What is a Free Zone?
The World Federation of Free Zones have defined free zones as the portions of distinctly defined and isolated setting or land, with a special customs, tax and imports regime, normally including a status of extra-territoriality. The free zones in Dubai were set up in order to encourage foreign investment and trade. The inauguration of JAFZ (Jebel Ali Free Zone) set the benchmark for incentives and regulations, proving incredibly successful. Maybe that is the reason why that model has been copied a number of times in not only Dubai, but also other Emirates.
The basic idea for creating free zones in Dubai was to establish areas that can serve as central business hubs for companies that are interested in conducting business in the outer world. Therefore, Dubai Free Zone companies are mostly operating within the associated free zones as a center for global operations and aren’t licensed for operating within the rest of Dubai.
Advantaged of Settling in Free Zones
There are numerous benefits for foreign investors who are starting their business in a free zone. Some of these advantages are outlined below:
1. No capital gain or personal income taxes in Dubai
2. Normally, 51% of the company had to be owned by a UAE national. However, companies registered in free zones are allowed 100% foreign ownership.
3. You do not have to pay corporate taxes for fifty years.
4. Modern, efficient communication is offered.
5. 100 percent repatriation of profits and capital
6. Attractive working environment
7. No recruitment or sponsorship restrictions
8. Excellent support services
9. No currency restrictions
10. No levy on imports or exports
Moreover, there are a variety of facilities available for companies in the free zone areas that are incredibly favorable for running business operations smoothly. For example:
1. Pre-built office accommodation units / warehouse for lease
2. Land for lease offered to the investors for development
3. Low cost of living
4. On-site accommodation for staff of the investor
5. Executive office suites located in the freezones are available for lease.
6. Inexpensive and abundant energy
7. Transportation links by sea, by air and by road
Setting up a Business in a Dubai Free Zone
Every free zone in Dubai has its own laws and regulations. However, an investor can start a business in majority of the free zones under the ways outlined below:
1. Free Zone Company (FZC) or Free Zone Establishment (FZE)
FZC or FZE are limited liability entities that are normally owned by a corporate entity or an individual. There are a few differences between the entities. For instance, FZE has only one shareholder, while FZC has two to five shareholders.
2. Branch of an offshore company or a foreign company
3. FZLLC (Free Zone Limited Liability Company) – Natural Person
FZLLC –Natural Person is an independent company integrated by an individual, and every shareholder is a natural person.
4. FZLLC (Free Zone Limited Liability Company) – Corporate
It is a company that is integrated by a corporation, and the shareholder is a company rather than a natural person.
How to Choose a Free Zone for your Company
There are a plethora of factors that should be considered when determining which area would be appropriate for establishing your business. Some of these factors include:
4. Licensing process of the planned activities
5. The status of the free zone under consideration
For example, Dubai Airport Free Zone and Jebel Ali Free Zone in Dubai are considered hubs for activities like export, import, processing, manufacturing, packaging, assembling, consolidation, distribution, logistics, and storage. Dubai Healthcare City is another good example. It serves as the center for the businesses related to healthcare. It not only caters for advertising and broadcasting, but also for public relations. Dubai Internet City is another famous free zone that offers web-based services, software development and IT support.
If you are planning on starting your business in a Dubai Free Zone, you are advised to consult an experience consultant. He/she will advise you on the right choice of an area that suits your business operation. A consultant also undertakes the full responsibility for arranging registration and incorporation documents for the formation of your business. You can contact us if you need more help in this regard as we also provide Free Zone business consultancy services.
How to Find a Free Zone That Is More Economical To Start Up a Company In.
Every free zone in Dubai has its own individual set-up cost, procedures and schedules. The cost of starting a business in a particular free zone depends on a number of factors, some of which are mentioned below:
1. Visa Requirements
2. Allocated budget
3. Size of the office
4. Rent cost of the company’s office
5. Size and nature of your business operations
6. Requirements of your business
It is not difficult to find out a suitable free zone in Dubai to establish your business for any requirement or constraint you have.
How Many Free Zones Dubai Has?
Currently, there are above 15 Dubai Free Zones, and more are expected soon:
1. Dubai Airport Free Zone Authority
2. Dubai Internet City
3. Dubai Gold & Diamond Park
4. Dubai Silicon Oasis
5. Dubai Knowledge Village
6. Dubai Sports City
7. Dubai Healthcare City
8. Dubai Automobile Zone
9. Dubai International Financial Centre
10. Dubai Palm Island Development
11. Dubai Textile City
12. Customs and Free Zone Corp
13. Dubai Flower Center
14. Dubai Metal & Commodity Center
15. Dubai Aid City
16. Dubai Logistics City
Upcoming Free Zones in Dubai
1. Dubai Auto Parts City
2. Heavy Equipment and Trucks Zone
3. Dubai Carpet Free Zone
4. Dubai International Arbitration Center
5. International Humanitarian City
The Estimated Minimum-Investment Needed For Starting a Company in Dubai Free Zone
The average investment required for setting up a business in majority of the free zones in Dubai is approximately AED 150,000 . Nevertheless, this amount might vary in accordance with the type of company you are starting and your requirements. It is absolutely possible to find out a suitable cost (contact us for more cheaper options) in a Dubai Free Zone in any case.
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