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How to Setup a Business in a UAE Free zone

How to Setup a Business in a UAE Free zone

Setting up a free zone company in the UAE entails navigating through various legal and administrative complexities. The UAE boasts numerous free zones, each with its unique set of rules, regulations, facilities, licensing procedures, and visa provisions. Despite entrepreneurs' primary focus on business operations, they often find themselves engrossed in the intricacies of administrative procedures, documentation requirements, and legal considerations associated with starting a business. In this article, we endeavor to offer comprehensive and standardized information that is applicable across most UAE free zones for facilitating business setup processes.

Advantages of Setting Up a Business in a UAE Free Zone

  • Full Ownership: Foreign investors enjoy 100% ownership of their company in free zones.
  • Profit Repatriation: Free zone companies can repatriate all profits outside the UAE, allowing for 100% capital transfer without restrictions.
  • Low Corporate Tax: Companies benefit from a reduced corporate tax rate of just 9%, allowing them to retain a larger share of their profits within the business.
  • Streamlined Import/Export: Free zones are exempt from customs duties, simplifying the import and export processes.
  • Strategic Location: Proximity to sea ports, airports, and borders maximizes trading advantages.
  • Global Connectivity: UAE's major ports and airports facilitate local and international trade, providing access to markets in the MENA region and South Asia.
  • Expatriate Hub: Dubai's status as a global transit destination attracts a diverse expatriate community, fostering global business connections.
  • Diverse Business Activities: Free zones offer flexibility in undertaking various business activities.
  • Efficient Registration: The registration process is swift and straightforward, providing investors with easy access to business formation and administrative services in free zones.

Crucial steps to consider when setting up a UAE free zone company

Free zone Entity

The initial step in establishing a free zone company in the UAE involves determining the legal entity your company will assume. Here are the options available: Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZCO): permits multiple shareholders, with a maximum cap of 50 individuals, companies, or a combination of both. Free Zone Establishment (FZE):Allows only a single shareholder.

Branch of a Company:

A branch of a company serves as an extension of either a local or foreign company. It operates under the same name as the parent company and conducts similar activities, thereby holding an equivalent legal status as the parent entity. Choosing the appropriate entity type is crucial as it determines the structure, governance, and ownership framework of your free zone company.

Selecting an appropriate company name

When naming your free zone company, it's vital to ensure compliance with the guidelines set by the free zone authorities. In addition to having a unique name, consider the following requirements for approval of your trade name:

Alignment with Business Activity and Legal Status:The trade name should reflect your company's business activity and legal structure.Use a suffix indicating the legal form, such as FZE for Free Zone Establishment.

Avoid References to Religion:The name should not include any references to religious entities or beliefs. Respect Societal Morals and Public Order:Ensure that the name respects societal values and does not violate public order. Avoid Emirates' Names and Governing Bodies:Exclude names of the UAE's seven emirates or any governing bodies from the trade name.

Obtain a Trade License

The type of trade license you pursue will correspond to the specific business activities your free zone company intends to undertake. This could include professional, commercial, industrial, or a combination thereof, depending on your business operations and the regulations of the free zone. Some free zones, like SPC in Sharjah, offer the flexibility to combine commercial, industrial, and professional activities within a single license. Additionally, many free zones provide options for multi-year license packages, enhancing convenience and continuity for businesses.

Selecting an Office Space or Flexi-Desk

Free zones across the UAE provide a wide array of options for office spaces tailored to meet diverse business needs. Consider factors such as budget, team size, and operational requirements when choosing a workspace.

Flexi-desk facilities are often included at no additional cost with the license. However, free zones also offer various physical office space options, including fixed desks, dedicated furnished or unfurnished offices, as well as shell and core spaces. While most spaces are available for lease, some free zones also offer office spaces for purchase.

In addition to traditional office spaces, free zones may provide workshops, warehouses, and other storage facilities, ensuring that businesses can find the right space to support their operations effectively.

Register Your Company and Obtain the Trade License

The registration process and required documentation for establishing your company and acquiring the trade license vary depending on the specific free zone. However, we have outlined a general list of documents and procedures commonly required across free zones for your reference:

Documents Required:
  • Passport copies of shareholders and managers
  • Business plan outlining company activities
  • Address proof of the shareholders and managers
  • No objection certificate (NOC) from current sponsor (if applicable)
  • UAE utilized Visa of the shareholders and managers
  • Any other specific documents as per free zone requirements

Registration Process:
  1. Submit all required documents to the relevant free zone authority.
  2. Await approval of company registration and issuance of trade name reservation certificate.
  3. Finalize lease agreement and obtain office space or flexi-desk facility.
  4. Complete payment of registration fees and submit required forms for trade license issuance.
  5. Upon approval, receive your trade license from the free zone authority.

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