Which freezone is the best fit for incorporating your company in the UAE?
Choosing between Dubai and Abu Dhabi Free Zones is a crucial decision. Let us guide you in discovering the ideal setup for your unique business needs. Contact us today to explore your options and embark on a successful business journey in the UAE.
In the UAE free zones, among the various corporate forms available, three prominent options for foreign company establishment are:
1. Limited Liability Company (LLC)
2. Branch
3. Representative Office
In UAE free zones, local corporations typically adopt a structure similar to a Limited Liability Company (LLC), but the name varies by the specific free zone, such as LLC-FZ, FZCO, FZE, DMCC, and others. Large companies often opt for regional headquarters, but they can also choose branches or representative offices, depending on their business goals.
What is a Freezone?
A free zone is a specialized area created by each emirate in the UAE to attract foreign companies. To operate here, you need a license from the Free Zone Authority. There are over 40 free zones in the UAE, with Dubai being a pioneer. Dubai is a prime investment destination, offering access to Asia, Africa, and Europe, making it highly attractive to investors.
Advantages of Freezone?
Free zones provide attractive advantages for foreign companies considering them as their operational base. Here are some specific benefits of establishing a company in a free zone:
- Corporate Tax Exemption: no corporate tax or income tax, and this benefit lasts for 50 years, with the option to renew it. However, there’s a catch. Starting from fiscal years after June 2023, you might have to pay corporate tax if your profits exceed a certain amount (375,000 AED). Also, if your company gets orders from the UAE mainland, corporate tax might apply to those earnings.
- 100% Foreign Ownership: In all free zones, foreign investors can retain full ownership of their company, without the need for a local sponsor or partner.
- Repatriation of Profits: Companies operating in free zones can typically repatriate their profits and capital without restrictions.
- Customs and Import Benefits: In free zones, companies enjoy benefits such as no import duties on goods used internally, but when selling to the mainland, a 5% customs duty applies. Manufacturing firms within free zones require licenses from UAE authorities and the Ministry of Economy. Notably, if a company holds a license from any of the six GCC countries (UAE, Saudi Arabia, Oman, Bahrain, Qatar, Kuwait) and adds at least 40% value to products, customs duties on raw materials, semi-finished goods, machinery, and parts are waived, typically covering most items and destination countries within these nations, which can influence product prices.
- No Currency Restrictions: There are often no restrictions on the use of foreign currencies within free zones, promoting ease of transactions.
- Infrastructure and Facilities: Free zones provide state-of-the-art infrastructure, office spaces, and modern amenities to support businesses.
- Business Support: Many free zones offer comprehensive business support services, including legal, administrative, and logistical assistance.
- Simplified Licensing: Establishing a company in UAE free zones is usually straightforward, with requirements varying based on business activities. Competition among free zones drives the popularity of those offering efficient services, although response times can differ by zone. Mainland UAE has distinct rules.
- Including the Wage Protection System (WPS)
- Employee quotas, and Emiratization mandates (2% UAE employees for companies with 50 or more employees).
- Notably, WPS is specific to non-free zone areas. While most rules are not directly related to free zones, it’s important to adhere to UAE-wide compliance standards when forming a company.
- Networking Opportunities: Businesses in free zones can benefit from proximity to other companies, fostering collaboration and growth.
- Access to Global Markets: Free zones are strategically located, offering easy access to regional and global markets.
Freezone in Dubai
Dubai, once known mainly for oil, is now a global business hub, and the Free Zone Authority in Dubai is your key to joining the action. They simplify registration and licensing for non-resident and foreign-owned companies, making Company Formation in Dubai Free Zones a breeze.
Beyond the red tape, Dubai’s Free Zones offer incredible networking opportunities and growth potential, thanks to attractive tax structures and incentives.
Freezone in Abu Dhabi
Abu Dhabi, the UAE’s largest emirate, boasts its own set of Free Zones that cater to diverse sectors. These zones are the gateway for foreign investors looking to tap into Abu Dhabi’s vast potential. Incentives and facilities make them an attractive choice for business setup.
Challenges You Might Face in Free Zones
- Opening a Bank Account: Some people think it’s tricky to open a company bank account in free zones. This belief comes from concerns about financial problems in the past, like money laundering. While the process may seem a bit more complicated compared to regular businesses, especially for startups, it’s doable with the right guidance and following the rules.
- Different Rules in Different Free Zones: Free zones have their own rules, which can be confusing. These rules cover things like office contracts, audits, the types of businesses allowed, employee limits, and office space requirements. Picking the right free zone should match your business plans and budget.
- Limited Relocation Options: Unlike regular businesses, moving your office or facilities within a free zone can be tough. Sometimes, you might realize that your current free zone isn’t the best fit for your business. Only a few free zones, like DMCC, allow relocation, and it can take time and effort.
- Restrictions on Mainland Transactions: Free zone businesses are considered outside the UAE, so they can’t directly import goods to the UAE mainland, sell wholesale to traders, or deal directly with individuals there. These transactions need to involve local companies or agents with import capabilities. Keep this in mind when planning your business activities
Types of Free Zones
In the UAE, there are over 40 free zones, and they fall into four main categories:
- Airport Type: These are close to major airports, great for trading and aviation businesses. For example, Dubai Airport Free Zone (DAFZA) is next to Dubai International Airport, offering various facilities. They’re good for air import/export but might be smaller and distant from cities. Examples of such freezones are:
- Dubai Airport Free Zone (Dubai)
- Abu Dhabi Airport Free Zone (Abu Dhabi)
- Sharjah Airport International Free Zone (Sharjah)
- Port Type: Specialized in shipping-related activities like ship repair and manufacturing. Jebel Ali Free Zone is a notable one. They have ample space but are often far from cities. Examples of such freezones are:
- Jebel Ali Free Zone (Dubai)
- KEZAD (Abu Dhabi)
- Hamriyah Free Zone (Sharjah)
- Industry-Specific Type: These are for specific industries like media, digital, finance, and healthcare. They’re in city canters, promoting collaboration, but come with more regulations. Examples of such freezones are:
- Dubai Health Care City (Dubai)
- Dubai Internet City (Dubai)
- Dubai International Financial Centre (Dubai)
- All-Round Type: These free zones are versatile, not specializing in any industry. They can include residential and commercial areas, forming communities with various services. Examples of such freezones are:
- Dubai Multi Commodities Centre (Dubai)
- Abu Dhabi Global Market
- International Free Zone Authority (Dubai)
- Sharjah Media City – Shams
- Ras Al Khaimah Economic Zone – RAKEZ
- All-Round Type: These free zones are versatile, not specializing in any industry. They can include residential and commercial areas, forming communities with various services. Examples of such freezones are:
Introduction to UAE Free Zones
- DAFZA – Dubai Airport Free Zone
- Type: Airport
- Location: UAE (Dubai)
- Establishment Fee (Starting from): AED 22,000 ~
- Time Frame: 10 to 20 business days
- Key Features: Suitable for large companies, home to over 1,300 companies, convenient for import/export by air, diverse industries.
- JAFZA – Jebel Ali Free Zone
- Type: Port
- Location: UAE (Dubai)
- Establishment Fee (Starting from): AED 47,800 ~
- Time Frame: 14 business days
- Key Features: One of the world’s largest free zones, ideal for large companies, diverse industries.
- ADAFZ – Abu Dhabi Airport Free Zone
- Type: Airport
- Location: UAE (Abu Dhabi)
- Establishment Cost (Starting from): AED 35,000 ~
- Time Frame: 3 to 4 weeks
- Key Features: Located near Abu Dhabi’s airport, logistics companies’ hub.
- KEZAD – Khalifa Economic Zone Abu Dhabi
- Type: Port-type
- Location: UAE (Abu Dhabi)
- Establishment Fee (Starting from): AED 9,450 ~
- Time Frame: 10 business days
- Key Features: Suitable for large companies, world-class transportation infrastructure.
- SAIF – Sharjah Airport International Free Zone
- Type: Airport
- Location: UAE (Sharjah)
- Establishment Fee (Starting from): AED 10,800 ~
- Time Frame: 1-2 Days
- Key Features: Adjacent to Sharjah’s international airport, relatively low company establishment costs.
- HFZA – Hamriyah Free Zone Authority
- Type: Port
- Location: UAE (Sharjah)
- Establishment Fee (Starting from): AED 11,000 ~
- Time Frame: 1-2 Days
- Key Features: Suitable for large companies, provides vast industrial land.
- DHCC – Dubai Healthcare City
- Type: Industry specialized
- Location: UAE (Dubai)
- Establishment Fee (Starting from): AED 21,600 ~
- Time Frame: 10 business days
- Key Features: Suitable for small and medium-sized enterprises, offers core healthcare services.
- I.C. – Dubai Internet City
- Type: Industry specialized
- Location: UAE (Dubai)
- Establishment Fee (Starting from): AED 18,500 ~ 7 business days
- Time Frame: 7 business days
- Key Features: Middle East’s largest information and communication infrastructure hub.
- DIFC – Dubai International Financial Centre
- Type: Industry specialized
- Location: UAE (Dubai)
- Establishment Fee (Starting from): AED 34,000 ~ 7 business days
- Time Frame: 7 business days
- Key Features: Major financial hub in the Middle East, Africa, and South Asia.
- ADGM – Abu Dhabi Global Market
- Type: Industry specialized
- Location: UAE (Abu Dhabi)
- Establishment Fee (Starting from): AED 38,000 ~
- Time Frame: 10 business days
- Key Features: One of the world’s leading international financial centres.
- DUCAMZ – Dubai Used Car Complex
- Type: Industry specialized
- Location: UAE (Dubai)
- Establishment Fee (Starting from): AED 14,000 ~
- Time Frame: 7 business days
- Key Features: Focused on re-exporting used cars to Asian and African markets.
- DMCC – Dubai Multi Commodities Centre
- Type: All-round
- Location: UAE (Dubai)
- Establishment Fee (Starting from): AED 35,484 ~
- Time Frame: 7 to 14 business days
- Key Features: Suitable for small and medium-sized enterprises, highest number of corporate setups in Dubai.
- IFZA – International Free Zone Authority
- Type: All-round
- Location: UAE (Dubai)
- Establishment Fee(Starting from): AED 14,900 ~
- Time Frame: 5 business days
- Key Features: Suitable for small and medium-sized enterprises, allows company setup without an office.
- Shams – Sharjah Media City
- Type: All-round
- Location: UAE (Sharjah)
- Establishment Fee (Starting from): AED 5,750 ~
- Time Frame: 5 business days
- Key Features: Suitable for freelancers and small businesses, multi-purpose media city in Sharjah.
- RAKEZ – Ras Al Khaimah Economic Zone
- Type: All-round
- Location: UAE (Ras Al Khaimah)
- Establishment Fee (Starting from): AED 8,240 ~ 3 business days
- Time Frame: 3 business days
- Key Features: Suitable for freelancers and small businesses, offers customizable setups.
- DWTC – Dubai World Trade Centre
- Type: All-round
- Location: UAE (Dubai)
- Establishment Fee (Starting from): AED 20,000 ~
- Time Frame: 5 to 7 business days
Set up and operate your company with Biz Easy
Biz Easy is your one-stop-shop for high-quality services designed to kickstart your freezone company in the UAE. We understand the ever-evolving business environment of the UAE, and our team is dedicated to helping you not only establish your presence but also thrive in this dynamic country.
Expedite your entry into the UAE freezone today! Call us at +971547180052 or send a WhatsApp Message on +971547180052. You can also drop in an email info@bizeasy.co and get the answers to your queries.
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