How to Set Up a Company in Dubai Free Zone
Did you know that Dubai Free Zone is the up-and-coming, dynamic business hub of 2033?
Dubai Free Zone is one of the most attractive places for entrepreneurs globally. It offers streamlined processes, tax advantages, full foreign ownership, and tremendous opportunities for new businesses.
Here is the more significant news: According to the Dubai Economic Agenda D33, the Dubai Free Zone is planned to double in size, making it among the top three global cities.
If reading this has triggered your business mind crunching figures and wondering how to set up a company in Dubai free zone, no need to worry; this guide will answer all your queries on how to open a company in dubai free zone.
What is a Dubai Free Zone?
Dubai Free Zone is a designated economic area developed to attract international businesses and investors. To promote investment, support business growth, and make the Dubai Free Zone one of the biggest business hubs, the UAE government helps international companies set up quickly without needing a local partner and offers 100% foreign ownership, a streamlined regulatory framework, and taxation advantages.
There are several Free Zones in the UAE, each catering to specific industries. Some of the most well-known zones are:
- DIFC Freezone (Dubai International Financial Centre) is a designated financial hub for banking, fintech, and professional services.
- DMCC Freezone (Dubai Multi Commodities Centre) caters to businesses involved in trade and commodities, supporting gold, diamonds, tea, and other goods.
- ADGM Freezone (Abu Dhabi Global Market) is a financial center with an independent legal framework based on English common law.
Key Objectives of Dubai Free Zones
Here are a few reasons why the Dubai Free Zone has been set:
1. Promoting Foreign Direct Investment
Dubai free zones attract foreign direct investments. They offer incentives to foreign businesses, such as reducing taxes, not limiting the movement of capital between home country and the Dubai free zone, and allowing relatively free movement of labour, making it financially beneficial for the companies to invest.
2. Economic Diversification
The establishment of the Dubai free zone has allowed the country’s economy to diversify and become less reliant on oil revenues. With growth in sectors like commodities trading, technology, and logistics, the country is diversifying exponentially.
3. Ease of Doing Business
The government has made setting up a company in Dubai free zone very simple. They expedite the business setup process and efficient growth by reducing paperwork and legal irregularities, allowing companies to follow basic rules, and, above all, allowing companies to choose their license according to their specific industry needs.
Business structures in Dubai Free Zone
Depending on the size and ownership of the business, the Dubai Free Zone commonly have the following business structures:
- A Free Zone Establishment (FZE) is a business entity with a single owner: either an individual who solely owns and operates the business or a corporate entity that registers a new business under its name.
- Free Zone Company (FZCO): A multi-shareholder company (between 2 and 50 shareholders) which can have individuals, corporate entities, or a combination of both.
- Branch of a Foreign Company—A branch of a business registered outside of the UAE may initiate a business in the Dubai free zone. This branch will then operate under the same name and conduct the same business activities as the parent company.
Advantages of Setting Up in a Dubai Free Zone
When you open a company in the Dubai free zone, these are the following advantages that you can enjoy:
1. 100% Foreign Ownership
The most significant advantage of opening a company in the Dubai free zone is that the owners keep full ownership of their companies, unlike in the Mainland, where the businesses need a local sponsor to get started.
The most significant advantage of opening a company in the Dubai free zone is that the owners keep full ownership of their companies, unlike in the Mainland, where the businesses need a local sponsor to get started.
2. Tax Exemptions
Dubai free zone offers businesses the advantage of tax exemptions. Yes, that is true. Businesses operating in the Dubai free zone are charged to tax at 0% corporate tax rate (on qualifying income) , allowing them to reduce their operational costs and reinvest in their business.
3. Transferring of Profits and Capital
When you set up a company in Dubai free zone, businesses can transfer all of their profits and capital to their home country without any restrictions. Unlike some jurisdictions where governments limit fund transfers.
4. No Import or Export Duties
The government has built free zone to help businesses operate efficiently. If you set up a company in the Dubai free zone and your business is related to commodity trading, the government allows the import and export of goods without any customs duties. The streamlined processes and reduced business costs make the Dubai-free zones highly attractive for businesses.
5. Simplified Business Setup
Another advantage that attracts foreign businesses towards the Dubai-free zones is that the processes have been streamlined, allowing them to start their business within a few days. There is a fast and efficient business registration process with minimal bureaucracy, straightforward licensing procedures, and compliance requirements, allowing entrepreneurs to enter the market quickly without administrative delays.
6. Modern Infrastructure and Strategic Location
Dubai Free Zones offers businesses attractive office spaces, warehouses, logistics facilities, and business parks equipped with the latest technology. Their strategic location between Europe, Asia, and Africa makes them an ideal global trade and investment hub.
Steps to Set Up a Company in a Dubai Free Zone
You must be getting overwhelmed researching so many different free zones, the perks of working in the UAE, and the advantages of the Dubai Free Zone. When you open a company in the Dubai free zone, these are the following advantages that you can enjoy:
But you don’t have to worry, as we’ll guide you exactly on how to set up a company in the Dubai free zone.
Choose the Right Free Zone
After you have decided to enter the free zone, the first thing you need to do is to choose your zone. Dubai’s free zone has dedicated zones for different kinds of businesses, such as trading, financing, media, or technology.
Select Business Activity and Legal Structure
Next, you will select and decide upon the business activity and its legal structure. You need to determine if you’ll be working in a Free Zone Establishment, where there is a single owner, or in a Free Zone Company, where you will have multiple shareholders. Just make sure that your selected free zone allows your intended business activities.
Reserve Company Name and Submit Initial Application
Once you have decided on your free zone and are set on the business structure and activity according to your zone, you need to decide upon your company’s name. All you have to do is submit your application to the relevant zone authority and ensure that your business name complies with UAE regulations.
Prepare Required Documentation
In the fourth stage of opening a company in the Dubai Free Zone, you need to have your documents ready. You will need passport copies, business plans, shareholder agreements, and any additional approvals required for your industry.
Apply for a Business License
Next, you have to apply for a business license depending on your business activity, such as trading, service, or industrial licenses. The Dubai free zone has an efficient and streamlined process, and all you have to do is submit your documents to the Free Zone authority and get your license.
Lease Office Space
Okay, now that you have completed all the paperwork and administration and have set up a company in the Dubai Free Zone, your next step is to lease an office space. Depending on the Free Zone’s requirements and your business needs, you can choose from flexi-desks, virtual offices, or physical office spaces.
Open a Corporate Bank Account
Since you will need to keep the money somewhere and may even be transferring money back and forth to your home country, you need to open a corporate bank account. Once your company is registered, you must establish a business bank account with a UAE-based bank to facilitate transactions and financial operations.
Apply for Residency Visas
Once you are all set with your business and offices, you can apply for a UAE residency visa for yourself, your employees, and any dependents under company sponsorship.
Required Documents for Company Formation
When opening a company in the Dubai Free Zone, you need to have a set of documents with you to ensure a smooth process.
Passport Copies of Shareholders and Directors
The first and most important thing you will need is clear copies of the passports of all business owners, directors, and key stakeholders for identity verification.
Proof of Address
Some Free Zones may require a recent utility bill, tenancy contract, or bank statement as proof of residential address for company shareholders or directors.
Business Plan (If Required)
While this is not mandatory, depending on the free zone where you register your business, authorities may ask you for your business plan to see the company objectives, financial projections, and operational strategies.
Memorandum and Articles of Association
The next necessary item is documents that define your company’s structure, shareholder rights, and operational guidelines.
Initial Approval Certificate
The most important thing is that before you proceed to full registration with your business, you will need to get an initial approval certificate for your business. Businesses need to obtain an initial approval certificate from the Free Zone authority that confirms the acceptance of the proposed business activity and company name.
Licensing Options in Dubai Free Zones
Now that we are clear on what documents you need to have when registering, you need to go through the licensing options as well. Dubai Free Zones offers various business licenses tailored to specific activities, and in order to keep a smooth registration process, you need to choose the right license as well.
Commercial License
The most important thing is that before you proceed to full registration with your business, you will need to get an initial approval certificate for your business. Businesses need to obtain an initial approval certificate from the Free Zone authority that confirms the acceptance of the proposed business activity and company name.
Service License
It is suitable for businesses offering professional or consultancy services, such as legal, marketing, accounting, and IT services.
Industrial License
Designed for manufacturing, production, assembly, or industrial companies. Businesses with this license may need warehouse or factory space within the Free Zone.
E-commerce License
An E-commerce license allows businesses to engage in online trading and digital services. It is ideal for entrepreneurs operating online retail stores or digital marketplaces.
Visa and Immigration Process
This is an attractive aspect of working in the Dubai Free Zone, and we are sure that it must have caught your eye when you were reading about the steps to set up a company in the Dubai free zone.
The businesses registered in Dubai-free zones can apply for investor and employee visas, allowing foreign professionals to live and work in the UAE. Following are the ways that you will need to follow:
Eligibility for Investor and Employee Visas
Depending on your free zone and the office size, you can apply for residency visas for business owners, shareholders, and employees.
Steps to Obtain Residency Visas
If eligible, you must first submit a visa application to your free zone authority. After that, you will receive a permit of 60 days, after which you can stay in UAE for visa processing.
Medical Tests and Emirates ID Application
Once you have the permit and have arrived in the UAE, you will need to conduct some regular medical tests and then apply for the Emirates ID, a UAE identification card. You will require this ID for tenancy purposes, for opening bank accounts, and for daily transactions.
Post-Setup Compliance Requirements
Once you set up a company in the Dubai free zone, your work does not end there. You must follow the guidelines of your free zone and ensure that you stay in compliance with the regulatory bodies.
Here are a few things you need to maintain to stay compliant with the authorities:
Annual License Renewal
Ensure that you renew your trading license annually to keep the trading and business process streamlined. If you fail to renew your license in time, you may be charged with penalties, and, depending on the severity of the situation, your license may even be suspended.
Submission of Audited Financial Statements
While this is not a compulsion in all the free zones, some Dubai free zones require you to submit audited financial statements of your business. To avoid any unnecessary trouble, you should engage an audit firm to ensure compliance with local regulations.
Compliance with UAE Laws and Free Zone Regulations
Lastly, your business must adhere to UAE labor laws, economic substance regulations (ESR), anti-money laundering (AML) rules, and other Free Zone-specific policies.
Common Challenges and Solutions
Even though the process of opening a company in the Dubai free zone is very fast, efficient, and straightforward, there are still some challenges that you might come across:
Navigating regulatory requirements
When it comes down to navigating regulatory requirements in a foreign land, no matter how straightforward the system seems, there is always a risk involved. Therefore, you must take the assistance of free zone specialists to reduce that risk. Adpets UAE assists companies and organizations in setting up their businesses in Free Zones.
Adpets offers dedicated professionals who guide you through each step, helping you choose the correct free zone for your business and ensuring you stay compliant with the regulatory requirements.
Opening a Corporate Bank Account
When you open a corporate bank account, there are multiple documents that the banks require, and sorting and filing them can be a hassle, considering that you are working in a foreign land. Managing visa quotas and employment regulations
Adpets offers dedicated professionals who guide you through each step, helping you choose the correct free zone for your business and ensuring you stay compliant with the regulatory requirements.
Managing visa quotas and employment regulations
The number of visas a business can issue is determined by its office space and the specific policies of the chosen Free Zone. To get the visas approved without delays, you must ensure your company provides workforce planning and clearly understands UAE labor laws.
Conclusion
When setting up a business in a Dubai Free Zone, multiple benefits are offered, from tax advantages and full foreign ownership to a high-tech yet efficient business environment.
While the systems have been streamlined to ensure a smooth process, you must follow the set guidelines and abide by the rules of your zone authority. Noncompliance with the laws can not only end up in the business facing penalties, but can also result in your license’s suspension.
Hiring specialists like Adpets can help ensure that you fulfill all the set criteria, choose the correct free zone for your business, and stay compliant with the Free Zone and UAE laws.
FAQs
No, most Free Zones allow remote registration. However, a visit to Dubai may be required for specific processes like opening a corporate bank account or obtaining residency visas.
No, Free Zone businesses cannot trade directly in the UAE mainland. They must work with a local distributor or establish a mainland branch to do so.
Setting up a business in the Free zone depends on a lot of factors, such as business activity and office space. Typical expenses include:
- Business license and registration fees
- Office lease (flexi-desk, shared, or physical)
- Visa and immigration costs
- Corporate bank account setup fees
Businesses must meet banking requirements, including:
- Choosing a bank based on business needs
- Submitting required documents (trade license, passports, proof of business)
- Attending a bank meeting (some require physical presence)
- Awaiting approval, which can take a few days to a week
