Dubai Free Zone Company Setup

Since the launch of the Jebel Ali Free Zone (JAFZA) in 1985, Dubai is now home to over 30 free zones with a dedicated focus on a diverse range of sectors such as media, finance, aviation, information technology, healthcare, etc., and each of these differs from one another in terms of pricing, setup packages, regulations, etc. Thus, entrepreneurs have ample options to choose their ideal jurisdiction for free zone company formation in Dubai.

Dubai Free Zone Benefits

With a host of advantages on offer, free zones stand out as the preferred choice for obtaining a Dubai trade license. Here are the best advantages of setting up a free zone company.

• 100% foreign ownership
• Tax benefits*
• Cost-effective business setup
• Strategic geographical location
• Proximity to seaports and airports
• Business-friendly framework
• Industry-specific support
• Provisions for training and mentorship

*Subject to certain conditions

Dubai Free Zone Business Setup

Industry-Specific vs General-Purpose Free Zones in Dubai

While most free zones in Dubai are industry-specific, a handful of them are general-purpose and are open to a diverse range of business activities. For instance, Meydan Free Zone is general-purpose while Dubai Media City (DMC) is an industry-specific free zone and is mainly preferred by companies from the media and advertising sectors. One must bear in mind that most industry-specific free zones are also open to business activities different from the ones they mainly focus on. For business setup in a Dubai free zone, you must also consider factors such as location, cost, and the type of facilities available.

Business Setup Costs in Dubai Free Zones

The cost involved in forming a company is one of the major concerns for anyone looking to take up entrepreneurship. It is crucial to understand that there are several factors at play in influencing the costs of your venture. The first of these factors is the free zone you select. Each of Dubai’s free zones has priced the trade license differently. Usually, licenses are offered as part of packages that include visas. This brings us to the second factor i.e. the number of visas you opt for. It is crucial to factor in the number of visa quotas you are looking to opt for.

The duration of your license is another factor affecting the overall setup costs. Also, if you have leased an office space, the leasing costs will also be added to the expenses. Again, the type of workspace you select will vary in price. As an example, a flexi-desk will cost way lower than a private office.

The license price also depends largely on the type of business activities you select. In certain free zones, the license cost inflates as you add more activities. Lastly, some free trade zones require a minimum paid-up capital from your end.

License-Types Available at Dubai Free Zones

Free trade zones in Dubai are known to offer varied types of licenses. Usually, the license types depend on the industry the free zone caters to. It is also possible that two different free zones have different names for a similar type of license. Below, we have explained the most common types of licenses that can be generally opted for at most free zones in the Emirate.

1. Professional

If you are into service-oriented businesses where you offer the service based on your professional expertise, you need to acquire a professional license. Some examples of such services include consultancy, medicine, accounting, etc.

2. Commercial

A commercial permit is usually required if you are looking to venture into trading. Activities such as import/export are covered under this license.

3. Industrial

As the name suggests, this license covers activities of industrial nature such as production, packaging, segregation, etc.

Obtaining a Dubai Trade License Through a Free Zone

Here are the steps for free zone company registration in Dubai:

1. Trade name reservation

As the first step in applying for a Dubai free zone trade license, you must reserve a trade name for your company. Every free zone authority has predetermined naming conventions that your company name must comply with.

2. Signing and submission of the application form

You will sign the application form and submit it along with the following: Documents for individual shareholders

• Passport copy of the shareholder(s) and manager(s)
• Latest UAE entry stamp/visit visa copy
• Residence visa copy and Emirates ID of the shareholder(s) and manager(s) (for UAE residents)
• Address proof of the shareholder(s) and manager(s)
• Passport-sized photo of the shareholder(s) and manager(s)

Documents for corporate shareholders

• Memorandum of Association (MOA)
• Article of Association (AOA)
• Business license (for an existing company)
• Board Resolution
• Certificate of Incorporation

Note: All documents for corporate shareholders must be attested by the UAE Ministry of Foreign Affairs (MOFA) as well as the UAE Embassy in the country of issuance. Also, additional documents other than those mentioned above may be required for both individual and corporate shareholders.

3. Issuance of trade license

Upon reviewing and approving your application, the free zone authorities will issue your trade license, and with this, your Dubai free zone registration process is complete. You may then proceed with the visa application process (if applicable).

Legal Structures for a Dubai Free Zone Company

The permitted legal structures vary from one free zone to another. However, the most common types of legal entities that a free zone business can take up are:

Free Zone Establishment (FZE)

An FZE company can have only a single shareholder, and this shareholder can be an individual or a company.

Free Zone Limited Liability Company (FZ LLC)

An FZ LLC is a legal entity that protects its owners from personal liability. This means that if an LLC company runs into legal or financial troubles, the owner will have no personal responsibility over this. Up to 50 individuals can be shareholders of an FZ LLC.

Branch

A branch company may be defined as an extension of a parent company that may be based in the UAE or overseas.

Dubai Mainland vs Free Zone

A free zone company is mainly defined by the ownership benefits it offers. These companies are mainly preferred as they allow 100% ownership for expats. This means that such a venture does not require an expat to partner up with a local sponsor for owning the company.On the other hand, a mainland company may require a local sponsor/partner to own 51% of the company shares. Until recently, a mainland company mandated the presence of a local sponsor. With the recent changes in laws, these companies can also be wholly owned by foreign nationals.

However, all mainland companies are not eligible for 100% ownership. Only companies engaging in specific business activities can be owned entirely by a foreign national. Also, a mainland business license is issued by the Department of Economic Development whereas a free zone venture is issued a permit by the free zone authority itself.

Can a Free Zone Company Conduct Business in Dubai Mainland?

In general, a free zone company in Dubai cannot conduct business directly in the mainland. In cases where a free zone company wishes to do business in the mainland, it becomes necessary to obtain approvals from the free zone authority first. This can be followed by securing permissions from the Department of Economy and Tourism. Some of the ways a free zone venture can carry out mainland business activities: Acquiring services of a logistics partner for managing the movement of goods within the UAE. Opening a branch of the free zone company in the mainland.
To learn more about how to open a company in Dubai, contact us.