Free Zones Company Formation

Many businesses shy away from investing in the UAE due to the compulsion of having a UAE national as a partner with 51% shares owned by them. Because of this, free zones have become a popular form of business registration in the UAE, where 100% foreign ownership is allowed. A free zone, or free trade zone, is an area with special tax-free status and low trade barriers where goods can be manufactured, imported/exported, handled, or reconfigured without paying any customs duty. Free trade zones are generally located in strategic geographical locations like national borders, international airports and major seaports, to maximize trading advantages.

The UAE government has set up multiple free zones in the Emirates, each designed for a specific business activity. UAE free trade zones offer lucrative facilities to non-resident corporates, like the convenience of single-window administration, no bureaucratic red tape, and 100% ownership. There are about 44 free zones situated all over United Arab Emirates that have attracted foreign direct investment in the form of 200,000 companies contributing to the GDP growth. The free trade zones vary in their focus, setup costs and paperwork needed, but the basic requirements are the same.

List of Free Zones in the UAE

Most of the UAE Emirates have set up free zones to boost the economy in the region, promote foreign investment, and drive growth. Free Zone Authority is the government body that registers and issues business licenses to non-resident companies in UAE free zones. The list of free zones established across the UAE are mentioned below:

1. Dubai Free Zone

2. Abu Dhabi

3. Sharjah

4. Ajman

5. Fujairah

6. Ras Al Khaimah

7. Umm Al Quwain

Benefits of Setting Up a Business in the UAE Free Zones

There are many benefits of starting a business in the UAE. But the UAE free zones offer some additional advantages if an investor decides to set up a business in one of the free zones. They are:

  • 100% foreign ownership
  • 100% repatriation of capital and profits
  • 100% exemption from corporate, personal and income taxes
  • 100% free transfer of funds, and no foreign exchange controls
  • Exemption from all import and export duties
  • Low freight charges
  • Abundant and inexpensive energy
  • Inexpensive workforce, and easy recruitment procedures
  • Efficient communication procedures and single-window administration
  • Liberal government policies and legal framework
  • Timely and streamlined immigration process
  • Sponsorship and visas for affordable skilled workforce
  • Flexibility to operate 24/7
  • Freehold offices available for sale or lease
  • Ready-made offices, factories, and warehouses
  • Easy start-up and licensing procedures
  • Unique industry clustering and purpose-built infrastructure
  • 3-year UAE residence visa
  • No restrictions on hiring expatriates

Types of Entities Allowed to Set Up in the UAE Free Zones

Business setup in the UAE free zones is smooth and hassle-free, as the Emirates government has eased the company formation process in the UAE to draw maximum foreign investors with the minimum capital investment.

There are mainly 3 types of entities one can set up in the UAE free trade zones, namely,

  • Branch of a foreign or local company
  • Free Zone Establishment (FZE), with a single shareholder
  • Free Zone Company (FZC), with 2 to 5 shareholders

Types of Licenses Available in the UAE Free Zones

Business formation in UAE free zones is incomplete without procuring a business license. Following types of business licenses can be obtained by applicants in the UAE free zones:

1. General Trading License

Allows investors to trade in all kinds of products

2. Trading/Commercial License

Grants a time-limited authorization to perform industrial, commercial, or consulting activities

3. Service License

Allows law firms, accounting firms, and business consultancy firms to operate

4. Industrial License

Permits importing raw materials, manufacturing goods, and exporting finished products, across global boundaries

5. Warehousing License

Investors can avail this license to avail warehousing facilities on lease for distribution, packaging, and storage of goods

6. Manufacturing License

Permits applicants to manufacture goods

How to Set Up a Business in the UAE Free Zones?

Company setup in free zones is not subject to commercial company’s law. Free zones in the UAE are outside the jurisdiction of the UAE and have rules and regulation set by concerned free zone authorities. These free zones offer excellent business opportunity for investors from all around the world and provide a liberal working environment and easy company setup procedures. The procedure is plain and simple.

Procedure to Set Up a Business in the UAE Free Zones

1. Determine the type of legal entity

Determine which type of entity you want to set up in any of the free zones. The capital requirement for such entity depends upon that particular free zone where you want to form a company; for example: there is no minimum capital requirement for setting up a business in twofour54, whereas in Dubai Airport Free Zone (DAFZ) you are supposed to have a minimum share capital requirement of AED 150,000.

2. Choose a trade name

After deciding the type of legal entity, choose a trade name for your company. Note that you ought to cross-check with the respective free zone authority about the permitted trade names and whether the intended name has already been registered.

3. Apply for a business license

After choosing a trade name and registering the same in the free zone authority’s portal, you have to apply for a business license. The list of the different business licenses issued by the free zone authorities has been stated above. The type of business license depends on the primary activity of your business. You need to submit the supporting documents while applying for the license.

4. Choose an office space

Free zone authorities provide flexi-desk office service to support start-ups. You can either buy or lease office spaces in free zones. Office requirements depend on the number of employees and type of business activity of your company.

5. Get pre-approval, register your business, and get the license

Get the initial approval and the related business approvals from the specific authorities, register your business at the portal, and get your license. It will merely take 2-4 weeks to get done with this process. Once you get the license, you are good to start your business.

Documents Required to Set Up a Business in the UAE

A number of documents need to be translated into English, attested, and notarized by the Gulf Cooperation Council (GCC) or the Arab Embassy.

General Documents

  • Duly filled application license form
  • Business card of the contact person
  • Copy of business plan
  • Notarized and attested Memorandum of Association (MOA) and Articles of Association (AOA)
  • Passport copies of the partners and business managers
  • Original bank reference letters and license of the partner’s existing company, if applicable

Documents for Consultancy License

  • A copy of degree or diploma certificate mentioning the desired activities, or the experience certificate [any of these documents is a must]

Documents for Industrial License

  • Business feasibility study
  • Existing company profile
  • Duly filled form for the investor’s project profile

Documents for Branch of Companies

  • Attested copy of the registration certificate, incorporation certificate, and the Memorandum and Articles of Association (MAA)
  • Original Board Resolution that guarantees financial commitment of the branch
  • Original Power of Attorney of a legal representative, and their passport copy
  • Last 3 months’ bank statements of the parent company

Why Set Up a Business in the UAE Free Zones?

Companies registered outside the UAE free zones cannot be owned solely by a foreign national (a maximum of 49% foreign ownership by the foreign national, and at least 51% ownership by a UAE national is mandatory), which is one of the primary reasons why global investors throng to UAE free zones for business investment. Apart from this, there are many advantages for start-ups setting up their business in free zones. Lucrative incentives and the wide spectrum of opportunities provided to investors is what make free zones in the UAE the most sought-after areas for setting up a business. There are a few reasons listed below as to why one should setup business in the UAE.

1. A Wide Range of Business Licenses and Activities

A company in the UAE free zone is permitted to engage in a variety of business activities with multiplicity in the type of licenses. The only thing is UAE free zone companies are not allowed to engage in is the insurance business.

2. Confidentiality

A free zone company is protected by the highest level of confidentiality adopted in the UAE about the identity of its owners, directors and activities within acceptable international standards.

3. Bank Account and Registered Office

A free zone company is allowed to have a registered office at the location of the free zone area it is licensed under. Additionally, one can open a bank account anywhere outside the UAE.

It takes about a week to complete UAE free zone company setup process, and around 2 to 3 weeks to obtain a UAE residence visa when an applicant contacts Commitbiz for support. We are a registered company, well informed of the company formation rules and regulations in the Middle East, and have been helping companies gain a foothold in the United Arab Emirates since 2006.

Free zone company setup in the UAE is rewarding, with tax exemptions, lower establishment overheads, business-friendly government policies, and hassle-free administration. If you are in search of a business partner to ease your company formation process in the UAE and launch your business dreams into action, contact our team for assistance – we’ll be glad to help!

Short Description

Free zones allow incorporation with 100% ownership (even for a foreigner), complete repatriation of capital and profits, and tax exemption. The UAE has over 40 free zones, based on location and domain.