The United Arab Emirates (UAE) boasts one of the best business ecosystems and investors through its Web of free zones and designated areas. Some of the advantages of carrying out a business in a free zone include; full ownership by foreigners, full and free transfer of capital and profits, and exemption from paying taxes. This article provides guidelines on how to incorporate a business in a designated zone in the UAE.
1. Determine the Nature of Your Business Activity
The Free Zone Authorities of UAE grant different categories of business licenses depending on the type of business as follows:
| S.No. | License Category | Description |
|---|---|---|
| 1. | Commercial Trade | For import, export, wholesale and retail trading activities. |
| 2. | Consultancy Services | For professional services like consulting, accounting, recruitment etc. |
| 3. | Industrial | For manufacturing, assembling, and packaging activities. |
| 4. | Educational | For educational institutes, training centers etc. |
| 5. | Media | For media, publishing, advertising and event management activities. |
| 6. | eCommerce | For online retail and trading through websites and applications. |
| 7. | Offshore | For holding companies with no physical presence in the UAE. |
| 8. | Freelancer | For independent professionals like designers, translators etc. |
| 9. | Warehousing | For storage and distribution activities. |
It is essential to lay down some considerations and choose a proper license type that corresponds to your business model.
2. Determine Your Company’s Legal Structure
The legal structure of the company refers to its legal formation and can depend on the type of business or activity, as well as the specific needs of the company. The three main structures in UAE free zones are:
- Free Zone Limited Liability Company (FZ LLC)
- Free Zone Company (FZ Co.)
- Free Zone Establishment (FZE)
Selecting the right legal form is important from an operational perspective, in terms of managing its finances, and in relation to compliance issues.
3. Register the Trade Name
The trade name commonly referred to as the company name must be distinctive, relevant to the company’s business, and must have received prior clearance from the free zone authorities. The following are useful points of note:
- It may have the legal structure abbreviation as the suffix (for example, LLC).
- Should not include obscene, vulgar, or any word in respect of the government or governor.
- Must be available and cannot be already registered to another party or entity.
- Consent and clearance have to be obtained from the Department of Economic Development.
- Trade name certificates require renewal after a specific amount of time.
4. Select Business Space and Location
The UAE has over 40 designated free zones across different emirates catering to varied industries. Key factors to consider while choosing a location are:
Choose Business Space
- Office/warehouse space can be leased or bought based on the size of operations required.
- Flexible and affordable accommodation with an opportunity to choose between fully or semi-furnished apartments.
Access to Infrastructure
- Networks of IT such as Internet, telecom, and utilities are well developed.
- Supply chain support includes post, courier; services, banking, etc.
Support Ecosystem
- Availability of funds, grants, start-up initiatives, etc.
- Reliability of input suppliers and other related industries required for the production of the firm’s products.
- The pool of skilled employees and living facilities.
It is important to critically assess the above factors in order to select a proper free zone that fit business objectives.
5. Obtain Initial Approval
To obtain permission to open a new company, certain necessary papers have to be submitted and all along prerequisites have to be fulfilled for the initial approval. It is however essential to note that some activities such as Tourism, Travel and Health among others will need permits from the respective authorities of government.
6. Registration, Payment of Fees and Obtain License
This stage consists of Payment of fees such as license issuance, setup charges etc. The fees depend on the type of license to be issued. Key documents required include:
| Requirement | Details |
|---|---|
| Completed Application Form | For registration |
| Board Resolution | Appointing Manager/Director (notarised and attested) |
| Power of Attorney | Given to Manager/Director (notarised and attested) |
| Memorandum and Articles of Association | (notarized and attested) |
| Specimen Signature | Of Manager/Director (notarised and attested) |
| Passport Photographs | Of Manager/Director |
| Share Capital Information |
After going through all the requirements, entrepreneurs receive the trade license, which signals the official start of business in the UAE. After licensing, there is a need to make annual renewal payments and also adhere to the set regulations.
Frequently Asked Questions
- Question: What are the benefits of setting up in a free zone?
Answer: Some of the significant advantages include 100% foreign ownership, tax exemptions, easy to do business and global market access.
- Question: What documents are required for freelancer registration?
Answer: The basic documents include an application, CV or profile, a reference letter from the bank, and the original notarized Registry Identification Form for the director.
- Question: What are the main stages of setting up a business?
Answer:The key stages are:
- Determine the legal entity type
- Choose a trade name
- Set pre-approval
- Apply for a business license
- Complete the company articles
- Select an office space
- Get pre-approvals, register, and obtain the license
In conclusion, business set up in a designated zone in UAE has been identified as effective due to operational advantages and fiscal nature of the Free Zone. Therefore, it is advised that companies operating in UAE seek professional assistance from experts in business setup in Dubai to undergo adequate planning, and to choose an appropriate free zone to ease the incorporation process. Thus, contact us today and we shall be glad to contact you.
Read More: Local Sponsor in Dubai for Business | Types and Duties
 In a Free Zone){kind=link}