business plan
  • Notarized and attested Memorandum of Association (MOA) and Articles of Association (AOA)
  • Passport copies of the partners and business managers
  • Original bank reference letters and license of the partner’s existing company, if applicable
Documents for Industrial License
  • Business feasibility study
  • Existing company profile
  • Duly filled form for the investor’s project profile
Documents for Consultancy License
  • A copy of the degree or diploma certificate mentioning the desired activities, or the experience certificate.
Documents for Branch of Companies
  • Attested copy of the registration certificate, incorporation certificate, and the Memorandum and Articles of Association (MAA)
  • Original Board Resolution that guarantees financial commitment of the branch
  • Original Power of Attorney of a legal representative and their passport copy
  • Last 3 months’ bank statements of the parent company

List of Free Zones in UAE

The lists of free zones established across the UAE are:

1. Dubai Free Zone
  • Jebel Ali Free Zone (JAFZA)
  • Dubai Airport Free Zone (DAFZA)
  • Dubai International Financial Centre (DIFC)
  • Dubai Healthcare City (DHCC)
  • Dubai World Trade Center (DWTC)
  • Dubai South Free Zone
  • Dubai Knowledge Village
  • Dubai Logistics City
  • Dubai Media City (DMC)
  • Dubai Silicon Oasis (DSO)
  • Dubai Academic City
  • Dubai Biotechnology & Research Park (DuBiotech)
  • Dubai Car and Automotive City Free Zone (DUCAMZ)
  • Dubai Design District
  • Dubai Gold and Diamond Park
  • Dubai Industrial City (DIC)
  • Dubai International Academic City
  • Dubai Internet City (DIC)
  • Dubai Multi Commodities Centre or Jumeirah Lakes Towers Free Zone
  • Dubai Outsource Zone
  • Dubai Studio City
  • Dubai Techno Park
  • Dubai Technology and Media Free Zone
  • International Media Production Zone
  • Economic Zones World
  • Dubai Flower CentreMeydan Free Zone
  • International Humanitarian City
2. Abu Dhabi
  • Abu Dhabi Airport Free Zone (ADAFZ)
  • Abu Dhabi Global Markets (ADGM)
  • Khalifa Industrial Zone Abu Dhabi (KIZAD)
  • Twofour54
  • Abu Dhabi Ports Company (ADPC) – Khalifa Port and Industrial Zone (KPIZ)
  • Industrial City of Abu Dhabi
  • Higher Corporation for Specialized Economic Zones (ZonesCorp)
  • Masdar City Free Zone
3. Sharjah
  • Hamriyah Free Zone
  • Sharjah Airport International Free (SAIF) Zone
  • USA Regional Trade Center (USARTC) Free Zone
  • Sharjah Publishing City Free Zone
  • Sharjah Media City Free Zone
4. Ajman
  • Ajman Free Zone
5. Fujairah
  • Fujairah Free zone
  • International Free Zone Authority (IFZA)
6. Ras Al Khaimah
  • Ras Al Khaimah Investment Authority (RAKIA)
  • Ras Al Khaimah Economic Zone (RAKEZ)
  • Ras Al Khaimah Media Free Zone
  • RAK Maritime City
7. Umm Al Quwain
  • Umm Al Quwain Free Trade Zone (UAQFTZ)

Want to Set Up a Business in the UAE Free Zones?

The ease of setting up a business in the UAE is one of the primary reasons why global investors choose UAE free zones for investment over many other places. Additionally, there are many benefits for start-ups, new entrepreneurs and small businesses, setting up their business in free zones.

At OBK Business Centre, we can help you establish your business in the United Arab Emirates in a hassle-free manner. If you are on the lookout for a business setup and company formation consultant, we will be more than happy to help you!

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