Free Zone Company Formation in UAE

Several businesses are hesitant to invest in the UAE due to the requirement of having a UAE national as a partner holding 51% of the shares. This has led to a rise in the popularity of free zones for business registration in the UAE, allowing 100% foreign ownership. Free zones, or free trade zones, are designated areas with special tax-free status and minimal trade barriers, enabling manufacturing, importing, exporting, handling, or reconfiguring goods without customs duty.

The UAE is globally acclaimed for its successful Freezones, defined areas governed by Free Zone Authorities with the ability to issue Business Licenses. In these zones, entrepreneurs have the freedom to grow their businesses without unnecessary hindrances from authorities, allowing for precise cost estimation.

Each Free Zone represents a diverse mix of multinational companies from across the globe, making it a true cross section of the world. Expatriates in UAE Free Zones have the opportunity to fully own and operate their businesses, making Free Zone Company Registration in UAE an attractive investment for expatriates worldwide.

The UAE's Free Zones have evolved into major trading hubs, supported by the UAE Government and Free Zone Authorities. Setting up a Free Zone Company in the UAE is hassle-free and affordable, with a minimum cost of AED 11,900 in Dubai.

The UAE government has established numerous free zones across the Emirates, each tailored for specific business activities. These free trade zones provide attractive incentives to non-resident corporates, such as streamlined administration, freedom from bureaucratic hurdles, and complete ownership. 

There are approximately 45 free zones strategically located throughout the United Arab Emirates, attracting foreign direct investment and housing over 200,000 companies that contribute significantly to GDP growth. These free trade zones differ in focus, setup costs, and required paperwork, but they all adhere to similar fundamental requirements. Foreign investors opt for the UAE due to its stable political climate, security, efficient law and order, tax benefits, and various other business advantages. 

YABS, a team of professional experts, facilitates the entire process of Free Zone Company Registration in the UAE, providing a seamless, one-stop solution for investors to reduce the complexities associated with company formation. 

Our proficient team excels in various company setup services, including: 

1. Establishing a UAE Freezone Company
2. Obtaining a Trade License 
3. Chamber of Commerce registration 
4. Opening a Bank Account 
5. Securing Director Visas 
6. Arranging office staff 
7. Accounting services

and fulfilling all requirements related to the company setup.

There are two main types of free-zone companies:

1. Free Zone Establishment (FZE):
2. Free Zone Company (FZC):

What's the Difference: The big difference is in the number of owners. An FZE has just one owner, whether it's a person or a company. But an FZC is like a team; it needs at least 2 owners. Both types of companies get the same benefits for their business.

Top Free Zones in the UAE

Free Zones in Dubai

Free Zones in Other Emirates

UAE Free Zone License

- A Free Zone License in the UAE is an official authorization granting an investor the ability to conduct trade and specified business activities within a designated area.
- Depending on the nature of the business, entrepreneurs can apply for a specific Free Zone License.

Process and Importance: 
- The issuance of a Free Zone License is facilitated by the relevant Free Zone Authority once the company is registered.
- Selecting the appropriate business activity during company formation is a critical step.

Contents of the Trade License: 
- The Trade License includes a comprehensive list of business activities chosen by the investor.
- The company is legally bound to conduct only those business activities specified in its Free Zone License in the UAE.
- Investors can choose up to 10 business activities under a single trade license, but this may vary based on the specific Free Trade Zone.

Variations in Activity Selection: 
- For example, in SHAMS Free Zone, investors can opt for up to three business activities without incurring extra costs.
- If investors intend to add more activities to the trade license, they can do so by paying a fee to the respective Free Zone.

Guidance and Support: 
YABS is committed to guiding investors on the most efficient path to obtain a Free Zone License in the UAE, ensuring a seamless journey into the world of business.

Different types of business licenses are available in UAE free zones, catering to various business activities: 

1. General Trading License
- Enables trading in a wide array of products.

2. Trading/Commercial License
- Provides a time-bound authorization for industrial, commercial, or consulting activities.

3. Service License
- Allows operations for law firms, accounting firms, and business consultancy firms.

4. Industrial License
- Authorizes the import of raw materials, manufacturing of goods, and export of finished products globally.

5. Warehousing License
- Allows investors to access warehousing facilities for distribution, packaging, and storage of goods.

6. Manufacturing License
- Grants permission to applicants for the manufacturing of products.

Free Zone Company Formation Requirements 

Certainly! Entrepreneurs can choose to create a new company in the UAE using one of these methods:

Business Structure: 
- Free Zone Establishment (FZE): One owner forms the company.
- Free Zone Company (FZC): Two or more owners jointly form the company.
- Branch or Representative Office: An extension of an existing company, whether it's in the UAE or abroad.

Understanding the Legal Structure: 
- FZEs and FZCs are limited liability companies, guided by the rules of the specific Free Zone where they are established. The UAE Commercial Companies Law (CCL) doesn't govern them.

To initiate the Free Zone Company setup, need the following documentation and due diligence from all shareholders/directors of the proposed company:

1. Certified copy of the passport and UAE Visa/UAE entry stamp (if non-resident)
2. Two proofs of address (dated within the last 3 months)
3. Bank or professional reference letter
4. Curriculum Vitae summarizing professional history
5. Completed Company Application Form (provided by us)

Business Plan Requirements: 
- Some UAE Free Zones may ask for a detailed business plan depending on the proposed business activity. Sovereign offers templates to help in this process.

Setting Up the Business:
- After establishing a legal presence in a UAE Free Zone, the business needs to lease premises or land and acquire an operating license from the relevant Free Zone Authority.

License Types and Business Scope: 
- Different Free Zones offer varying types of licenses.
- Companies with trade and industrial licenses can operate within the Free Zone or expand internationally.

Selling Products in UAE: 
- To sell products within the UAE, businesses may need an official UAE agent and sometimes establish a joint venture.

Steps to Register a Company in a UAE Free Zone

To start a business in any UAE Free Zone, you need to follow three crucial steps: obtaining your business license, securing your UAE Residence Visa, and opening a corporate bank account. This process, when carefully planned, typically takes from 1 to 4 weeks.

Here's a breakdown of the key steps:

1. Obtain Your Business License: 
Acquiring a business license, also known as a trade license, is a fundamental requirement for every company operating within a UAE Free Zone. These licenses are valid for one year, starting from the date of issue, and must be renewed annually.

2. Secure Your UAE Residence Visa: 
As part of the setup process, securing your UAE Residence Visa is crucial. This visa allows you to reside in the UAE, a necessary aspect of operating a business within the Free Zone.

3. Open a Corporate Bank Account:
Establishing a corporate bank account is essential for managing the financial aspects of your business operations within the UAE Free Zone.

In addition to these steps, certain UAE Free Zones may have specific requirements regarding minimum paid-up share capital during the formation of a Free Zone company. The exact amount varies based on the unique requirements of each Free Zone.

To help you navigate the company registration process, we provide an overview of the key steps involved in setting up a business in the UAE Free Zones.

Setting Up a UAE Free Zone Company: Easy Steps

1. Pick Your License and Business Activity: 
Each Free Zone has specific rules on combining activities. Trading falls under 
 - Trading / Commercial License 
 - services under Service License 
 - manufacturing under Industrial License 

2. Choose a Free Zone: 
- Each UAE Free Zone offers unique activities, facilities, and visa quotas. Seek professional guidance From YABS to find the best fit for your business.

3. Decide Your Company Structure: 
Choose from options like 
 - New Company 
 - Subsidiary
 - Joint Venture, or Branch 
based on individual or corporate ownership. Ensure alignment with the chosen Free Zone.

4. Select a Name and Gather Documents: 
List three preferred company names and prepare needed documents: 
 - passports 
 - visas, etc. 
as per the chosen Free Zone's requirements.

5. Get Initial Approval: 
- Seek approval for your company name, selected business activities, and proposed structure.

6. Sign Up and Incorporate:
Arrange a meeting or appoint a representative for document verification and signing. Key documents include:
 - Articles of Association 
 - Board Resolution, etc.

7. Secure Your Business Location: 
- Find a suitable commercial space in your chosen Free Zone, sign a Tenancy Contract, and obtain an Ejari Certificate.

8. Get Your Business License: 
- Complete required procedures, settle payments, and receive your business license and essential corporate documents.

Benefits of Free Zones Regarding Taxes

- Companies established within UAE Free Zones gain the status of onshore entities, allowing them to engage in both global and local trade while adhering to relevant customs laws governing goods transportation. 

- Registering a company in a Free Zone grants investors a 2-year Investor Residence Visa, offering flexibility in hiring employees based on the allotted visa quota, which can be adjusted as needed.

Role of Free Zone Authorities: 
- Each Free Trade Zone in the UAE operates under its respective Free Zone Authority.
- While these authorities operate within the framework of UAE laws and regulations, they maintain independence through separate regulations.
- Responsibilities of these authorities include issuing Trade Licenses, providing suitable business infrastructure, approving employee visa applications, ensuring fair business practices, and more.

Tax Advantages for Foreign Investors: 
- Free Trade Zones in the UAE provide significant tax benefits for foreign investors.
- The UAE does not impose Personal Income Tax, offering a tax-friendly environment.
- Starting from June 2023, a modest 9% Corporate Tax is applied to companies meeting specific criteria.
- Additionally, certain designated Free Zones in the UAE offer an exemption from the 5% Value-Added Tax (VAT) for specific transactions, adding to the tax advantages.

Incentives and Challenges: 
- UAE Free Zones extend a variety of incentives to attract investors and business owners, facilitating a diverse range of business activities.
- However, selecting the appropriate Free Zone based on budget and timeline can be challenging for investors.

Affordable Business License Packages in UAE Free Zones

- UAE Free Zones offer enticing Low-Cost Business License Packages, streamlining the company setup process.
- Numerous Free Zones in the UAE present these economical packages to cater to diverse business needs.

Cost-Effective Business License:
- Sharjah Media City provides an attractive service license at just AED 8,050, making it an appealing choice for entrepreneurs and startups aiming for a cost-effective presence in the UAE.

Tailored License Costs for Specific Professionals:
- Tailored Free Zone License Costs cater to various professionals like consultants, marketing experts, legal practitioners, and software professionals.
- For instance, the Free Zone License Cost for these professionals is approximately AED 11,743 (excluding visa fees and additional costs).

Additional Options for Long-Term Ventures:
- For service professionals considering a long-term commitment, a 3-Year Business License is available at AED 32,712.

Diverse Offerings and Factors Affecting Setup Costs:
- UAE boasts over 45 Free Zones, each offering competitive packages.
- The overall Business Setup Cost in a Free Zone is influenced by factors such as the type of business license, nature of business activity, office requirements, location, budget considerations, and more.

- Establishing a Free Zone company in the UAE offers flexibility, allowing registration with or without a physical office.
- Essential steps include Chamber of Commerce registration and obtaining an Import Export code to streamline trade operations.

Taxation and Residency: 
- After one year of incorporation, investors can obtain a Tax Residency Certificate from the UAE, capitalizing on Double Taxation Avoidance Agreements (DTAA) to reduce tax liabilities in their home country.

Banking and Trade Facilities: 
- Free Zone companies can easily open bank accounts in various UAE banks, providing convenient features like online banking, debit/credit cards, checkbooks, and comprehensive trade facilities.

Summary: 
- The process of setting up a Free Zone company in the UAE stands as the most viable approach to bolster business endeavors within the Middle East and North African region, fostering growth and expansion.

Advantages of Establishing Business in UAE Free Zones

1. Full Ownership: 
- Enjoy complete ownership of your business, as 100% foreign ownership is permitted.

2. Tax Benefits: 
- Experience tax-free income with no corporate or income taxes.

3. Profit Repatriation: 
- Repatriate 100% of your profits and capital with ease.

4. Simplified Setup: 
- Establish your business quickly and effortlessly, with minimal documentation requirements.

5. Residence Visa and License: 
- Obtain a 3-year residence visa and multi-year business license.

6. VAT Exemption: 
- Benefit from VAT exemption in specific Free Zones, making transactions within the zone tax-free.

7. State-of-the-Art Infrastructure: 
- Access top-notch infrastructure, including fully furnished office spaces, 24/7 security, and more.

8. Efficient Logistics: 
- Leverage in-house customs checkpoints and duty-free imports, facilitating seamless transit of goods.

9. Warehousing Facilities: 
- Utilize world-class warehousing for storage, packaging, and light manufacturing.

10. Strategic Location: 
- Enjoy proximity to major airports and seaports, enhancing accessibility for international trade.

11. Global Connectivity: 
- Benefit from direct connections via airports and seaports to over 180 countries worldwide.

12. Business Expansion: 
- Easily scale up your business by tapping into extensive networking opportunities and events within the Free Zones.