How to open a Company in Dubai Textile City Free Zone?

by Zaara 31, Mar 2020

How to open a Company in Dubai Textile City Free Zone?

Manufacturing is the second-largest economic industry in the United Arab Emirates (UAE) after the oil and gas industry. To be more precise, this industry plays one of the most critical roles in the growth of the UAE economy, representing close to 10% of the country’s Gross Domestic Products.

Dubai, the prominent city of the UAE, is known for its luxurious shopping malls and for the fact that the wealthiest persons in the world visit the Emirate for buying luxury products from these shopping centres. Among the most purchased merchandise here are clothes and textiles, due to which setting up a textile business in Dubai can be considered by the investors making a Free zone company setup in UAE a very lucrative and attractive option.

All about Dubai Textile City Free Zone

Dubai Textile Village free zone is the joint venture between TEXMAS and Dubai Port and Customs Authority to enable the textile dealers in the Emirate and other parts of the sphere. This free zone has a number of features like easy business setup and 24*7 assistance which can be a big boost for the companies’ setup in the area. DTC is an entity located in Al Awir Free Zone, promoting the storage of textile fabrics for long periods without enticing customs duty, which is 5% currently. 

DTC free zone also has the full support of Dubai Ports and Customs; the Customs Authority will help to handle the visa requirements of DTC members. The rents and the terms of the lease are being accessible to the members are very competitive and welcomed by TEXMAS and the textile merchants of the country. This is why it is one of the most sought after free zone for people in the textile industry.

Business Setup in Dubai Textile City Free Zone

Business incorporation in Dubai Textile City, like any other business setup in Dubai free zones, is done through a procedure expected to follow by investors who wish to be one of the Dubai free zone companies in DTC. But before that, you need to select the type of business entity you need to set up a business.

Types of Corporate Structures in DTC Free Zone

  1. Free Zone Limited Liability Company - This is a separate legal entity with only one owner or shareholder. The owner or shareholder can either be an individual or a corporate entity. In this, the stakeholders will have a limited liability which will be beneficial for them and the shareholders will incur less risk. However, the risk to reward ratio will also be less.
  2. Free Zone Company - This is a corporate entity with two or more shareholders. Like FZ-LLC, they can be either individuals or corporate structures. This is the most common form of the company formation structure used in the free zone.
  3. Branch of a UAE or Foreign Company – A branch is an entity under the name of its parent company. It is representative of an existing company. The parent company may be either situated in a different part of the country or can be in a different jurisdiction altogether.

After choosing the type of business entity, next is to select the type of business activity.

Types of Business Activities Allowed in DTC Free Zone

Just like any other free zone in Dubai, DTC also has its list of business activities that they allow in their location. This means that there are many opportunities for different companies in different sectors to take advantage of the features and benefits of this free zone. The various activities are as follows–

  • Company related to Trading Industry
  • Company related to Textile Industry
  • Company related to Fashion Industry

After deciding which business activity your company is into, the next step is to register your business at DTC.

How to set up a Free zone Establishment with a Corporate Owner/Applicant

  1. Register a Trade name

A trade name must be registered and proof of the registered trade name must be presented.

  1. Obtain initial Approval

Before starting business formation activities the applicant must receive initial approval.

  1. Provide Documents

A Memorandum of Association and/or Articles of Association for the corporate applicant must be provided. This must be notarized by the UAE Embassy in the country of origin.

  1. Notarize the Resolution

A resolution from the Board of Directors of the corporate applicant indicating the intent to establish a new business in Dubai. This must be notarized by the UAE Embassy in the country of origin.

  1. Notarize the Certificate of Application

A certificate of registration for the corporate applicant from the registrar of companies in the origin country. This must be notarized by the UAE Embassy in the country of origin.

  1. Copy of Passport and CV are required

The shareholders must provide passport copies of employees and shareholders and C.V. (resume)

  1. The Physical Address is required

The physical address of the corporate applicant must be provided.

  1. Complete the Personal Information Sheet

Personal Information Sheets must be completed for each shareholder and manager.

  1. Find an office

Suitable space for the business must be leased and documents provided.

  1.  Notarize the Power of Attorney

If a Local Agent is utilized, that agent must have a notarized Power of Attorney

How to Set up a Freezone Establishment with a Real Person

Here is the procedure to establish a Free Zone Establishment with a real person.

  1. Register the Trade Name

A trade name must be registered and proof presented.

  1. Receive Initial Approval

Before starting business formation activities the applicant must receive initial approval.

  1. Provide Copy of Passport and CV

The owner/shareholder must provide a passport copy and also the CV (Resume)

  1. Fill up the Personal Information Sheet

Personal Information Sheets must be completed for the owner/shareholder and manager.

  1. Find Office Space

Suitable space for the business must be leased and documents provided.

  1. Notarize the Power of Attorney

If a Local Agent is utilized, that agent must have a notarized Power of Attorney

After your application is approved, the DTC free zone authorities will provide you with a Certificate of Incorporation and a Business License.

Documents Required for Company Incorporation in DTC

  • Passport copy of the owner and the shareholder
  • Passport and CV of the manager
  • Drafted Memorandum of Association and Articles of Association notarized by the UAE Embassy
  • The physical address of the corporate applicant
  • Proof of trade name reservation
  • Proof of initial approval for the business incorporation
  • Proof of capital
  • Board resolution of the parent company (this is for branch office)

Now that you know how to start a business in Dubai Textile City, here are a few benefits of setting a company in this free zone.

  • Complete foreign ownership a d complete repatriation of all profits
  • 100% corporate tax exemption
  • 100% personal income tax exemption
  • Customs duties exemption
  • Long lease period and attractive rent
  • Option to sublease the premises
  • Low operational expenses

The most important thing to know here is to get the appropriate license. To set up a textile business, you need a General Trading License. It is obtained when the Dubai Textile Company is registered. This is a key detail for starting and continuing a textile business in the United Arab Emirates. For more details about the general trading license, you can read our blog about the subject.

It should be known that Dubai and the other cities must follow the International System of Units which levies for the capacities of textile materials to be made in the metric system. The vendor must also make sure the sold products fulfil the national standard safety rules. Not complying to the rules and regulations of the business can be a huge hindrance to the growth and development of the business.

How can we help?

We at Commitbiz can help you set up a textile business in the UAE. Our advisors are well-versed with the legal structure and can make this process hassle-free. If you are looking forward to seizing this lucrative idea of starting your own Textile Business in Dubai, contact us. We will be happy to help.

FAQs

1. What was the cost of the development of the Dubai Textile City?

AED 250million.

2. Why was the Dubai Textile City established?

To provide immigration services to the members of the TEXMAS.

3. TEXMAS was signed between whom?

The Ports Customs and Free Zones Authority.

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