Establishing companies in free zones is a strategic investment step that provides multiple opportunities and various benefits to investors and companies. This step is considered an essential part of successful business strategies in the UAE, as free zones enjoy a developed investment environment and legal flexibility that attracts both national and international companies.
Free zones embody the UAE\\\’s vision to achieve sustainable development and diversify the base of the national economy. It provides integrated business platforms that allow companies to set up and operate their activities efficiently and easily. One of the most prominent benefits offered by these regions is the complete freedom for investors to own companies without the need for a local partner, which enhances business flexibility and helps speed up decision-making and implementation processes.
In addition, free zones provide a suitable competitive environment that guarantees companies access to global markets and multiple business opportunities, by offering a set of tax and customs privileges and flexible legislation that maintains their global competitiveness.
It is also important to mention that establishing a company in the free zone requires an extensive study of the market and careful analysis of potential opportunities and challenges, in addition to developing integrated strategic plans to manage the business efficiently and achieve sustainable success in the local and global market.
In this regard, free zones are a major gateway for ambitious companies seeking to expand and achieve success in a dynamic and evolving business environment. These areas reflect the UAE\\\’s ambitious vision of building a diversified economy capable of challenge and sustainable growth in various economic sectors.
What is the free zone?
The meaning and definition of the word free zone varies depending on the type of free zone, but in most cases the word free zone expresses a geographical area in which goods are preserved, stored, manufactured, traded and re-exported according to a known and specific customs system, but it is not subject to any customs duties. Free zones are also considered entities completely separate from the state\\\’s laws, as they are not governed by the country\\\’s trade laws and do not require a sponsor. Also, the company that is established in the free zone can be owned by a person of another nationality without the need for a partner who is a UAE citizen.
The free zones in Dubai and in the Emirates in general are not subject to the laws that were established by the Ministry of Economy to regulate the commercial activities of companies, as this free zone in Dubai works to provide ownership freedom for businesses, in addition to tax exemption and exemption from any customs duties. These advantages in the free zones make them an ideal destination. It is a supervisor for international companies that carry out many commercial activities. One of the advantages is that establishing a company in the free zone does not require the presence of a partner or sponsor who is a citizen of the Emirates.
Establishing companies in free zones
Establishing companies in free zones is a popular option for investors seeking to take advantage of the facilities and benefits offered by these zones. Free zones are characterized by the favorable investment environment and advanced facilities they provide, making them an attraction for startups and large institutions alike.
Free zones offer many advantages to investors, such as customs and tax exemptions, ease of export and import, no restrictions on the percentage of foreign ownership, in addition to advanced infrastructure and distinguished logistics services.
Thanks to these facilities, startups in free zones can achieve sustainable growth and scale their operations faster and more effectively. These areas also provide an ideal environment for innovation and development, and enhance interaction and trade exchange between companies located within them, which contributes to supporting the local economy and increasing job opportunities in the region.
Opportunities for establishing companies in free zones in Dubai
- Diversified investment market: Establishing companies in Dubai\\\’s free zones provides investment opportunities in a wide range of sectors such as manufacturing, technology, financial services, e-commerce, and logistics.
- Advanced infrastructure: Dubai\\\’s free zones are characterized by a modern and advanced infrastructure that greatly supports business activities, making it an ideal station for emerging and medium-sized companies.
- Government support services: The UAE government provides a legislative and regulatory environment that encourages business, which facilitates procedures for establishing companies and protects the rights of investors.
- Easy access to global markets: Dubai\\\’s free zones provide access to a wide global market through its strategic location as a global commercial center.
- Integrated facilities and services: Free zones provide an integrated work environment with facilities such as modern offices, warehouses, logistical facilities, and commercial centers.
- Flexibility in practical laws: Free zones in Dubai enjoy flexibility in practical laws and regulations, which makes it easier to manage companies and expand the scope of work.
- Political and economic stability: The UAE enjoys political and economic stability, which enhances investor confidence and creates a favorable environment for business.
- These opportunities make establishing companies in Dubai\\\’s free zones an interesting option for investors looking for an encouraging environment and diverse and stimulating investment opportunities for growth and expansion.
Free zones in the United Arab Emirates
In the United Arab Emirates, there are many free zones that provide an ideal environment for business and investment, among them:
- Jebel Ali Free Zone: Located in the Emirate of Dubai, it provides advanced infrastructure and distinguished services to companies in various fields such as manufacturing, logistics, and logistics services.
- Sharjah Free Zone: It is famous for its economic diversity and flexibility in regulatory laws, which makes it an ideal destination for companies looking for various investment opportunities.
- Ras Al Khaimah Free Zone: It is characterized by its strategic location and advanced infrastructure, and enhances investment opportunities in various industrial sectors.
- Ajman Free Zone: Provides an ideal environment for small and medium-sized companies, and encourages innovation and development in various sectors.
- Abu Dhabi Free Zone: It is one of the largest free zones in the Emirates, and provides wide investment opportunities in a variety of industries and services.
- Fujairah Free Zone: Focuses on the industrial and logistics sectors, and provides advanced infrastructure and competitive services to companies.
- Umm Al Quwain Free Zone: Located on the coast of the Arabian Gulf, it provides investment opportunities in the marine and industrial sectors.
These free zones are ideal places for establishing companies and investments, as they provide an encouraging business environment and flexibility in laws and regulations, making them preferred destinations for local and international companies.
The time period for establishing companies in free zones in Dubai
In general, the time period required to establish companies in free zones in Dubai can vary based on several important factors that affect the incorporation process. These factors include the type of company to be established, as the period required to establish an individual company may differ from establishing a limited liability company or joint stock company. Also, legal and administrative requirements play a vital role in determining the duration of proceedings, as it requires full compliance with state and local laws and regulations and provision of all required documents correctly and on time.
In general, the average time period for establishing a company in free zones in Dubai is approximately 7 to 10 working days, knowing that this period may vary slightly depending on the conditions of each free zone and the type of company established. For example, there may be company-specific requirements that require additional procedures that extend the lead time slightly, and government inspections and audits can affect the work schedule and extend the lead time in some cases.
In general, it is important to work accurately and organized with Itqan company consultants who specialize in this field, as they can provide the necessary guidance and provide the necessary support during all stages of establishing the company in the free zones in Dubai.
Commercial license in Dubai Free Zone
This table contains the types of licenses required to establish a company in the Dubai Free Zone:
| Type of commercial license | the description |
|---|---|
| General commercial license | It allows companies to engage in different activities in a wide range of business sectors |
| Industrial commercial license | It allows companies to invest in the industrial sector and manufacture products |
| Commercial license for services | It allows companies to provide various services such as consulting, real estate, health, education, and more |
| Retail business license | It allows businesses to retail and retail various goods through retail stores |
| E-commerce business license | It allows businesses to trade online and sell products and services via the web and electronic applications |
| Commercial license for logistics services | It allows companies to provide logistics services such as warehousing, shipping, distribution, and logistics chain management |
| Commercial license for technology and innovation | It allows companies to invest in research, development and innovation of new technologies and products |
| Commercial license for investment activities | It allows companies to engage in investment activities such as investing in real estate, stocks, bonds, and other financial assets |
| Commercial license for cultural and artistic activities | It allows companies to organize cultural and artistic events such as exhibitions, artistic performances, cultural events, and activities related to arts and culture |
| Commercial license for sports activities | It allows companies to organize and present sports activities and sports-related events such as tournaments, leagues, training, and sports promotional activities |
| Commercial license for recreational activities | It allows companies to organize and provide entertainment activities such as parties, entertainment shows, amusement parks, games, and other entertainment events |
These licenses allow companies to operate in different fields and provide them with the opportunity to develop business and achieve success in the Dubai Free Zone.
Why do you need to establish a company in Dubai Free Zone?
Establishing a company in a free zone in Dubai represents an important strategic step for companies, as these areas provide a suitable and stimulating business environment for growth and prosperity. Companies in free zones benefit from tax and customs exemptions, advanced infrastructure, easy access to regional markets, and flexible legislation that supports business and encourages innovation and development. Here are the most important reasons for establishing a company in a free zone in Dubai:
- Privacy and Confidentiality: Free zones provide a dedicated environment for companies that enjoy privacy and confidentiality in business operations and information.
- Foreign investment: Free zones encourage foreign investment by providing a suitable investment environment and tax and customs exemptions.
- Ease of entry to regional markets: Free zones enable you to access regional markets easily and facilitate export and import operations.
- Flexible legislation: Free zones enjoy flexible and easy-to-apply legislation that supports business growth and stimulates innovation and development.
- Advanced infrastructure: Free zones provide advanced infrastructure that includes logistical, communications, and transportation facilities, which facilitates production and distribution operations.
- Access to skilled workers: Free zones provide access to skilled and specialized workers of various nationalities to enhance productivity and innovation in the company.
- Benefiting from government programs: Free zones offer various government programs aimed at supporting emerging companies, enhancing their growth, and expanding business scope.
- Providing partnership opportunities: Free zones provide opportunities for partnerships with other companies inside and outside the region, which enhances trade exchange and opens new horizons for cooperation.
In short, establishing a company in a free zone in Dubai provides you with the opportunity to achieve success and growth in a favorable business environment supported by the right benefits and facilities.
Conditions for establishing companies in free zones
Establishing companies in a free zone varies slightly depending on the region and local law, but there are some general conditions that may be common in many free zones. Here are some conditions that may be required:
- Company type: Determine the type of company you wish to establish, such as a limited liability company, joint stock company, or sole proprietorship.
- Commercial activity: precisely define the company’s activity, as it must be compatible with the activities authorized in the free zone.
- Capital: Determine the capital necessary to establish the company, as some free zones may require a specific capital.
- Licenses and Permits: Obtain all necessary licenses and permits to start work, including a work permit and building permits if necessary.
- Address and space: Provide a specific address for the company and specify the space required for the office or factory.
- Contracts and Agreements: Preparing and signing the necessary contracts and agreements, including labor agreements and commercial contracts.
- Insurance: Obtaining employment insurance and the necessary insurances in accordance with local laws.
- Tax Compliance: Comply with all tax obligations and participate in the local tax system.
- Submitting documents: Submit all required and necessary documents, such as copies of personal identification, insurance certificates, and qualifications certificates if necessary.
Types of activities authorized in the free zone
In free zones, companies can practice a wide range of commercial and industrial activities. Permitted types of activities may vary depending on the type of free zone and local legislation. However, authorized activities can generally be classified into the following categories:
- Manufacturing and production: It allows companies to manufacture products and goods in free zones, while providing a suitable environment for production operations.
- Warehousing and logistics: Free zones allow the establishment of warehouses and logistics centers to store and distribute goods efficiently.
- Trade and Distribution: Companies can freely conduct trade and distribution activities in free zones, with easy access to regional and global markets.
- Financial Services: Providing an environment for financial companies such as banks and financial companies to provide their services freely.
- Research and Development: Start-up companies in the fields of research and development can take advantage of free zones to develop and innovate their products.
- Consulting services: Providing an environment for consulting companies to provide their services in various fields.
- Technology and Information Technology: It allows companies in the field of information technology to carry out their activities freely, which encourages innovation and development.
- Entertainment and Culture: Allows the establishment of companies in the entertainment and culture sector, such as film production and cultural events.
The difference between offshore companies and free zone companies
This table shows the difference between offshore companies and free zone companies in Dubai:
| Element | Offshore companies | Free zone companies in Dubai |
|---|---|---|
| Guidance and supervision | Offshore companies conduct business outside the country in which they operate. | Free zone companies conduct business within the free zone. |
| Legal ownership | Offshore companies are 100% owned by foreigners. | Free zone companies require a partnership with a local partner at a certain percentage. |
| Taxes | Not exempt from taxes in the country of origin and may be subject to taxes there. | Exempt from taxes for a specified period on profits and returns. |
| Administrative procedures | Requires complex administrative procedures to organize foreign business. | It offers a simple and flexible administrative environment for organizing business within the region. |
| Easy access to markets | It can easily access international and regional markets. | Provides easy access to local and regional markets. |
| Transparency and confidentiality | It is subject to the standards and laws of the country of origin and the information may not be transparent. | Provides a transparent and confidential environment for business while adhering to local laws. |
This comparison highlights the main differences between offshore companies and free zone companies in Dubai in terms of direction and supervision, legal ownership, taxes, administrative procedures, ease of access to markets, transparency and confidentiality.
The difference between FreeZone and Mainland
The main difference between the Free Zone and the Mainland in the United Arab Emirates is the laws and regulations that govern each, as well as the freedom and restrictions that result from companies registered in each.
| Aspects | Free Zone | Mainland |
|---|---|---|
| Property | It is allowed to own 100% of the company\\\’s share without a local partner | A local partner of no less than 51% is required. |
| Trade restrictions | Great freedom in business operations, import and export | Restrictions on business operations and exports in accordance with local laws |
| Taxes | There are often tax incentives and taxes are usually low or exempt | Businesses are subject to local taxes and fees |
| Procedures and costs | Less complicated procedures and lower costs | Higher procedures and costs due to compliance with local laws and legislation |
| Money transfer | Freedom in financial transfers without restrictions | There may be restrictions on money transfers depending on local laws |
In short, free zones provide a freer and more flexible operating environment for international companies, while mainland operations require greater compliance with local laws and regulations and may involve a partnership with a UAE national.
Fees for establishing companies in free zones
Fees for establishing companies in free zones may vary significantly between different free zones and depend on the type of company and the economic activity it carries out. Here are some common fees that may be relevant:
- License fees: Fees are charged to obtain the necessary licenses to establish the company, and these fees may vary depending on the type of company and activity.
- Registration fees: There may be fees for the company registration and establishment process in the free zone.
- Government service fees: These fees include government services provided by the relevant government agencies in the region.
- Land or real estate fees: If a company needs an office or production space, it may incur fees for utilizing this space.
- Financial services fees: There may be additional fees for companies operating in financial services, such as banks and financial institutions.
- Excellence and Excellence Fees: Sometimes, fees are imposed on companies that benefit from distinguished services or excellence in a particular field.
- Annual renewal fees: Companies must pay an annual fee to renew their licenses and continue operating in the free zone.
Factors affecting the cost of establishing a company in the Dubai Free Zone
There are several factors that affect the cost of establishing a company in the Dubai Free Zone. Some of these factors include:
- Type of license: The cost of establishing a company varies depending on the type of license you wish to obtain. For example, there may be a general trade, manufacturing, or professional services license, and the associated licensing and permit fees vary.
- Company size: The cost of establishing a company is related to the size of the company and the investment capital required. There may be requirements for the minimum capital required for the company, this depends on the type of business activity and the license required.
- Space and office: There are costs associated with renting space or office in the free zone. Rental costs may vary depending on the size of the space and its location within the free zone.
- Additional Services: The company may need to take advantage of additional services provided in the free zone, such as logistics, registration and licensing, banking, and other support services. These services may be associated with additional costs.
- Government fees: There are government fees associated with establishing a company in the free zone. These fees vary based on the type of company and license required, and may include registration, permits and visa fees.
Legal and accounting consultations: You may need legal and accounting consultations to establish your company in the free zone, and this may require additional costs.
Tax advantages of working in the Dubai Free Zone
Working in the Dubai Free Zone offers a number of tax advantages that make it an attractive destination for businesses. Here are some of the main tax advantages:
- No personal income tax: In the Dubai Free Zone, personal income tax is not imposed on individuals and companies. This means that profits made in the free zone are often exempt from income taxes.
- No corporate tax is imposed: In the Dubai Free Zone, corporate tax is not imposed on the profits made by companies established in the free zone. This includes local companies and foreign companies.
- No Goods and Services Tax (VAT): In 2018, value added tax (VAT) was imposed in the UAE at 5%. However, the Dubai Free Zone provides VAT exemptions to companies resident in the zone, which means they are not required to pay VAT.
- No import and export duties: Dubai Free Zone provides exemption from import and export duties on imported and exported commercial goods. This means that companies in the free zone can import and export goods without having to pay customs duties or export fees.
There are some rules and exceptions to be aware of, and tax benefits may vary depending on the type of company, its business activity and applicable tax legislation.
Types of companies allowed in free zones
In free zones, a variety of types of companies are allowed to be established, and these types vary based on the local regulations and laws of each free zone. Here are some common types:
- Limited Liability Company (LLC): A common type in free zones is a limited liability company, where shareholders are only liable to a certain extent for debts and obligations.
- Joint stock company: allows shareholders to purchase shares and participate in the management of the company. Debts and liabilities are usually limited to shareholders.
- Sole Proprietorship: Managed by one individual, who is solely responsible for debts and obligations.
Subsidiary Company: A subsidiary of a parent company that is fully or partially owned, and its operations can be limited based on the mandates delegated. - Foreign branch: It represents a branch of a foreign company and is affiliated with it, while adhering to local regulations and laws in the free zone.
- Investment Company: Focuses on investing money in specific projects or assets, and may be a source of financing for other projects.
- Import and Export Company: Focuses on import and export operations, and benefits from the free zone’s location as a center for international trade.
- Information Technology Company: Specializes in providing information technology services, software development, and technical solutions.
Documents required to establish a company in free zones
Establishing companies in free zones requires submitting a set of documents. The required paperwork may vary based on the type of company and local laws in the specific free zone. Here is a general list of documents that may be required:
- License application form: This is the document that specifies the type of company and economic activity.
- Social contract model: contains information about shareholders and capital distribution.
- Legal Notice Form: Defines the legal form of the company and legal responsibilities.
- Photos of IDs: Photos of IDs of all shareholders and managers.
- Certificates of qualifications: For managers who may need to provide qualification certificates in some cases.
- Financial Report: A financial report or business plan may be required to determine the company\\\’s ability to continue and succeed.
- Shareholder information form: Details about shareholders and shareholdings must be provided.
- Lease Contract: If you are renting office or production space in the free zone.
- Work permits: Permits for foreign managers and employees if they are part of the team.
- Building permits if necessary: for companies that need specific infrastructure.
- Insurance: Providing the necessary insurance documents.
How to establish companies in free zones
Advantages of establishing a company in the free zone in Dubai
Establishing a company in a free zone in Dubai offers distinct opportunities and exceptional benefits to investors. These advantages include a developed business environment and flexible laws that encourage investment and expansion, which are:
- 100% retransfer of capital and profits abroad
- 100% exemption from import and export duties
- No tax is imposed on corporate gains or personal income in most cases
- No restrictions on the use of currency
- Low cost of operations
- Pre-built offices, factories and warehouses
- Fast procedures for establishment and licensing
- Single window for customs clearance; That is, multiple administrative services in one station
- Provides labor recruitment assistance and additional support services, such as sponsorship and on-site housing
- Abundant and inexpensive energy
- Excellent infrastructure, communications, and attractive work environment
In conclusion, it appears that establishing a company in the free zone represents an important strategic step for investors looking for a favorable investment environment and stimulating business opportunities. Free zones offer a wide variety of facilities and benefits that support business operations and contribute to the success of companies, including customs and tax exemptions, easy access to the market, and advanced infrastructure.
With Itqan Company, investors can make the most of the opportunities available in the free zones, by obtaining the professional advice and support necessary to establish and manage their companies efficiently and effectively. Thanks to the experience and distinguished services provided by Itqan Company, investors can achieve their business goals with confidence and success in the evolving business environment in the free zones.
Are you looking for the best company to establish companies in the free zone?
ITQAN Company provides a wide range of services specialized in establishing companies in free zones in Dubai and the UAE in general. Here are some of the services ITQAN provides that may make it a good choice for business formation:
- Business Consulting: Providing comprehensive consultations on company establishment processes and related legal and financial procedures.
- Company formation: Assistance in establishing limited liability companies (LLC), public stock companies (PJSC), sole proprietorships, and others.
- Providing virtual offices: Providing virtual offices equipped with the necessary services for working remotely and communicating with clients and partners.
- Legal Affairs Department: Review and prepare legal documents necessary to establish the company and comply with local laws.
- Accounts and Tax Management: Providing accounting, financial reporting and tax management services for registered companies.
- Licensing and Licensing Services: Assistance in obtaining the necessary licenses and licenses to start work in the free zone.
- Customer Services and Support: Providing customer support services and assisting with the daily needs of the company.
- Investment Consulting: Providing advice on investments and economic opportunities in the free zone and the Emirates.
- Guiding investors: effectively guiding investors about the necessary procedures and available investment opportunities.
In addition, ITQAN can be effective in reducing the time required to establish companies, provide customized solutions that suit customer needs, and provide distinguished services that contribute to the success of businesses in the Dubai Free Zone.
Does the company need to rent a facility to obtain a license in the free zone?
Yes, usually the company needs to rent a facility in the free zone to obtain the necessary license. A business license is part of the company incorporation process, and usually includes information about the type of business activity the company does.
Renting the facility in the free zone is a prerequisite in many cases, as the type of facility required and its requirements are determined according to the company’s activity and local laws and regulations.
Some free zones may offer flexible options for startup companies, such as virtual offices or shared spaces that allow starting work without having to rent an entire office space in the first stage, but in the advanced stage the company usually needs an office space suitable for its activity.
Therefore, it is always advisable to check the specific commercial license requirements in the free zone in which the company intends to establish, and to contact Itqan Company, which specializes in establishing companies, to obtain accurate information about leasing and the necessary requirements for the license.
Frequently asked questions about establishing companies in free zones
What are the free zones in the UAE?
Free zones in the UAE include many locations such as Jebel Ali Zone in Dubai, Ajman Free Zone, Ras Al Khaimah Free Trade Zone, Dubai World Central Zone, and the UAE Passports Zone.
What are the main benefits of establishing a company in a free zone?
The main benefits of establishing a company in a free zone include obtaining 100% ownership of the company, no taxes on income and profit, the possibility of freely dealing in foreign currencies, and no restrictions on transferring profits abroad.
What are the basic steps to establish a company in a free zone?
The steps include choosing the appropriate type of company, submitting the required documents to the relevant authorities, paying the required fees, and obtaining the necessary work permit and visas for workers.
Can companies in free zones deal with the local market?
Yes, companies in free zones can fully deal with the local market, in addition to the possibility of exporting and dealing with global markets.
What are the estimated costs of establishing a company in a free zone?
Costs vary depending on the type of company and free zone, and include establishment fees, annual fees, and costs of supporting services such as work visas and logistics.
What guarantees are provided to investors in free zones?
The guarantees provided to investors in free zones include intellectual property protection, facilities for obtaining visas and permits, and a legislative and legal environment conducive to business.
