A Complete Guide on Freezone Company Formation in UAE

There are around 40 free zones in the UAE. More are being built. Each freezone company formation is focused on one or more commercial areas and offers licenses only to those companies.

UAE is a key business hub. It’s ideal for setting up business or representative offices. Finding the right freezone company formation to do business in the region can be difficult. A common misconception is that a freezone company formation company is an offshore business. However, they have many different characteristics.

 A Freezone company formation allows shareholders, directors, and employees to apply for residency visas in UAE.

  • 100% foreign ownership is possible (there is no requirement to have a local sponsor/partner).
  • 100% repatriation capital and profits
  • Exemption of 100% personal and corporate income taxes
  • Currency restrictions not enforced
  • Many licensable activities
  • Energy abundant and cheap
  • Modern and efficient communication
  • Logistic efficiency due to the business cluster effect
  • Services desks and offices available for start-ups and SMEs;
  • Excellent support services.

The nature of your business activity will play a major role in determining the freezone company formation that meets your needs. These are the principal Free Zones with their license activities:

  • Dubai Multi Commodities Centre – Commodities Trade and Exchanges
  • Jebel Ali Freezone company formation (JAFZA – Trading and General Trading; Service, Logistics, Industrial;
  • Dubai International Financial Centre (DIFC – Banking, Financial Services and Legal
  • Dubai World Central (DWC – Aviation, Logistics, and Light Industry;
  • Dubai Knowledge Park (DKP), Human Resources Management, Training and Personal Development.
  • Dubai Internet City (DIC), Internet and Communications Technology.
  • Dubai Media City (DMC), – Media related activities
  • Dubai Silicon Oasis – Information Technology, Telecom, Electronic and Engineering
  • Dubai Healthcare City (DHCC), – Healthcare, Medical Education and Research; Pharmaceuticals and Medical Equipment.
  • Ras Al-Khaimah – Trading, General Trading and Service.
  • Fujairah Creative City – Media, Consulting, Communications, Design and Technology

Requirements

Investors have two options: register a company as a Free Zone Establishment or FZC (an FZE has one shareholder, while an FZC can have more than one), or establish a branch of their parent company or subsidiary based in the UAE. FZE and FZC are limited liability companies that are subject to the rules and regulations set forth by the Dubai where they were established. These provisions are not covered by the UAE Commercial Companies Law.

In order to begin the process of setting up a Company Formation Dubai we will require the following documentation and due diligence from all shareholders/directors of the proposed new company:

  • If non-resident, certified passport copy and UAE Visa/UAE stamp
  • 2 x Proofs Of Address (dated within three months)
  • Refer to a professional or bank reference letter
  • Curriculum Vitae (summary and description of professional history).
  • We will send you the Company Application Form
  • Some Free Zones may require a detailed business plan depending on the type of business that the proposed company is involved in. Sovereign offers a range of templates to help you.

After establishing a legal presence in a Free Zone the business must lease land or premises and obtain an operating license from the FZA. There are different types of licenses that can be used in each type of free zone. Trade and industrial licenses are only valid for companies that operate within the Dubai. A UAE official agent and a joint venture are required to sell products in the UAE.

FAQs related to Company Formation in Dubai

You will find additional information about the UAE Company Formation Dubai in the following Q&A.

Why create a Free Zone Company when you can do it yourself? An Offshore Company would be simpler to establish and serve the same purpose.

It is usually more expensive to set up a Company Dubai than an Offshore Company. Also, it takes between 4 and 6 weeks to get established. It is however an offshore company with some offshore characteristics. This company type is great for market entry as it gives you the ability to have an office and visa in the UAE without the need of a local sponsor. 

Since it is an offshore company, will I be granted a license once the company has been incorporated?

All Free Zone businesses have a trade license that reflects their business activities. You can obtain a license for manufacturing, industrial, consulting, and services activities. Most Free Zones specialize in a specific sector.

Is it possible to do business in any country with a Free Zone Company?

You can’t do business outside the UAE or within the Free Zone. It is not permitted to do business in the UAE’s mainland. You will need to set up a UAE Onshore Company with local sponsors if your target market is the UAE mainland. This can be done with the assistance of Sovereign.

Are there restrictions on business activities?

Yes. Yes. An investor may need approvals from the Knowledge and Human Development Authority to establish a training or educational practice. The Free Zone Authority will review the proposed business activity and make sure that it is not required to obtain approvals from outside agencies.

What are the legal requirements for a Free Zone Company (FZCO)?

Each Free Zone has its own governing body, so the requirements can vary from one Free Zone to another. The majority of Free Zones follow the same framework. You can set up two types of company in the Free Zone. One is a Sole Establishment (FZE), which has one shareholder, and another is a Free Zone Company(FZC), which has two or more shareholders. Individual and corporate shareholders are both allowed.

The company must appoint a manager. This person is responsible for the day to day running of the business and for signing any contracts for the company. The manager must sign off on any changes to the company structure. Managers must be UAE residents or intend to take up residence.

How many residence visas will you issue?

This will depend on the type and location of the office/premises. A Virtual Office/Flexi Desk option will usually grant 2 to 3 visas. The size of the physical office space will determine how many visas will be granted (generally, 1 visa per 10sq. Price per meter.

Can a company obtain a tax residency certificate?

If you are looking to use the UAE’s double tax treaties network, it is possible to apply to obtain a Tax Residency Certificate.

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