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Company Formation in Dubai Free Zones

Company Formation in Dubai Free Zones

Dubai is currently one of the easiest places to register a company in the world. Apart from that, Dubai offers other advantages which is why the number of foreign investors interested in business setup in Dubai free zones is constantly growing. Enterprisers have two options for starting a business in Dubai and various types of legal entities to choose from. They can open a company within the Emirate or in one of its free zones. Dubai has more than 30 fully operational free zones and few others in the development phase, satisfying the needs of those interested in company formation in a Dubai free zone. We can help you open a company in any of the UAE free zones.

Types of companies for business setup in Dubai free zones

Foreign enterprisers can choose to register free-zone limited liability companies or work as sole traders, while foreign companies can establish free zone companies with corporate shareholders or branch offices. Investors can also operate as sole proprietors, provided that they apply for one of the professional licenses issued by the free zone authorities.

No matter the type of company one decides to set up in one of Dubai’s free zones, the following licenses are available:

  • general trading licenses;
  • trading licenses;
  • industrial licenses;
  • national industrial licenses,
  • service licenses.

For certain types of activities, minimum share capital requirements apply depending on the free zone where the company will be registered. Here is a video presentation for you if you want to know more about Dubai freezone company setup cost:

Advantages of company formation in a Dubai free zone

The first and most important benefit of starting a business in a Dubai free zone is the great number of free zones surrounding the emirate. Dubai is now home to more than 30 free zones, however a few others are under construction. It is also worth mentioning the fact the conditions for setting up companies in any of them are pretty much the same.

Companies operating in Dubai mainland have multiple tax advantages, however, these advantages are also present in its free zones. Among these, we mention:

  • the lack of any taxes imposed on the corporate income of locally registered companies;
  • one of the lowest value added taxes in the world at a rate of 5%;
  • the free repatriation of profits is available in all of Dubai’s free zones;
  • access to a wide network of double taxation agreements concluded by the UAE.

Dubai free zone companies also benefit from exemptions on imports and exports. We can assist with VAT registration services in Dubai. Our specialists can help you with company formation in UAE free zones.

It is easier and quicker to register a company in a Dubai free zone than to set up a business on the mainland. This is because the company incorporation procedure of a business in a Dubai free zone is completed in one step.

Among the facilities offered by Dubai’s free zones are the office spaces, warehouses, and factories which operate within the same areas where the companies are. This way, the time and money spent on such facilities are reduced to a minimum.

One of the greatest advantages of business setup in Dubai free zones is the fact full foreign ownership is permitted. Compared to any free zone, incorporating a company in Dubai implies having a national partner who will own 51% of the shares in the company. The other reasons what make Dubai free zones so attractive are:

  • investors can benefit from a 3-year visa and can sponsor their families;
  • hire employees without the appliance of the UAE labor legislation;
  • quick and easy company incorporation procedures;
  • excellent infrastructure for any type of business;
  • no taxes.

Depending on the free zone where the company will be located, tax exemption can be granted for a 50-year period of time.

Most foreign investors decide to open free zone companies in Dubai because of the following benefits:

  • full foreign ownership;
  • quick and simple business registration procedure;
  • free repatriation of profits in most free zones;
  • a larger variety of business licenses compared to onshore companies;
  • each free zone is dedicated to specific industries;
  • each free zone has office spaces, industrial parks, and warehouses to cater to the needs of every type of company.

How to open companies in UAE Free Zones

Foreign investors who want to operate in UAE free zones by establishing companies here must respect the following steps:

  • select the type of structure of the company;
  • apply for the residence permit (if applicable)
  • reserve the company name;
  • apply for the business license;
  • obtain the legal address of the business;
  • obtain work permits for foreign employees (if required).

It is useful to know that the free zone authority in which the company will operate will handle all the visa applications and company registration procedures through a fast-track process.

Our advisors can handle the preparation of the documents required to open a free zone company in the UAE.

The following requirements must be respected for company formation in Dubai free zones:

  1. most free zones allow for single or multiple shareholders – their number will also determine the business form of the free zone company;
  2. . the documents which need to be prepared for registering a free zone company are the Memorandum and Articles of Association;
  3. the share capital requirements for opening a free zone company depend on the Dubai free zone authority (each free zone has its own regulations in this sense);
  4. no matter the business setup in Dubai freezone, each company must apply for a license based on the activities it will undertake;
  5. in the case of foreigners, it is necessary to appoint a local agent to complete the company registration procedure of a Dubai free zone company.

What Dubai free zone to choose

When choosing a Dubai free zone for company incorporation, foreign investors must know that each free zone offers business licenses related to one or more related industries. Free zones in Dubai can be grouped as it follows:

  • Dubai Media City, Dubai Silicon Oasis and Dubai Internet City are dedicated to the new emerging industries like the software and media clusters;
  • Dubai International Academic City and Dubai Knowledge Village are dedicated to the education industry;
  • Dubai Studio City and the International Media Production Zone are related to the media sector;
  • Dubai Maritime City is dedicated to foreign investors seeking to open companies in the maritime sector.

Apart from these, Dubai Multi Commodities Centre which is currently the largest free zone in the Emirate was opened for foreign investors who want to open companies in the import/export industry.

Taxation in Dubai free zones

One of the most important reasons foreign investors choose to set up companies in the UAE is the country’s taxation system which provides mainly for the taxation of companies operating in the oil and financial industries. It must also be noted that each Emirate has its own tax laws. Among them, Dubai has one of the most advantageous tax systems. Dubai also has an important number of free zones which govern themselves and have their own taxation systems.

Our company formation agents in Dubai can offer detailed information about the Dubai freezone company setup and they can help you with opening a free zone company in UAE.

Applying taxes in Dubai free zones

Each free zone in Dubai has its own authorities which issue and enforce the applicable legislation, including tax decrees. The most popular free zone in the Emirate is the Dubai International Financial Centre, however, there are also other free zones offering advantageous tax conditions. A company is considered tax resident in a Dubai free zone once it is incorporated with the relevant authority and if the management of the company is exercised in Dubai.

Considering free zone authorities in Dubai do not impose a corporate tax, companies are not required to pay this tax in the Emirate or to follow other procedures related to taxation; therefore, companies are not required to file annual tax returns. There are no taxable periods or tax assessments imposed to free zone companies in Dubai.

Types of taxes in Dubai free zones

Dubai free zone authorities do not impose any income tax on companies or individuals, which is why no dividend or corporate taxes are levied in any of them. However, the local authorities impose a municipal tax on properties held in this country. If the property is a rental, the tenant is usually required to pay this tax.

Dubai free zone authorities usually offer tax exemptions for up to 50 years to foreign companies operating here. However, foreign shareholders of Dubai free zone companies must pay attention to the taxes they are subject to in their home country and if any double tax treaty applies in their case.

Frequently Asked Questions

Our company formation specialists have prepared a set of questions and answers that include information about business setup in Dubai freezone. We remind you that our team can provide all the necessary support in this direction and can explain the formalities related to the Dubai freezone company setup cost.

  1. How many Dubai freezones are currently active?
    There are already 30 Dubai freezones where foreign companies operate successfully. However, plans in this sector continue, and the authorities have announced that such business centers will be opened.
  2. What licenses are required for business setup in Dubai freezone?
    Trading license, service license, industrial license, and general trading license are some of the licenses required for Dubai freezone company setup. Our agents can provide you with the necessary support to obtain these important licenses and to work in various fields.
  3. What taxes must be paid if you have a business setup in Dubai freezone?
    One of the great advantages offered in these special centers is the fact that there are no fees to pay. However, companies must register for VAT purposes, and this tax is only 5%, the lowest in the world.
  4. What taxes are imposed for the repatriation of profits?
    Repatriation of profits from Dubai freezones is not subject to taxation. This is another benefit enjoyed by local and foreign investors. Learn more details in this area from our tax specialists.
  5. What is Dubai freezone company setup cost?
    In addition to the minimum share capital that differs in each freezone, foreign entrepreneurs had to consider the costs for the necessary licenses, residence permit, renting the place where the activities will take place, or those for accounting services. If you want to know more about Dubai freezone company setup cost, do not hesitate to talk to our agents.
  6. Is full ownership allowed in Dubai freezone?
    Yes, foreigners interested in business setup in UAE freezone and more precisely in Dubai can enjoy 100% ownership in their company, compared to mainland Dubai where a local partner is needed.
  7. What are the steps for Dubai freezone company setup?
    Booking the company name, choosing the type of structure, obtaining the necessary licenses and work permits for foreign employees are some of the things you need to consider for Dubai freezone company setup. All these formalities can be handled by our company formation agents in Dubai.
  8. Is there a corporate tax for Dubai freezone company setup?
    No, investors who decide on a business in UAE freezones do not have to pay corporate tax. This is a great advantage over international players.
  9. Can I own property with a company in UAE freezones?
    Of course, there are no restrictions on the properties you can have in the UAE if you open a freezone company.
  10. Can the company be relocated to freezones in Dubai?
    Yes, company redomiciliation in Dubai freezones is possible, but for complete information about this, we invite you to talk to our specialists in the field.

Reasons to invest in Dubai

Dubai is one of the most successful cities in the world, with rapid development, thousands of business opportunities, and a very secure business climate. Large companies already operating in the UAE and more precisely in Dubai enjoy a beneficial tax system, excellent business conditions, access to the world’s largest financial centers, top technology, and experienced workforce. These are some of the advantages offered by the stable business climate of the UAE, and the following statistical data show the economic direction of the country:

  • The UAE is estimated to reach over USD 401 billion in GDP in 2021.
  • Manufacturing activities account for about 47% of the UAE’s total annual GDP.
  • Over 64% of employees are in the field of services.
  • An incentive of approximately AED 3 billion will be allocated to small and medium-sized businesses in the form of a Credit Guarantee Scheme.
  • Exports of approximately USD 325 billion were recorded in the UAE in 2019.
  • Saudi Arabia, India, Switzerland, China, and Oman are the UAE’s largest export partners.
  • In terms of imports, the UAE has strong partners in countries such as China, India, the USA, Germany, and Japan.
  • Petroleum products represent the largest export of the UAE.

If you want to know more about Dubai freezone company setup and need assistance, you can contact our company formation agents in Dubai who can handle the registration and licensing procedures.