Difference between UAE Free Zone and Onshore Company Formation

by Zaara 05, Aug 2021

Difference between UAE Free Zone and Onshore Company Formation

Even though having welcoming foreign ownership policies in the UAE, foreign investors usually shy away from investing or owning a company in this manner. This is because of the compulsion of having a UAE national as a partner with 1% shares owned by them. Now that the free zone offers and allows 100% foreign ownership, it has become a popular form of business setup in the UAE.

UAE has about 44 free zones spread all across it which is attracting direct foreign investment in the form of 200,000 companies contributing to an impressive growth in its GDP. The basic requirements of the trade free zone are the same however the paperwork, setup cost may vary. Free zones are also tax-free zones that provide 100% exemption from income, corporate and personal taxes, etc.

Various Free zones in the UAE

  1. Dubai –
  • Dubai airport free zone [ DAFZA]
  • Dubai world trade center [DWTC]
  • Dubai industrial city [DIC]
  • Jebel Ali free zone (JAFZA)
  1. Ajman free zone
  2. Umm Al Quwain –
  • Umm al Quwain free trade zone [UAQFTZ]

Procedure and Documents Required

The type of legal entity to be determined, then choose a trade name and then follow it by applying for a business license and then get an office space, register your business and get approval. The documents required are –

  • General documents such as original passport copies.
  • Original reference letter.
  • Copy of business plan.
  • Business card of the contact person. etc.

Licenses Available in Free zones

  • General trading license.
  • Commercial/trading license.
  • Warehouse license.
  • Industrial license.
  • Service license.
  • Manufacturing license.

Onshore Company Formation

UAE is one of the most popular destinations when it comes to business setup from all across the globe, with its GDP having an impressive growth and new rules easing business setup in the UAE and formation of a company for doing various business activities in the region.

With the sole purpose of doing business, an onshore company is an entity that is incorporated in a home country. To open a company in the UAE with the purpose of completing business activities for this one need to comply with the requirements of the company law. The advantages of onshore company formation in the UAE are –

  • Tax free economy.
  • For companies there is an availability of multiple currency in bank accounts.
  • No audited balance sheet required.
  • Effective and efficient infrastructure.
  • 10-15 visas depending on the activity and size of the company.

Selecting UAE for an onshore company formation can yield the investors much more significant advantages especially with its various services offered across and throughout the entire UAE company lifespan.

Steps for Company Formation

  • Start by finding a location that serves as a legal address for the company.
  • Open a bank account for the share capital to be deposited.
  • File the required documents along with personal information of the company’s directors and shareholders.
  • According to the new VAT legislation apply for the VAT number and register for taxation.

Licenses Available to Onshore Companies

  • Commercial license
  • Industrial license
  • Consultancy license
  • Educational license
  • Marketing and media license
  • Technology and It license
  • Health and medical license
  • Freelancer license

How can Commitbiz Help?

The energetic and ever buzzing business environment in the UAE always leads new business owners to raise questions on how to set up business in the UAE. Well, that's why UAE is home to industry professionals that cater to providing new business owners with step-by-step solutions to business setup services in UAE. We at Commitbiz have been catering to various clients across a tenure of over 15 years, providing our clients with tailor-made solutions for all their administrative activities, from accounting to company secretarial services. Our team of consultants has been diligently working to provide clients with nothing but the best in class services. Contact us to know more.