Establishing a company in the free zone in the Emirates

Establishing a company in the free zone in the Emirates

I think we do not need to repeat that Dubai is one of the best global markets, but today we will discuss one of the most important reasons for the development of investment methods in the Emirates in general, which revolves around diversity. Economic services to serve the business community, and among the many policies for establishing companies in the free zone, we will talk about the advantages of establishing a company in the free zone. And how you can create your own company within a few days without taxes or exorbitant fees!

 

Establishing a company in the free zone in the Emirates

 

Investing in the free zone

Initially, the goal of establishing and legalizing free zones was to attract companies working in the fields of trade, import and export, to support their presence within the UAE markets and save multiple expenses in customs, taxes, shipping services, etc., and the name of free zones quickly evolved to include many activities in different fields, which we will explain in detail. In the following paragraphs, but first, what are free zones and why do investors from all over the world go to them to establish a company in the free zone?!

 

Free zones in the Emirates

Free zones are geographically defined areas within the Emirates, and each zone has its own policy according to its investment objectives under the supervision of the development authority, away from restrictions, taxes and fees imposed on mainland companies. It is worth noting that all free zone companies are internationally recognized.

When it comes to opening a company in Dubai for foreigners, free zones are the first choice, because of the financial freedom they provide to foreigners, in terms of the possibility of transferring profits without fees, in addition to complete tax exemption, and the multiple facilities that the zone supports for various activities.

In light of the advanced economic development plans that the UAE seeks to implement on the ground, the number of free zones and their activities have also been increased to accommodate the largest possible number of investors.

When thinking aboutestablishing a company in a free zone, you must first determine the appropriate area for the nature of the company’s activity, as free zones differ among themselves depending on the nature of the available activities. It is practiced, and one of the most famous free zones in Dubai is:

  • Dubai Airport Trade Free Zone.
  • Dubai Internet city.
  • Dubai Design District.
  • Dubai Media City.
  • Dubai International Financial Centre.
  • Dubai Healthcare City.
  • Dubai Production City.
  • Knowledge Park in Dubai.
  • Dubai Silicon Oasis.
  • Dubai International Academic City.
  • Gold and Diamond Complex.
  • Dubai Multi Commodities Centre.
  • Jebel Ali Free Zone Authority.
  • Dubai South Logistics District.
  • Dubai Studio City.
  • Dubai Science Park.
  • Dubai CommerCity E-commerce.

 

Types of free zone companies

The legal entity of free zone companies in Dubai is limited to only three forms:

  • A limited liability company.
  • Free zone establishment.
  • Branch of a local or foreign company.

Note that there are some free zones that do not adhere to these legal characteristics, perhaps because they are not compatible with the activities of the zone, so it is necessary to consult the zone administration to learn about the conditions and procedures for establishing a company in the Dubai free zone.

 

Advantages of establishing a company in the Dubai Free Zone

The UAE continues to strive to make the investment experience in Dubai and duty-free shops the best in the world, so it provides many advantages such as:

  • Full ownership by foreigners, as the foreign investor can now establish a company in the free zone without seeking the help of a national partner.
  • Ease of repatriation of capital and transfer of profits; There is no income tax, etc., or withholding fees on transferring money to another country, or exchanging foreign currencies.
  • Complete exemption from taxes, import and export duties, reducing shipping costs to various countries of the world, and providing all logistical services to support investors.
  • Providing corporate management offices with a variety of sizes and prices to suit various requirements. It is worth noting that obtaining a company headquarters does not require complex procedures like mainland companies.
  • Ease of procedures for establishing a company in the free zone, low cost of visas and sponsorship, and ease of employing expatriate workers with simplified procedures.

There is no doubt that the most important advantages of establishing a company in Dubai in the free zones are due to the unification of activities in each region, which creates a suitable environment for business, and helps the state listen to the requirements of investors and work on them, and thus more flexibility in the laws and policies of the region.

 

Steps to establish a company in the free zone:

Free zones are characterized by the ease of procedures for establishing companies. On the other hand, the procedures can be completed in the shortest possible period of time. The process of establishing a company may take less than a week. The steps for establishing Dubai free zone companies include the following stages:

1. Select the free zone:

We have previously explained that there are many free zones in the Emirates in general and Dubai in particular, which differ among themselves in terms of the activities available in them and the facilities they support for investors, so the appropriate free zone must be chosen according to the objectives and identity of the company.

 

2. Determine the type of license and company activity:

Each license includes several activities. For example, a commercial license includes import and export activities, selling, repackaging, etc., bearing in mind that each region has a special policy regarding the multiplicity of licensing activities, so the list of activities available within the scope of the license is examined first, and then Then choose the appropriate ones.

 

3. Choosing the legal form of the company:

You should refer to the free zone administration to inquire about the available legal structure. Depending on the type of license and the activities chosen, some regions may allow you to choose between several legal structures, and some regions may impose on you the system that is most appropriate for your activity.

 

4. Preparing the documents required to establish a company in the free zone:

Although the list of documents required for establishing a company in Dubai is similar, it requires prior knowledge of the laws and rules of the free zone that has been chosen. Determine the required documents and have them certified by the correct authorities. We will discuss the presentation of the documents in detail in the following paragraph.

 

5. Obtaining initial approval:

The initial approval to establish Dubai Free Zone companies includes obtaining the region’s approval of the trade name, license, and company activities, as well as the proposed legal structure and work system. This approval is not considered a work permit, but rather is obtained to complete the required establishment procedures.

 

6. Choosing the company’s location:

All free zones provide you with multiple options for the company’s location, and once you reach the appropriate headquarters, you can draw up a lease contract starting from at least one year, and have the contract authenticated by the competent authority managing the zone to license the company’s commercial address.

 

7. Signing legal documents:

After obtaining initial approval forestablishing a company in the free zone, a signing meeting is held with the free zone representative, to examine and sign all the company’s legal documents, And obtaining external approvals depending on the company’s activity and the international agreements related to it.

 

8. Obtaining a work permit:

Once all the above-mentioned steps are completed, and the administrative fees due are paid, commercial licenses must be obtained, and the company’s articles of incorporation, certificate of incorporation, and articles of association must be approved, and then you can begin work.

 

Documents required to establish a company in the free zone

To clarify the fourth step regarding the documents required to be provided to establish a company in the Dubai Free Zone, you must extract and authenticate the following list of documents:

  •  A copy of the existing business license or registration certificate.
  • A form with the commercial registry identification code.
  • A color copy of the passport of the investors and the company director.
  • Signature form for company shareholders and a director or member of management.
  • Letter of intent between the parties to the contract.
  • Business plan for at least two years.
  • The company’s articles of incorporation according to the region’s policies.
  • An audited financial report on the company’s budget for two years.
  • A title deed for the company’s headquarters or a notarized lease contract.
  • Reference letter from the bank for capital.
  • The manager’s biography and professional history.
  • Initial approval request form.

 

Investors may wonder: Are these documents suitable for all activities in the free zone? The answer is that these documents are essential for all activities, but some approvals differ from one activity to another depending on the region’s policy, but what activities are available to be practiced in free zones in general?

 

Activities permitted in the free zone

Establishing a company in a free zone may be easier and simpler in procedures, but the activities available to practice are somewhat limited compared to those available to mainland companies, as free zone activities are limited to the following sectors:

  • Educational activities.
  • Aviation and air transport services.
  • Information and communications technology.
  • Logistics services.
  • Media sector services.
  • Tourism and hospitality sectors.
  • All commercial activities.

This is in addition to some manufacturing powers.

What types of manufacturing are allowed in the free zone?

Some free zones in Dubai grant industrial permits to carry out some basic industries to serve the business community, noting that these zones support all investment avenues and provide a strong infrastructure to support the industries available in them. For example, the Al Safa area was designated for industries related to the consumer food production sector, and the Jabal area For heavy and medium industries, you can view the list of industrial activities available through the district administration.

 

Types of licenses required to establish a company in the Dubai Free Zone:

To establish a company in the Dubai Free Zone, you must choose the appropriate commercial license from among the available types of licenses:

  • Commercial licenses.
  • Consultation or service licenses.
  • Industrial licenses.
  • Educational licenses.
  • Media licenses.
  • E-commerce licenses.
  • Free employee licence.
  • Industrial licenses.

 

The cost of a commercial license in the Dubai Free Zone:

The cost varies depending on the type of license and the legal entity of the company, while the requirements for establishing a free zone company are limited to a deposit of only 150 thousand dirhams, so the requirements for obtaining a license for free zone companiesDubai It depends on the type of license and the legal form of the company.

 

Cost of establishing a company in the free zone:

The cost of establishing a company in the Dubai Free Zones starts from fifteen thousand dirhams, in addition to the minimum capital required by the company’s activity. It should be noted that the company’s activity directly controls the cost of establishment as follows:

 

Costs of establishing a company in the free zone in the UAE:

  • License issuance fees. Fees vary depending on the type of license. For example, the cost of commercial licenses is 15 thousand dirhams, while industrial licenses start at five thousand dirhams, depending on the license’s powers.
  • Fees for obtaining the required documents and authenticating them from the competent authorities in the free zone, or external parties supervising the company’s activity in accordance with policies and regulations.
  • The cost of establishing a company in the free zone also includes fees for obtaining initial approval, the zone management meeting, company registration and announcement fees, and receiving foreign workers.

 

Does the company need to rent a facility to obtain a license in the free zone?

Yes, as the Articles of Association are considered one of the basic documents required within the procedures of Dubai Free Zone companies, and this question may open up another point for us that should be mentioned, which is the fees for practicing the company’s activity, which amount to 7.5% of the value of the company’s lease contract, and if the company’s headquarters is owned by Therefore, a specialized committee is formed to determine the value of the fees.

 

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