Beginner’s Guide to Dubai Freezone Company Formation
Dubai is one of the financial epicenters of not only the Middle East or Asia, but for the entire world. Today, DubaiA is home to a thriving business environment which beckons investors from all over the world. One of the biggest attractions for entrepreneurs is the freezones of Dubai. Now, you might have heard about Dubai freezones, but how can they be helpful for your entrepreneurial aspirations? How can you start a company? In the following article, we are going to take a look at all the important things that you should know before planning a business formation in Dubai freezones.
What are Dubai Freezones?
Freezones or Free-trade zones (FTZs) are Special Economic Zones (SEZ) set up in Dubai with the aim of offering tax concessions and customs duty benefits to foreign investors. FTZs in Dubai and the UAE are governed according to a special framework of rules and regulations which is specifically designed to promote business and economic activities. It is important to note that each Freezone is designed for one or more related industry categories and only offers licenses companies within those categories. A majority of the free zones in Dubai broadly offer trading, services, and industrial licenses to investors looking to set up their businesses. Today, there are more than 30 Free Zones operating in Dubai itself.
What are the Benefits of Dubai Freezone Company formations?
There are a number of advantages of Dubai Freezone company formation. This is why the concept has got such popularity among the entrepreneurs from all across the world. Some of the biggest advantages are:
- 100% Ownership
- 0% Tax
- A company can be formed by only one individual
- You can open bank account with a reputed in Dubai
- 100% Secrecy maintained
- Lower Renewal Charges
- The company can be liquidated anytime and you would be allowed to fully repatriate all the amount
- You can do international business, engaging multiple activities
- You are free to hold Properties
What the Steps of Starting a Freezone Company in Dubai?
Setting up a business in a free zone is comparatively easier that starting a company in Dubai mainland. One of the biggest advantages is that freezone authorities require minimum paperwork and duration. Here are the key steps for business setup in Dubai freezone.
- Determining the type of legal entity
- Choosing a trade name
- Applying for a business license
- Choosing an office space
- Get pre-approvals, register your business and get your license
Let us now take a detailed look at each of the steps so that you can know what to expect at each of the stages.
STEP 1: Determining the Type of Legal Entity
The first thing that you need to do is to determine the type of legal entity your business would take up. Most of FTZs allow you to set up one of the two types of companies:
- Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZ Co.)
- Free Zone Establishment (FZE)
The differences between the two lie in the number of shareholders. There are certain other differences as well. Please note that not all free zones would allow you register both types of companies. You need to check with free zone authorities administering the FTZ about the type of company they allow to register.
STEP 2: Choosing a Trade Name
The next step is choosing a trade name or company name for your business entity. Usually, you need to check either with the respective free zone authority or with the Department of Economic Development (DED) about the permitted trade names. You also need to ensure that whether the intended name has not been already registered.
According to the DED Guidelines, you must ensure that your company name –
- Does not violate the public morals or the public order of the country
- Is followed by the legal form of the company, for example (LLC, FZE, DMCC etc.)
- Is not previously registered
- Is compatible with the required type of activity and legal status
- Does not contain names of any religion, or governing authority, nor names or logos of any external bodies.
Certain FTZs might have their own requirement when it comes to the names. For example, as per the website of twofour54 (an FTZ), your company cannot have ‘Abu Dhabi’ and/or ‘United Arab Emirates’ in the name of the FZ-LLC or the branch.
STEP 3: Choosing an office space
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. Different freezones have different options. For example, some might offer you packages where as others might offer you offices just as you would rent them. You need to check with the concerned FTZ authority to know about the options they have.
STEP 4: Get pre-approvals, register your business and get your license
This is the final step of the process. However, it is not one single step but three steps rolled into one. You need to apply with the necessary documents. The list of documents you need to furnish would depend on the type of business activity, the type of company and the requirements of the free zone authority. Below is a general guideline of steps and documents needed for approvals.
- Initial approval
First, you need the initial approval. For this, you need to provide:
- Completed application form
- A detailed Business plan
- Copy of existing trade license/registration certificate (applicable for local company only)
- Color passport size photos of the company’s shareholder/s and the appointed Manager/Director for the new company
- Specimen signature of the company’s shareholder/s and the appointed Manager/Director for the new company
- 2 years’ audited financial reports for corporate entity or certificate of reference from a personal bank of the individual shareholder
- NOC from current sponsor (for individuals)
- Unit title deed
- Letter of Intent
- Registry Identification Code Form (RIC) for Manager/Director (Original and notarized)
- Freelancers need to submit fewer documents. In most cases, they need to submit:
- Application for registration
- Bank reference letter
- Registry Identification Code Form (RIC) (Original and notarized)
After getting initial approval, the next stage is Registering and paying registration fees and license fees. The fees depend on the type of license required. Then, you need to submit:
- Completed application for registration
- Board Resolution appointing Manager/Director (Notarized and attested)
- Power of Attorney given to Manager/Director (Notarized and attested)
- Memorandum and Articles of Association (Notarized and attested)
- Specimen signature of Manager/Director (Notarized and attested)
- Passport-size photo of Manager/Director against white background
- Share capital information
- Licensing and visa process
The only thing left to do now is apply for license and going through the visa process. At this stage:
- Lease agreements will be prepared by the authority
- Then trade license will be issued
- Visa processing will start after completing the above stage
Getting the Help You Need
Company formation in Dubai freezone becomes a whole lot easier if you have a professional and reliable consultant by your side. They deal with a majority of hassles, thereby simplifying the process of company formation. One of the leading names in the field is ARAB BUSINESS CONSULTANT (ABC). They have years of experience in the field and they have successfully helped numerous entrepreneurs to start their own successful business in one of the freezones of Dubai.
They would help you choose the right free trade zone as per your requirements and deal with all the paperwork. They would also assist you in every step of the process. So, get the help from the experts and make the process of Dubai freezone company formation a whole lot easier.