With a population of over 3 million and growing, investors are taking notice of Dubai. You’re another potential investor who’s heard the rumors and wants to see what all the fuss is about with free zone company setup.
You‘ve been thinking about starting your own business in a free zone for a while. Maybe you’re a creative person who has dreamed of running your own design shop, or maybe you’re an entrepreneur who wants to start their own tech company.
Either way, it’s time to get out there and make it happen!
Setting up a company in a free zone can be more straightforward than establishing one elsewhere. But before you can start your business and make money, there are some things you need to know about free zone company setup and what it means for your finances.
Read on to learn more.
Decide What Type of Business You Will Be
People who establish businesses in a free zone can form one of four types of companies. We will discuss these distinct business entities below to help you choose which type best suits your needs.
FZE vs. FZC
If your business has a single owner, it will be called a Free Zone Establishment. A company with multiple owners is a Free Zone Company, or an FZC.
Subsidiary
A subsidiary is a smaller company that relies on another larger company for support. The parent company owns more than 50% of the subsidiary’s shares. A subsidiary and its parent company, however, are separate entities under the law.
Branches
A branch is a company that operates similarly to its parent and serves the same market. Branches are under their parent company, so they cannot legally operate independently.
Choose a Company Name
Your company’s name is one of its most important assets. It will appear on all official documents and correspondence, so it should reflect the nature of your business.
Your trade name can’t offend the UAE and its morals. It also can’t conflict with other trade names. Finally, all companies in the UAE have to append their legal entity type to the end of their name (e.g. FZE, LLC).
Apply for Business Licences
Each business activity in the UAE requires a specific licence. There is no general business licence that covers all activities. You’ll need to get the right licences before you can start operating your company.
The process for getting a trade licence varies depending on which Dubai free zone you’re in, but usually involves completing an application and paying a fee.
Choose an Office Space
Besides your trade licences, you’ll also need a physical location for your business. This can be in the form of an office, warehouse, or showroom, depending on what kind of business you operate.
What Are the Documents Required for Business in a Free Zone?
Free zones require you to provide the following documents when applying for a business licence:
- Passport
- Passport-sized photo
- Contact of the business owner
Once you have registered your company, the zone authority will issue your business licence and other documents.
Free Zone Company Setup for Foreign Investors
For a foreign entrepreneur, it’s hard to understand all the rules and regulations of setting up a business in the UAE. Free zones usually have their own criteria for company formation, which can differ from those in mainland Dubai.
Beyond understanding the laws, it is a challenge for companies to find the right free zone in Dubai—there are over thirty of them. Advisers and mentors can smooth the way for investors to set up businesses in Dubai free trade zones.
You don’t have to be in Dubai to complete your business setup. An agent can do it on your behalf.
Types of Trade Licences in Dubai
The type of trade licence you’ll need in Dubai depends on the business activities you want to carry out. Here are some examples:
Commercial Trade Licence
A commercial trade licence allows you to engage in general commercial trading activities, including selling goods or offering services. If you’re planning to open a small shop in Dubai, this is the type of licence you’ll need.
Professional Trade Licence
If you are in business to provide services, a professional licence will allow others to know that you meet the qualifications required by your field. You can establish many business structures with this licence in Dubai, such as LLCs, Civil Companies, and sole establishments.
Freelance Permit
In Dubai, many people work as freelancers in several fields. A freelance permit allows them to operate without having to set up their own company. This option is popular with writers, designers, and consultants who want the flexibility to take on different projects as they come up.
Agricultural Licence
If you want to set up a farm in Dubai, you’ll need an agricultural licence. This type of business is subject to different rules and regulations than other types, so it’s important to get the proper permits before getting started.
Industrial Trade Licence
An industrial trade licence is required for any business that manufactures goods. This includes businesses such as factories, warehouses, and shops.
How Long Does It Take To Start a Business in a Free Trade Zone?
Most startups begin with a one- to four-week launch period. During this period, you can expect to:
- Set up meetings with the relevant government departments and agencies
- Complete paperwork for visa applications and licensing
- Submit your application with all necessary documents to the free zone authority
Business Activities in a Free Zone
There are very few types of economic activity that you cannot do in Dubai. Here are some of the businesses that thrive in the free zone.
Production
Free zones are the ideal location for manufacturers. This is because production companies can get easy and preferential access to raw materials, which makes setting up shop in a free zone very attractive.
When a product is made in a free trade zone, the producer benefits from reduced taxes and tariffs. Other benefits exist as well.
When the producer imports raw materials and components from another state, they don’t pay customs taxes on them. This means that the production process is more affordable.
Travel and Tourism
Dubai has been one of the world’s most popular tourist destinations for years. Tourism is a growing industry, and extra attractions are always being created. If you’re interested in travel or hospitality work, now’s the time to look for an office space.
Tourism Licences
There are three types of licences available to tourism-related businesses.
To get a licence to sell travel packages inside Dubai, you must apply for an inbound tour operator’s licence. Conversely, if your clients are outside the city, you will need an outbound tourist visa. The third category is the travel agent’s licence, which allows you to perform booking services.
Trading Businesses
If you want to set up a business that imports or exports goods, then a free trade zone is also the right place for you. The customs process is streamlined and efficient, meaning your goods will reach their destination quickly.
Also, the usual factors that influence trade are available in free-trade zones. So you can do things like storage and surveying in the same zone.
E-Commerce
In the UAE’s current e-commerce market, there has been a surge of growth after the COVID-19 pandemic. Free zones in the UAE provide ample opportunities for businesses to set up their online stores and sell their products to a global customer base.
Logistics
With the demand for online shopping increasing, so did the need for logistics businesses—and setting one up in Dubai makes sense. The local laws promoting flexibility in import and export further add to the timeliness of the entire logistical process.
Dubai’s geographical location and its ability to tap into global markets have helped make this a simple, almost guaranteed moneymaker for 2022 and beyond.
Digital Printing
Labeled, printed instructions and stickers have become common in the hospitality, healthcare, and entertainment sectors because of the need for social distancing. Starting a digital printing business in Dubai will be profitable and provide good returns on investment.
Media
In Dubai, advertising agencies work within a variety of media—from television to billboards and digital screens. Television is still the most popular form of advertising in that part of the world.
Consultancy
In order to set up a consultancy in Dubai, the owner of the company should have at least a bachelor’s degree in their field. The company should also be able to show that it has some experience in the field.
Bookkeeping and Accounting
Dubai is attracting many companies in various fields. These businesses need help with their bookkeeping and accounting. So, there are plenty of opportunities for people to become freelance bookkeepers or even set up a small business in this field.
Automotive
Dubai is a robust market for automobiles, and low entry barriers have bolstered the influx of luxury cars into this region. The cost of fuel in Dubai is relatively low compared to other regions. Import tariffs are not very high here, per capita income is high among residents, and tax policies encourage car purchases.
As a result, the car industry is one of the most attractive to enter in Dubai because it offers consumers attractive insurance and financing policies.
Jewelry
The city has a favorable business climate for the gold, diamond, and silver industries. Low import duties, no restriction on the amount of gold that you can import, and a central location make Dubai an ideal place for these businesses. The city has many jewelry shops, which can cater to the needs of both residents and tourists.
Fashion
The Dubai fashion and beauty market has become an international hub for brands. Geographical proximity, easy import/export regulations, and a large customer base in the Middle East and Asia are just some of the many factors that have made it an attractive place to set up shop.
Some specific examples of businesses in the Dubai fashion and beauty market include:
- Dior
- Givenchy
- Marc Jacobs
- Giorgio Armani
These are just a few of the high-end brands that have found success in Dubai. There are also many local designers and boutiques that have been able to find a niche in the market.
Food and Beverage
Dubai, a food lover’s paradise, has all sorts of restaurants—from Michelin-starred establishments to cafes, food trucks, and more. Starting a restaurant can be a lucrative business opportunity for many.
Why Do Business in the Free Zone
The free zones in Dubai are aimed at attracting foreign direct investment. In addition to the tax-free environment, businesses can enjoy 100% ownership and repatriation of capital. Other benefits include:
- Economic compliance
- Can hold multiple business licences
- An account in a UAE government bank for corporate use.
- Residency visas for business owners and key employees
- No requirement for the licence holder to be present at the renewal
Start Your Business in DUQE Free Zone
Now you know the benefits of setting up in a free zone, you’re ready for the next steps. For free zone company setup, there are numerous business opportunities available within the DUQE Free Zones.
Not only will your businesses enjoy tax-free status and 100% ownership, but we have a team to help you through the process of licensing, start-up and operation. We can also assure you that your business will enjoy a high level of government support and market access to billions of consumers.
Get started on your business journey today.