Company Setup

UAE Free Zone Company Formation

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Unique advantages of UAE free zone company formation

Choosing a free zone can depend on many factors: the nature and type of business, the size, flexibility and availability of office space, location, and pricing. But the decision for company formation in UAE free zone should be simple enough.

UAE free zones have become a popular form of business registration in the UAE, where 100% foreign ownership is allowed. A free zone, or free trade zone, is an area with special tax-free status and low trade barriers where goods can be manufactured, imported/exported, handled and reconfigured based on customer needs.  Free trade zones are generally located in strategic geographical locations like national borders, international airports, and major seaports, to maximize trading advantages.

The UAE government has set up multiple free zones in the Emirates, each designed for specific business activity. UAE free trade zones offer lucrative facilities to non-resident corporates, like the convenience of single-window administration, no bureaucratic red tape, and 100% ownership. There are more than 40 free zones situated all over the United Arab Emirates that have attracted foreign direct investment in the form of 200,000 companies contributing to the GDP growth. The free trade zones vary in their focus, setup costs and paperwork needed, but the basic requirements are the same.

Benefits of Business Setup in UAE Free Zones

There are many benefits to starting a business in the UAE. But the UAE free zones offer some additional advantages if an investor decides to set up a business in one of the free zones. They are:

  • 100% foreign ownership
  • 100% repatriation of capital and profits
  • 100% exemption from personal and income taxes
  • 100% exemption from corporate tax subject to fulfilment of certain conditions
  • 100% free transfer of funds, and no foreign exchange controls
  • Exemption from all import and export duties
  • Low freight charges
  • Abundant and inexpensive energy
  • Inexpensive workforce, and easy recruitment procedures
  • Efficient communication procedures and single-window administration
  • Liberal government policies and legal framework
  • The timely and streamlined immigration process
  • Sponsorship and visas for an affordable skilled workforce
  • Flexibility to operate 24/7
  • Freehold offices available for sale or lease
  • Ready-made offices, factories, and warehouses
  • Easy start-up and licensing procedures
  • Unique industry clustering and purpose-built infrastructure
  • 2-years UAE residence visa
  • No restrictions on hiring expatriates

Things to Keep in Mind about a Freezone Company in UAE

The following things should be kept in mind before setting up a UAE Freezone company:

  • Physical presence is not required in some free zones during the company formation, it’s only required during the visa process
  • Cannot easily work with Government agencies directly
  • Value Added Tax is not applicable for business outside the country
  • The corporate tax that is starting from June 2023, 0% corporate tax subject to fulfilment of certain conditions The business type could be B2B anywhere n UAE and B2C in the free zone and internationally.

Types of Entities Allowed for Free Zone Company Formation UAE

Business setup in the UAE free zones is smooth and hassle-free, as the Emirates government has eased the company formation process in the UAE to draw maximum foreign investors with the minimum capital investment.

There are mainly three types of entities one can set up in the UAE free trade zones, namely,

  • Branch of a foreign or local company
  • Free Zone Establishment (FZE), with a single shareholder

Free Zone Company (FZC), with more than 1 shareholder

Types of Licenses Available in the UAE Free Zones

Business formation in UAE free zones is incomplete without procuring a business license. Following types of business licenses can be obtained by applicants in the UAE free zones:

1. General Trading License
Allows investors to trade in all kinds of products

2. Trading/Commercial License
Grants a time-limited authorization to perform industrial, commercial, or consulting activities.

3. Service License
Allows law firms, accounting firms, and business consultancy firms to operate

4. Industrial License
Permits importing raw materials, manufacturing goods, and exporting finished products, across global boundaries

5. Warehousing License
Investors can avail this license to take warehousing facilities on lease for distribution, packaging, and storage of goods

6. Manufacturing License
Permits applicants to manufacture products

How to Set Up a Business in the UAE Free Zones?

Company set up in free zones is not subject to the commercial company’s law. Free Zones in the UAE are outside the jurisdiction of the UAE and have rules and regulation set by concerned free zone authorities. These free zones offer an excellent business opportunity for investors from all around the world and provide a liberal working environment and easy company setup procedures. The procedure is plain and simple

Procedure for UAE Free Zones Company Setup

1. Determine the type of legal entity
Determine which type of entity you want to set up in any of the free zones. The capital requirement for such entity depends upon that free zone where you want to form a company; for example, there is no minimum capital requirement for setting up a business in some freezones whereas in other free Zone, you are supposed to have a minimum share capital requirement.
2. Choose a Trade Name
After deciding the type of legal entity, choose a trading name for your company. Note that you ought to cross-check with the respective free zone authority about the permitted trade names and whether the intended name has already been registered.
3. Apply for a Business License
After choosing a trading name and registering the same in the free zone authority’s portal, you must apply for a business license. The list of the different business licenses issued by the free zone authorities has been stated above. The type of business license depends on the primary activity of your business. You need to submit the supporting documents while applying for the license.
4. Choose an Office Space
Free zone authorities provide flexi-desk office service to support start-ups. You can either buy or lease office spaces in free zones. Office requirements depend on the number of employees and type of business activity of your company.

5. Get Pre-Approval, register your Business, and Get the License
Get the initial approval and the related business approvals from the specific authorities, register your business at the portal, and get your license. It will merely take 5-10 days to get done with this process. Once you get the license, you are good to start your business.

Documents Required to Set Up a Business in the UAE

A few documents need to be translated into English, attested, and notarized where it is necessary to do so.

General Documents
• Duly filled application license form
• Address of the shareholders
• Business plan
• Passport copies of the partners and business managers
• Original bank reference letters and license of the partner’s existing company, if applicable
Documents for Consultancy License
• A copy of the degree or diploma certificate mentioning the desired activities, or the experience certificate [any of these documents is a must]
Documents for Industrial License
• Business feasibility study
• Existing company profile
• Duly filled form for the investor’s project profile

Documents for Branch of Companies
• Attested copy of the registration certificate, incorporation certificate, and the Memorandum and Articles of Association (MAA)
• Original Board Resolution that guarantees financial commitment of the branch
• Original Power of Attorney of a legal representative, and their passport copy
• Last 3 months’ bank statements of the parent company

Frequently Asked Questions

In most free zones, you do not need a local partner or sponsor. You can have 100% foreign ownership. However, there are exceptions in some sectors.

Minimum capital requirements vary depending on the chosen free zone and business activity. Some free zones have no minimum capital requirement, while others may have specific thresholds.

Yes, you can open a corporate bank account in the UAE for your Free Zone Company. We can assist you in this process.

Free Zone Companies typically enjoy full exemption from corporate and personal income taxes for a specified period (often 15 to 50 years) and can benefit from zero customs duties on imports and exports.

The timeline varies by free zone but typically ranges from a few weeks to a few months. Factors like documentation readiness and approval times can affect the process.

Yes, most free zones require you to lease office space or a flexi-desk facility within the zone. Virtual office options are available in some cases.

Yes, you can apply for employment visas for yourself and your employees. The number of visas may depend on the office space size and business activity.

You’ll need to renew your company’s license annually, pay the associated fees, and submit any required documents to maintain compliance.

Free Zone Companies are primarily set up for business within the UAE. To conduct business internationally, additional licenses or entities may be required.

 Costs vary based on the free zone, type of license, and other factors. It’s important to get a customized cost estimate based on your specific requirements.