Dubai Free Zone Company Setup

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About Dubai Free Zones

Free zones in Dubai have always been the preferred jurisdictions for business setup in the UAE, owing to the numerous benefits they have on offer. The initiative of launching free trade zones in UAE was taken up with the aim of diversifying the oil-dependent economy and creating business and investment opportunities in Dubai and other emirates. It is safe to say that free zones have been largely successful in attracting foreign businesses and thus have become sought-after destinations for business registration in Dubai.
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.
  1. 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.
  1. 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. While a mainland company is free to trade anywhere in the UAE, a free zone venture is generally permitted to conduct business within the free zone itself. 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.

Popular Free Zones in Dubai

Below we have discussed some of the most sought-after free zones in Dubai. These jurisdictions cater to a wide array of industries that include aviation, F&B, oil and gas, information technology, etc. As mentioned earlier, free zones can be either industry-specific or general purpose.

#1 Meydan Free Zone

Housed within the popular Meydan Hotel, this free zone offers one of the lowest trade license costs in Dubai and is fast gaining popularity as the emirate’s go-to business setup jurisdiction. Meydan FZ offers the best Dubai free zone license cost and is preferred by entrepreneurs for the luxurious amenities and community benefits it offers. The free zone offers over 3,500 business activities for a wide range of industry sectors.

#2 IFZA Free Zone

IFZA is known for its streamlined procedures for free zone company formation in Dubai. The free zone allows a combination of professional, commercial, and industrial activities under one license and offers one of the lowest Dubai company formation costs. IFZA also offers other benefits such as no requirement of an NOC from your employer, and also does not require the physical presence of a shareholder for company registration in Dubai.

#3 Jebel Ali Free Zone (JAFZA)

JAFZA is the UAE’s oldest free zone and is set up near Dubai’s premier seaport, the Jebel Ali Port. Notably, JAFZA is one of the three (3) offshore jurisdictions in the UAE. With the other two jurisdictions being in Ajman and Ras Al Khaimah, JAFZA is the only jurisdiction for setting up a Dubai offshore company. JAFZA is an ideal free zone for setting up businesses related to sectors such as logistics, oil & gas, and food & agriculture, and offers highly affordable offshore company formation costs in Dubai.

#4 Dubai South Free Zone

Formerly known as Dubai World Central (DWC) free zone authority, Dubai South is a part of the regulatory authority Dubai Aviation City Corporation and is one of the leading aviation and logistics free zones in Dubai. With facilities like warehouses, supply centres, and storage spaces, Dubai South has everything on offer to benefit an aviation or logistics business. Also, the free zone has a dedicated e-commerce zone to support the fulfillment, delivery, and return of orders, making it the ideal choice to register an e-commerce company in Dubai.

#5 Dubai Silicon Oasis (DSO)

DSO is a globally recognized IT-dedicated free zone in Dubai and a part of the Dubai Integrated Economic Zones Authority (DIEZ). DSO offers an integrated ecosystem to encourage research and development in the field of technology. The free zone offers a diverse range of business solutions in the form of well-equipped offices, conference facilities, warehouses, and plots, all at a highly affordable cost for business operations, and makes for a great option for setting up a business in Dubai.

#6 Dubai Multi Commodities Centre (DMCC)

DMCC is a leading global trade hub and happens to be one of the largest free zones in Dubai. Located at the prominent location of the Jumeirah Lakes Towers (JLT) district, DMCC as of today houses over 23,000 businesses. The free zone has industry-specific ecosystems dedicated to business sectors such as food and agriculture, sports and wellness, e-commerce, crypto and blockchain, gaming, etc. DMCC is one of the most sought-after jurisdictions for Dubai business setup.

#7 Dubai International Financial Centre (DIFC) Free Zone

DIFC is Dubai’s only finance-dedicated free zone and is considered one of the most advanced financial and innovation hubs in the MEASA region. DIFC free zone is home to numerous financial ventures dedicated to banking, capital markets, fintech, and so on. The free zone offers accelerator programs for startups, has adopted some of the most business-friendly regulations, and offers a highly efficient Dubai company registration cost.

#8 Dubai Airport Free Zone Authority (DAFZA)

DAFZA is one of the most widely-recognized Dubai free zone authorities and offers unparalleled connectivity benefits thanks to its proximity to the Dubai International Airport. The free zone benefits businesses with comprehensive cargo handling facilities and also has a dedicated logistics hub. DAFZA must be the free zone of your choice if you are looking for benefits related to VAT in Dubai. DAFZA is a designated free zone, meaning it is deemed as outside the UAE when it comes to the application of VAT. No wonder DAFZA is a highly preferred choice among companies undertaking activities involving imports and exports from Dubai.

#9 Dubai Development Authority (DDA) Free Zones

Formerly known as Dubai Creative Clusters Authority (DCCA), DDA is a government entity that regulates and controls a total of nine (9) different free zones for company formation in Dubai. These include Dubai Media City, Dubai Internet City, Dubai Science Park, Dubai Design District, Dubai Production City, Dubai Knowledge Park, Dubai International Academic City, Dubai Outsource City, and Dubai Studio City.

#10 Dubai World Trade Center (DWTC) Free Zone

Based at the iconic Dubai World Trade Center, DWTC Free Zone offers an excellent business environment for SMEs and MNCs alike. With hassle-free incorporation procedures and a well-regulated ecosystem, DWTC Free Zone is a great option for Dubai company formation. The jurisdiction offers immense opportunities for companies to conduct business in Dubai and internationally. At DWTC, you can choose from as many as five (5) trade licensing options.

#11 Dubai Healthcare City (DHCC) Free Zone

DHCC Free Zone is Dubai’s dedicated healthcare hub and is home to numerous hospitals, medical institutions, laboratories, recreational and clinical facilities, etc. Equipped with state-of-the-art office spaces and facilities, the free zone offers a world-class infrastructure for anyone looking to set up a healthcare venture. Besides medical enterprises, the jurisdiction also supports businesses from education, hospitality, and retail sectors, and is a highly beneficial option for Dubai free zone company setup.

#12 DUQE Free Zone

DUQE is the UAE’s first and only ship-based free zone. It is based on the iconic Queen Elizabeth 2, which is docked at the Mina Rashid marina. DUQE benefits entrepreneurs with quick and simple incorporation procedures, flexible setup packages, and ultra-modern facilities. With professional, commercial, and industrial permits to choose from, DUQE is an excellent option to avail of a Dubai free zone license.

#13 Dubai CommerCity (DCC)

Dubai CommerCity is the first e-commerce-dedicated free zone in the Middle East Africa and South Asia (MEASA) region. The free zone benefits e-commerce ventures with an excellent fulfillment solution in the form of a dedicated logistics cluster. Dubai CommerCity also has a dedicated business cluster with well-equipped state-of-the-art offices. The free zone is quickly becoming a preferred jurisdiction for obtaining a Dubai business license.

#14 Dubai Cars and Automotive City (DUCAMZ) Free Zone

DUCAMZ Free Zone was set up as a specialized jurisdiction for re-exporting automobiles to overseas destinations and is a popular destination amongst vehicle dealers. With facilities like workshops, warehouses, and showrooms, the free zone provides an ideal environment for undertaking business activities such as repair, maintenance, and trading of vehicles.

Frequently Asked Questions

Here are answers to the most frequently asked questions about Dubai free zones:

A free zone or a free trade zone is a special business setup jurisdiction with its own regulatory body. A free zone allows companies to have 100% foreign ownership and offers specific tax benefits, not available to companies outside the free zone.

A Dubai mainland company is simply an onshore company that is licensed by the Department of Economic Development in Dubai. A mainland business is free to trade anywhere in the UAE and overseas. On the other hand, a Dubai free zone company is a business entity that allows 100% foreign ownership and is licensed and regulated by the free zone authority where it is set up.

Meydan FZ offers the most cost-effective packages for Dubai company setup. Besides Meydan FZ, IFZA also offers a highly affordable pricing for business setup.

No, a free zone company does not require a local sponsor to hold shares and can be owned completely by foreign nationals.

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)
  • Free Zone Limited Liability Company (FZ LLC)
  • Branch

As of the date of writing, the UAE is home to 46 free zones.

With an area spanning over 57 Sq.KM, Jebel Ali Free Zone (JAFZA) is Dubai’s largest free zone jurisdiction.

The capital requirements for company formation vary from one free zone to another. While some free zones specify a minimal capital, others have no such requirements.

A business activity simply means the type of business you will conduct. It could be a service you offer or a product that you sell. A free zone in Dubai usually categorizes business activities into activity groups. In case you are considering offering multiple services, make sure to include all the business activities on your Dubai free zone license.

Free zones in Dubai offer three types of visas:

  1. Investor Visa
  2. Employment Visa
  3. Dependents’ Visas

To know more about Dubai’s free zone visa cost, contact us

While Dubai is a recognized business hub, RAK is also gaining popularity as a business setup jurisdiction. Your decision to choose a free zone for company formation in UAE must depend on factors such as cost, the ports you would require for trading, business activity, and so on. Choose the free zone that meets your requirements and proceed to start your business.

JAFZA allows you to set up an offshore company in the UAE.

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