Undertstanding Business Setup In Dubai Freezones

Dubai has all that it takes to become a leading city for businesses to flourish- tax exemptions, centrally located between all major business hubs in the world, supportive initiatives by the government and its dynamic economy. To expand the list of success stories and businesses even further, Dubai has Specialized Free Zones (FZ) for different types of businesses to attract foreign investments. Free Zones are designated areas in the city where businesses can set up their operations with 100% foreign ownership, along with tax exemptions and a lot of other benefits. Businesses setup in Dubai Free Zones are supervised by a different set of regulations, than of those set up outside these zones.

Currently, there are over 20 freezones in Dubai, each one focussing on a specific industry like health, technology, etc. According to Dubai Customs, the total value of trade conducted by companies in Dubai’s free zones reached AED 593 billion in the first half of 2021, indicating their significant role in promoting international trade.

Explore the benefits of setting up a business in Dubai Freezone and decide if it is the best fit for you:

  1. 100% Foreign Ownership: All free zone companies allow for foreign investors full ownership, giving them entire control over corporate operations and decision-making.
  2. Tax Exemptions: Typically, free zone enterprises are exempt from company and personal income taxes for a set period, resulting in favourable choice and greater profitability.
  3. Simple Incorporation: The process of creating a free zone firm is simplified, with fewer bureaucratic formalities and a rapid licensing process, allowing for faster business creation.
  4. Profit Repatriation: Free zone enterprises allow for 100% capital gains and profit repatriation, allowing investors to move cash earnings back to their home nations without limits.
  5. World-Class Infrastructure: Dubai’s free zones offer cutting-edge infrastructure, innovative amenities, and a welcoming corporate environment, increasing operational efficiency and productivity.

While there are many benefits that make freezones a very lucrative proposition, there are also some key considerations that need to be paid attention before setting up your business:

  1. Choosing the Right Free Zone:
    • Conduct research and select the free zone that corresponds to your company operations and aims.
    • Consider industry specialty, infrastructure, accessibility to target markets, and facilities offered.
  2. Additional Permits on Commercial Activity:
    • Some business activities in your chosen free zone would require additional permits from external government agencies
    • Check that your proposed business activities are available in the chosen free zone.
    • Ensure regulatory compliance and receive the relevant permissions and approvals.
  3. Legal Framework:
    • Choose the best legal form for your company, such as a Free Zone Company (FZCO) or a Free Zone Establishment (FZE).
    • When deciding on a formal company structure, consider the number of shareholders, appointed managers, liability protection, and ownership requirements.
  4. Minimum Capital Requirements:
    • While most freezones don’t require physical evidence of minimum capital requirement, there are some and certain activities that are not permitted without it. Ensure that you have adequate funds to satisfy the capital requirements.
  5. Office Location:
    • Freezone entities can only take office space within the Freezone physical jurisdiction
    • Determine the free zone authority’s office space requirements.
    • Check before starting the process for available office size and location for your company’s needs.
    • Consider the related expenditures, leasing periods, and the availability of extra facilities.
  6. Shareholder Requirements and Visa Requirements:
    • Determine the number of shareholders necessary for your legal structure of choice.
    • Learn about the visa requirements and limits that apply to shareholders, workers, and dependents.
    • Understand the free zone’s visa quotas and sponsorship requirements.
  7. Costs of Operation and Financial Considerations:
    • Assess the cost structure of establishing and operating in the free zone.
    • Consider the price of licenses, visas, office rent, utilities, hiring, and compliance.
    • Create a detailed financial strategy to guarantee long-term profitability.
  8. Implications for Taxation:
    • Learn about the tax breaks and exemptions available in the free zone.
    • Take time to learn about tax treaties between your country of citizenship and the UAE
  9. Compliance with regulations:
    • Keep up to speed on the free zone authority’s regulations and legal duties.
    • Ensure compliance with reporting standards, renewal procedures, and continuing license and permit responsibilities.
  10. Business Support Services:
    • Investigate the availability of business support services such as legal, accounting, and consulting within the free zone.
    • To assist your company operations, evaluate the quality and pricing of these services.
  11. Future Expansion and Flexibility:
    • Think about the scalability and flexibility provided by the free zone of choice.
    • Examine the possibility of expanding your business within the free zone, into adjacent free zones, or into the mainland of Dubai.

To navigate the complexities of the setup process and ensure compliance with all requirements and guidelines, it is essential to consult experienced legal and business consultants that specialize in setting up businesses within Dubai’s free zones.

Contact Next Generation Corporation to book a no-obligation consultation and get started on your journey to set up your business in one of Dubai’s freezones today!

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