If you’re thinking of starting a business and want to learn more about the advantages of establishing a Free zone business setup in the UAE, you’ve come to the right spot. Take a look at some important information about doing business in the UAE before learning about the benefits of forming a Freezone company in the UAE.
What Are Free Zones in Dubai?
Free Zones are areas within a country where products, services, and commodities can be exchanged without having to comply with strict customs regulations. Companies are taxed minimally or even completely exempted in most Free Zones to promote economic development.
The Free Zones Operating In UAE
Since they are not allowed to operate in the rest of the UAE, free zones were created to serve as foreign business hubs for companies outside of the UAE. Most free zone companies were initially involved in import and re-export. Now, most of them are doing business within the UAE and the Gulf Cooperation Council through local distributors.
For foreign investors, establishing a business enterprise in one of the UAE’s Free Zones is an appealing choice. Free Zones promote business activities and attract a company setup looking to establish rapidly and effortlessly. The UAE’s Free Zones are geographically distinct sections with laws and regulations that are significantly different from those that regulate companies in the UAE. International companies or companies working outside the UAE are deemed to be operating in the Free Zones.
Free zones are special economic zones or jurisdictions that offer financial and tax exemptions to businesses in exchange for operating licenses. In total, the seven Emirates have over 40 free zones. The Free Zone Authority is the government agency in charge of a Free zone. The Free Zone Authority, also known as the FZA, is the governing body responsible for the crucial activities related to free zone operations and license issuance.
In a UAE-free zone, an investor may form three types of business entities: listed below.
- Free zone company (FZC)
- Free zone establishment (FZE)
- Branch of a business concern
Each Free Zone in the UAE is governed by its own Free Zone Authority, which also manages registration and issues licenses. While there are differences in the Free Zones around the Emirates, the basic concepts are the same.
What Are The Key Costs In Setting Up A Company In A Free Zone?
Sometimes, Free Zones suggest that you can register for a low price, but the fact is that there is a range of mandatory costs that quickly add up.
There are five major costs to consider in any Free Zone:
- Trade Name Reservation
- Registration
- Trade License
- Office Rental
- Visas and other ancillary costs
There are two types of rates: one-time fees and recurring fees. Although the registration fees are relatively low, it isn’t easy to set up in any Freezone for less than 30,000 AED if all other costs are factored in.
Benefits of Forming a Free Zone Company
Let us get to the main point to learn about the main benefits of a Freezone company in Dubai. The advantages of establishing a free zone company setup are described below.
- Complete Foreign Ownership – One of the most obvious advantages of starting a free zone business in the UAE is to have 100% foreign ownership. This ensures that a foreign investor does not need to find a UAE national sponsor to start a business in the UAE. Foreign investment is possible without getting affected by the investor’s nationality.
- Absence Of Currency Regulations – Currency controls are government-imposed limits on the exchange of foreign currencies. In UAE free zones, there are no currency restrictions of any kind. This facilitates financial transactions.
- Import And Export Duty Exemption – The UAE’s free zone territories are exempt from import and export duties. This contributes to the promotion of foreign trade.
- Tax Benefits – For Freezone company setup, 100% tax exclusion is applicable, including income and corporate tax.
- Repatriation Benefits – Total repatriation benefits are available to businesses. Income and capital assets are included in this.
- Smooth Labour Recruitment – Companies in the Free Zone will perform labour procurement formalities quickly and cost-effectively. Companies are permitted to hire foreign nationals.
- Readily Available Workspaces – Free zone jurisdictions have plenty of warehouse and office accommodation. Free zones in the United Arab Emirates are suitable for both SMEs and start-ups both.
- Ease Of Company Incorporation – The procedures for forming a business in a free zone is plain and straightforward. In comparison to other jurisdictions, you will be able to complete the licensing procedures in fewer days.
- Trouble-Free Immigration Procedures – The immigration facilities associated with Dubai Free zones are effective and helps to save time.
- Excellent Communication And Infrastructure – Free zones in the United Arab Emirates have the most up-to-date connectivity networks and facilities. Energy is both cheap and available in free zones.
More than 38 free zones are operating in the United Arab Emirates, distributed across the seven emirates. This number is steadily increasing, with new free zones being developed every year. The majority of free zones are designed to accommodate a specific form of enterprise. While the rules and laws that regulate most Free Zones are identical, the business climate and services can vary.
If you want to open a business in one of the UAE Free Zones, you should conduct extensive preliminary research. An approved company registry agent can help you navigate the registration and start-up process, which can be time-consuming for beginners.
