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Free Zone Business Setup in UAE

There are around 40 Free Zones operating in the UAE, with more under construction. Each Free Zone is governed by its respective Free Zone Authority (FZA) and is designed around one or more commercial categories. They will only offer licences to companies operating within these commercial categories.

The main attractions of Free Zone establishment are that there are no foreign ownership restrictions and companies are governed by an independent Free Zone Authority, which is responsible for issuing operating licences and regulating the activities of companies within the Free Zone. A Free Zone Company is not therefore subject to the UAE Commercial Companies Law.

It is a common misconception that a Free Zone Company is the same as an Offshore Company but, despite a number of similarities, these entities also have very different requirements and characteristics.

UAE Free Zone Residence Visas

UAE Free Zone Authorities typically offer from one to six Residence Visas per UAE Free Zone Company established – not including the Residence Visas for family members of the main visa holder – for owners, directors and employees.

The number of UAE Residence Visas available per Freezone Company will depends on the specific Free Zone, the size of business premises that are leased and sometimes on the nature of business.

Free Zone Company Residence Visas are typically issued with a validity of three years and can be renewed without limitation. addition to enabling shareholders, directors and employees to obtain residency visas in the UAE, the benefits of a Free Zone include:

  1. 100% foreign ownership (no requirement for a local partner/sponsor);
  2. 100% repatriation of capital and profits;
  3. 100% corporate and personal income tax exemption;
  4. Absence of currency restrictions;
  5. Wide variety of licensable activities;
  6. Abundant and inexpensive energy;
  7. Modern, efficient communications;
  8. Logistic efficiencies due to business cluster effect;
  9. Serviced desks and offices for SMEs and start-ups;
  10. Excellent support services.

The nature of the business activity that you intend to carry out will have a big influence on selecting the Free Zone to meet your requirements. The principal Free Zones and their licence activities include:

  1. Dubai Multi Commodities Centre (DMCC) – Commodities Trade and Exchanges;
  2. Jebel Ali Free Zone (JAFZA) – Trading, General Trading, Service, Logistics and Industrial;
  3. Dubai International Financial Centre (DIFC) – Banking, Financial Services and Legal;
  4. Dubai World Central (DWC) – Aviation, Logistics, Light industry and Ancillary Services;
  5. Dubai Knowledge Park (DKP) – Human Resources Management, Training and Personal Development;
  6. Dubai Internet City (DIC) – Internet and Communications Technology;
  7. Dubai Media City (DMC) – Media related activities;
  8. Dubai Silicon Oasis (DSO) – Information Technology, Telecom, Electronic and Engineering
  9. Dubai Healthcare City (DHCC) – Healthcare, Medical Education and Research, Pharmaceuticals and Medical Equipment;
  10. Ras Al-Khaimah (RAK) – Trading, General Trading, Service, Industrial and Educational;
  11. Fujairah Creative City (FCC) – Media, Consulting, Communications, Design and Technology.

Free Zone Company Formation Requirements

Investors can either register a new company in the form of a Free Zone Establishment (FZE) or a Free Zone Company (FZC) – an FZE has one shareholder and an FZC has two or more – or simply establish a branch or representative office of their existing or parent company based within the UAE or abroad.

An FZE or FZC is a limited liability company that is governed by the rules and regulations of the Free Zone in which it is established. The provisions of the UAE Commercial Companies Law (CCL) do not apply.

In order to begin the process of setting up a Free Zone Company, we will require the following documentation and due diligence from all shareholders/directors of the proposed new company:

  1. Certified Passport Copy and UAE Visa/UAE entry stamp (if non-resident)
  2. 2 x Proofs of Address (dated within 3 months)
  3. Bank or Professional Reference Letter
  4. Curriculum Vitae (summary of professional history)
  5. Company Application Form (which we will provide)

Please note that some UAE Free Zones may request a detailed business plan, depending on the business activity of the proposed new company. Alwahda has a variety of templates to assist you.

Once a legal presence has been established one of the UAE Free Zones, the business will need to lease premises or land and acquire an operating licence from the relevant Free Zone Authority. Different types of licences will apply in the different Free Zones.

Free Zone Companies with trade and industrial licences can only conduct business within the Free Zone or on an international basis. To sell products in the UAE itself, a UAE official agent will be required and a joint venture will need to be formed.