UAE free zone company formation
Some Important Facts about UAE Free Zone Company Formation
The United Arab Emirates or the UAE is increasingly becoming an attractive destination for company formation given its stability, low tax regime and the constant efforts to modernize its business law regime. Dubai in particular is becoming a popular city for companies to set up, especially for benefits that free zones have to offer. In this article, we would look at the various aspects of UAE freezone company formation. We will look at the steps of UAE free zone company formation and also look at some of the tips you should follow and some traps you should avoid. So, there is a lot to cover. Let’s begin!
Steps of UAE Free Zone Company Formation
The process of UAE free zone company formation can be complicated. The biggest hurdles are two:
- getting the approval and
- getting the trade license.
To get the approval, you must submit an application along with various documents such as a passport copy, education certificate, etc. You would need to submit this to the free zone authority of the free zone you are starting your business
Obtaining a trade license is a more complicated step of UAE free zone company formation. A license proves that the company meets the minimum capital requirement. To get a license, you would need the approval form, an invoice and a bank account opening letter. You would also need to show the proof for the deposit of the relevant capital amount.
The Capital requirements would differ between free zones, and it also depends on business categories and complexity of the business activity. For example, in the DIFC, the required capital deposits range from $10,000 for a firm undertaking low risk financial activities to $10,000,000 for firms undertaking much higher risk. Once the relevant capital amount has been paid for UAE free zone company formation into the bank account, it will be frozen by the bank. The bank will issue a letter stating that the capital has been submitted. You will need to take the letter to the free zone authority after which it will issue the trade license. To unfreeze the account, you must take the trade license to the bank.
If all the required documents are in order, the approval process can be pretty quick. For example, the DFSA would only take 3 months from submission. However, this would depend on the nature, scale, complexity and the risk of the business.
Tips for UAE free zone company formation
- You should hire a business consultant as they would assist with the incorporation process. A company like Arab Business Consultant would ensure that you deal with all the formalities in a hassle-free way.
- Choose the right location. You need to determine the most suitable location for the business based on the distance, costs and if appropriate, tenancy terms and conditions.
- Confirm Visa eligibility. You would need to apply for visas as they are required for most non-UAE employees seeking to live in the UAE. The number of visa that you can apply for varies depending on a number of factors including office size, nature of business, and the category of the employee or investor.
Mistakes You Should Avoid for UAE Free zone company formation
- Not checking the office space and tenancy terms and conditions: Advertised information in free zone may offer a wide choice of offices, but you need to check the things yourself.
- Not accounting for the higher annual rental rates: Rents tend to be higher in free zones. DIFC, charges up to US$ 3,000 per square meter, which is the highest in Dubai.
- Not verifying the information: You need to confirm the validity of the published information for business registrations. These rules tend to change in free zones and the local the Department of Economic Development or DED.
You can get in touch with Arab Business Consultant as they would help you get the best advice on UAE free zone company formation. Get the help from the experts and make your business a success.
