For years, Dubai and the United Arab Emirates have attracted entrepreneurs from all over the world. This attractive destination provides access to dynamic and emerging markets.
Despite this, setting up a business in the United Arab Emirates can be very complicated if you do not have proper guidance. Today, there are a multitude of possible options and structures, and you could be completely lost when faced with such a wide range of choices.
But the main reason entrepreneurs come to set up their business in Dubai is the possibility of establishing a company in a free zone and owning 100% of its shares.
What is a free zone?
A free zone is also known as a free-trade zone. These are geographically defined commercial areas where companies can operate and benefit from preferential tax, customs, and import regimes. But the greatest advantage of setting up a company in a free zone is the possibility for foreign nationals to own 100% of the company. This means that you do not need a sponsor or a local partner holding 51% of your company's shares to open your business in the country! And that is not all: these types of companies offer numerous tax advantages.
There are many free zones in the United Arab Emirates, more than 45 in total, with broadly similar characteristics. However, each has its own requirements, particularly regarding permitted activities.
We have prepared a guide to help you choose the
best free zone for your business.
How do you open a company in a free zone in Dubai?
Define the emirate in which you will open your company
There are seven (7) emirates in the United Arab Emirates. All of them offer the possibility of establishing a company. Each emirate has one or more free zones.
The northern emirates tend to have lower free-zone company formation fees than Dubai or Abu Dhabi, but one thing to bear in mind is that opening a bank account afterward will also be more complicated. Each has its advantages and disadvantages.
Define your business activity
Each free zone offers its own range of activities from which an entrepreneur can choose when setting up a company.
In some cases, the authority may allow several activities under the same license, while others do not. In general, however, the more activities you choose, the more expensive the license will be.
The best approach in this situation is to find a free zone that allows all the activities you need under the same license.
For example,
DMCC (Dubai Multi Commodities Centre) allows you to conduct up to six commercial activities under the same license.
Here is a non-exhaustive list of the most popular types of commercial licenses in the United Arab Emirates: service license (consulting); e-commerce license, media license, import-export license, and general trading license.
Once you have selected the right activity, you can begin the process of establishing a company in the zone you have chosen.
Define the number of visas
As an entrepreneur, you will need to obtain a residence visa to stay and operate legally in the United Arab Emirates. Each license entitles you to a certain number of visas, but once you exceed 4 visas, you will be required to rent a physical office. Under free-zone regulations, you must rent an office whose minimum area depends on the number of employees, with a minimum of eight square meters per employee. For fewer than 4 visas, you may have a shared desk.
The quota and cost of a visa vary from one zone to another.
Establish your budget
Contact a firm like ours to obtain full details on the fees applicable to registering your company, the cost of the license, office rental costs, residence visas (for shareholders, employees, and families), all for the first year of operation and subsequent years.
At Merritt Middle East, we have a team of experts specializing in establishing companies in Dubai and the other emirates, as well as residence visas and ongoing support for your business.
What are the advantages of setting up a free-zone company in Dubai?
Dubai is a renowned global business hub and one of the most popular destinations for a business project in a free zone.
The United Arab Emirates offer numerous advantages to businesses, including a favorable tax regime, a strategic location at the crossroads of East and West, and a business-friendly environment.
The advantages of a free zone include 100% foreign ownership, 100% exemption from personal income tax, 100% exemption from corporate tax, and 100% exemption from customs duties.
It is therefore easier and less expensive to do business in a free zone. These zones often have modern infrastructure and facilities that make conducting business easier. Finally, companies in free zones can benefit from being close to other businesses in the same industries, which can facilitate networking and collaboration.
There are therefore many reasons to choose Dubai as the location for your business, but the main advantages are tax incentives and the ease of doing business.
What are the disadvantages of a free-zone company in Dubai?
Establishing a business in a free zone also has certain disadvantages. First, companies are required to rent premises within the free zone rather than elsewhere in the Emirates.
This can be costly and limit a company's growth potential.
A free-zone company cannot conduct business directly with a mainland company. If this is the case, depending on your activity, you will have to go through a distributor registered in the mainland.
Although exempt from taxes, it is important to note that a 5% customs duty applies to imports into the local market.
Finally, companies located in a free zone may be subject to different laws, which are sometimes less favorable than those applicable to companies located on the mainland.
Our support for establishing a company in a free zone
Our firm, based in Dubai, has been renowned as one of the best firms for setting up free-zone companies in the United Arab Emirates since 2009.
Our French-speaking team supports you and handles all the administrative procedures involved in setting up your company and obtaining your residence visas.
Our office consists of a team of lawyers, accountants, and PROs. By providing ongoing support for your company, we will be the primary point of contact with the authority where your company is registered.
Please do not hesitate to contact us for more information about the company formation process. You can reach us by email at
support@merritt.group.
