How to Start a Free Zone Company in the UAE?

When an investor decides of starting a business in the United Arab Emirates, he/she will come across a variety of options. The country provides the entrepreneurs with different jurisdictions to start a business from. They are-

  1. Mainland
  1. Offshore and,
  1. Free zone

Today, we are going to provide you with an in-depth process of starting a company in the UAE free zone. One of the key reasons why most of the investors prefer opening a business in the free zone is due to the advantage of having full foreign ownership. Let us now get to know more of such advantages.

Benefits of Business Setup in UAE Free Zone

  • 100% foreign ownership (no requirement for a local partner/sponsor)
  • 100% repatriation of capital and profits
  • 100% corporate and personal income tax exemption
  • Absence of currency restrictions
  • Wide variety of licensable activities
  • Abundant and inexpensive energy
  • Modern, efficient communications
  • Logistic efficiencies due to business cluster effect
  • Serviced desks and offices for SMEs and start-ups
  • Excellent support services
  • Easy business setup

Every free zone in the UAE offers such benefits to its businesses. There are more than 40 free zones in the UAE, with more under construction. Each Free Zone is designed around one or more commercial categories and only offers licenses to companies within those categories. The companies operating in the free zone are govern-forced by an independent Free Zone Authority (FZA) which is directly responsible for issuing operating licenses and regulating the activities of the companies within the Free Zone. Remember that, the type of business entity is also important while starting a business in any of the UAE free zone.

Type of Business Entities in the UAE Free Zone

There are mainly three types of business entities in the free zone UAE. They are-

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

Next important process is to select the business activity so that the FZ Authority can provide you with the appropriate license for the same.

Types of Business Licenses in the UAE Free Zone

Following types of business licenses can be obtained by applicants at the UAE free zones:

  1. General Trading License
  1. Trading/Commercial License
  1. Service License
  1. Industrial License
  1. Warehousing License
  1. Manufacturing License

Now that you have everything at a place, let us understand the process of establishing a company in the free zone UAE.

Procedure to Start a Business in the UAE Free Zones

  1. Select a trade name for your free zone company. The name cannot be similar with the names of any existing companies in the UAE
  1. Apply for a business license. The list has already been aforementioned. 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
  1. Choose an Office Space. Free zone authority provides you with the flexi desk services and there also are, options of either buying or leasing the office
  1. Get an initial approval. You have to get approval from the authority that basically says, the authority does not have any objection towards you wanting to register a business in the free zone
  1. Register your business and get the license. To register your business with free zone authority, you must submit all the necessary documents attached with the application form. Once you submit, it will take around 2-4 weeks to get the final approval. You will then get the Certificate of Registration from the FZA and after a week or so, a business license. Once you get the license, you can officially start your business.

As it has already been mentioned in the process that you need to provide a set of documents to the authorities along with the application form, here are the documents that you need to have.

  • 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

A free zone company is mostly recommended to start ups because this type of company is ideal for market entry and it will give you the physical presence in the UAE through office space and visas without the need for a local sponsor. Once you make your position in the market, you can also expand your business in the mainland.

If you are still skeptical of starting a business in the UAE free zone, we at Business Setup Worldwide are here to help you. You can consult with us by contacting us today. We’d be glad to help you out.

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