Why You Should Setup a Company In Dubai Free Zone
The UAE has long been an attractive destination for entrepreneurs the world over. Offering low tax, a strategic location at the heart of the world’s largest and fastest emerging markets, and a government committed to nurturing and supporting business, it’s not hard to see why.
But while these may be the factors that get the headlines, there’s another major reason why so many flock to the UAE’s shores to do business – free zones.
The UAE’s free zones – also known as free trade zones – are essentially economic areas where goods and services can be traded, usually at preferential tax and customs rates. They were originally rolled out to boost international business in the region by offering benefits such as 100% foreign company ownership. There are currently 45 free zones across the UAE.
Over the years, the UAE’s free zones have evolved to offer ever-increasing advantages to the businesses within them. Many free zones cater to specific industries or business types – for example, Dubai Healthcare City serves those in the healthcare industry while Jebel Ali Free Zone Authority is directly linked to the largest port in the region and is therefore favoured by those in the import/export trade.
Why set up in a free zone?
If you’re looking to set up a company in the UAE, there are plenty of reasons to choose a free zone.
Easy setup: The set up process in most free zones is incredibly straightforward. The exact application process will depend on your business activity and chosen free zone but in many cases you are only required to provide some basic documentation such as passport copies and business paperwork. The whole process often takes just a week or two. Many free zones also offer flexi-desk and virtual packages allowing you to make use of the free zone address and facilities on an ad-hoc basis.
Tax and duty: This is perhaps the most compelling reason to choose a free zone: the tax regime. Set up in a free zone and as well as benefiting from 0% corporate and personal tax, your business will also be exempt from VAT, currently at 5%. And that’s not all. Free zone businesses are exempt from import and export tax too and can trade with no currency restrictions.
Set up in a free zone and as well as benefiting from 0% corporate and personal tax, your business will also be exempt from VAT, currently at 5%.
Foreign ownership: Another major plus to setting up in a free zone is foreign company ownership. Most entrepreneurs from overseas wanting to set up in the UAE mainland must work with a local partner to do business. This is not the case in the UAE’s free zones – set your business up here and you will retain 100% ownership.
Trading within the UAE: Free zone businesses are not permitted to trade directly with the local market in the UAE, however this is easily overcome. One option is to work with a locally appointed distributor who can put your goods and services to market in return for a fee. Alternatively, it is possible to establish your free zone business and then open branch offices of your free zone company throughout the Emirates at a later date. These branch offices can be used to market your offering and undertake business within the UAE mainland.
Support and assistance: Free zone authorities are on hand to offer support during set up and beyond. Most free zones offer assistance with applying for visas for both shareholders and any applicable dependants such as spouses or domestic staff. Many also assist with opening corporate bank accounts, advising on the best bank to suit your needs and even arranging meetings in-branch for you. In terms of ongoing business support, it is not unusual for free zones to offer business advice and networking services as well as access to startup hubs and growth initiatives to help new businesses get up and running.