Dubai Free Zones

Dubai Free Zones

Dubai free zone companies do not require a UAE-based shareholder. While office rental is mandatory, hiring staff is not. Other benefits include low bureaucratic requirements for establishment; fewer restrictions on hiring staff and no import/export taxes. High-quality infrastructure facilities and energy and public services at competitive prices. An FZ company must restrict its commercial activities to the zone itself and therefore cannot provide services to customers in Dubai or within the UAE. Violation of these provisions may result in a fine of up to 35,000 USD. Alternative options are available for FZ-based companies to engage in trade within the UAE.
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A Comprehensive Guide to Dubai Free Zone Company Formation

Dubai's free zones offer a wide range of incentives for investors from all over the world, making them a cornerstone of the UAE's business-friendly environment. World Company Setup assists with all aspects of setting up a Free Zone (FZ) business, including help with:

Our staff will handle all the formalities without our clients needing to visit Dubai.

The following information will help you decide if establishing a business in a Dubai free zone is beneficial for achieving your business goals:

Key Considerations for Dubai Free Zone Company Registration

  1. An FZ company is a legally tax-exempt entity established by foreign investors who want to use Dubai as a gateway to consumer markets in Africa and the Middle East. The corporate tax exemption minimizes withholding tax on remittances to other countries, and no customs duties are applied to goods imported into and exported from the FZ.
  2. Dubai free zone companies do not require a UAE national shareholder. While renting a low-cost office is mandatory, hiring staff is not compulsory.
  3. Other benefits include minimal bureaucratic requirements for incorporation, fewer restrictions on staff recruitment, no import/export taxes, high-quality infrastructure facilities, and competitively priced energy and utilities.
  4. An FZ company must limit its commercial activities to the zone itself and therefore cannot serve customers in mainland Dubai and within the UAE directly. Violations of these provisions can result in fines of up to US$35,000. There are alternative options that allow FZ-based companies to trade within the UAE, such as using a local distributor.
  5. The paid-up share capital of an FZ company ranges from US$14 to US$300,000, depending on the chosen FZ and company structure. After incorporation, the capital can be used to finance the company's daily business activities.
  6. Company licenses can be renewed annually after complying with FZ laws, including the submission of audited financial statements to the authorities where required.

Trading with the UAE Mainland

A Freezone company in Dubai can:

  1. Conduct business with and issue invoices to clients located outside the UAE or in other UAE free zones.
  2. An FZ company cannot conduct business on its own with customers on the UAE mainland (those located outside of free zones). Instead, the FZ company must appoint a local service agent to sell and distribute its goods and services on its behalf within the city.
  3. A 5% customs duty will be levied on the sales of free zone companies in the UAE when goods are moved to the mainland.

Legal Considerations

  1. A Dubai FZ company can be established using one of the following 3 entities: a Free Zone Establishment (FZE); a Free Zone Company (FZ-LLC), or a branch. While FZE and FZ-LLC have limited liability, a branch offers unlimited liability for the parent company.
  2. All three entities allow 100% foreign ownership and applications for Dubai free zone visas for foreign employees. An FZE is equivalent to a one-person company (OPC), allowing only 1 shareholder and 1 director. However, an FZ-LLC requires at least 2 shareholders.
  3. Dubai Free Zone entities are required to lease office premises in the zone, submit annual audited financial statements, and renew their business license annually.
  4. Additionally, a branch must maintain a deposit with the Dubai government until it is officially deregistered.
  5. All companies registered in the UAE must create and maintain a register of their ultimate beneficial owners (UBOs) and submit the UBO data to the relevant registrar or licensing authority.

List of Major Dubai Free Zones

DUBAI FREE ZONES
1. Dubai Studio City (DSC) 2. Dubai Airport Free Zone (DAFZA)
3. Dubai Media City (DMC) 4. Dubai Multi Commodities Centre (DMCC)
5. Dubai Production City (formerly IMPZ) 6. Energy and Environment Park (Enpark)
7. Dubai Knowledge Park 8. Dubai Biotechnology and Research Park (DuBiotech)
9. International Humanitarian City 10. Dubai Textile City
11. Dubai International Financial Centre (DIFC) 12. Dubai Flower Centre
13. Dubai Outsource City 14. Dubai Healthcare City
15. Dubai International Academic City 16. TechnoPark
17. Gold and Diamond Park 18. Dubai Silicon Oasis
20. Dubai Internet City 21. Dubai Logistics City
22. Dubai Cars and Automotive Zone (DUCAMZ) 23. Jebel Ali Free Zone (JAFZA)
24. Heavy Equipment and Trucks Zone 25. Dubai Maritime City

Dubai Free Zone Comparison Table

Dubai has over 30 free trade zones catering to every industry sector. Among the most popular are Dubai Multi Commodities Centre (DMCC-JLT), Dubai Airport Free Zone, Jebel Ali Free Zone, Dubai Internet City, Dubai Media City, and the Dubai International Financial Centre.

 

Dubai Multi Commodities Centre (DMCC)

Dubai Airport Free Zone (DAFZA)

Jebel Ali Free Zone (JAFZA)
Our Recommendation (in order of preference) 1 2 3
Summary      
Total World Company Setup Consultant Fees (US$) 28,786 22,063 26,245
Incorporation Time 3 months 3 months 3 months
Cheapest Annual Office Rent Estimate (US$) 6,000 10,700 16,500
Annual Warehouse Rent Estimate (US$) 24,500 25,000 25,000
Paid-up Capital Estimate for Free Zone Company (US$) 14,000 (per shareholder) 272 (per shareholder) 0
Paid-up Capital Estimate for Free Zone Establishment (US$) 14,000 272 0
Virtual Office Permitted Yes No No
Travel required for all shareholders for incorporation No No No
Legal Considerations      
Minimum Number of Shareholders 1 1 1
Minimum Number of Directors 1 1 1
Corporate Shareholders Permitted Yes Yes Yes
Corporate Directors Permitted No No No
100% Foreign Ownership Permitted Yes Yes Yes
Public Register of Shareholders and Directors No No No
Tax Considerations      
Exempt from corporate tax on earnings Yes Yes Yes
Annual tax return to be submitted No No No
Statutory audit required Yes Yes Yes
Access to UAE double tax treaties Yes Yes Yes
Other considerations Yes No No
Permitted License Types      
Can lease office premises outside the free zones No No No
Is import of raw materials permitted? Yes Yes Yes
Is export of goods permitted? Yes Yes Yes
How long does work permit approval take? 4 weeks 4 weeks 4 weeks
Free zone work permit fee per person 4,950 4,950 4,950

Other UAE Dubai Free Zones Comparison Table

 

RAKEZ Free Zone

Sharjah Airport International FZ (SAIF)
Our Recommendation (in order of preference) 1 2
Summary    
Total World Company Setup Consultant Fees (US$) 21,800 29,890
Incorporation Time 3 months 3 months
Cheapest Annual Office Rent Estimate (US$) 2,000 12,500
Annual Warehouse Rent Estimate (US$) 25,000 27,000
Paid-up Capital Estimate for Free Zone Company (US$) 0 41,000
Paid-up Capital Estimate for Free Zone Establishment (US$) 0 41,000
Virtual Office Permitted Yes No
Travel required for all shareholders for incorporation No No
Legal Considerations    
Minimum Number of Shareholders 1 1
Minimum Number of Directors 1 1
Corporate Shareholders Permitted Yes Yes
Corporate Directors Permitted No No
100% Foreign Ownership Permitted Yes Yes
Public Register of Shareholders and Directors No No
Tax Considerations    
Exempt from corporate tax on earnings Yes Yes
Annual tax return to be submitted No No
Statutory audit required Yes Yes
Access to UAE double tax treaties Yes Yes
Other considerations Yes No
Permitted License Types    
Can lease office premises outside the free zones No No
Is import of raw materials permitted? Yes Yes
Is export of goods permitted? Yes Yes
How long does work permit approval take? 4 weeks 4 weeks
Free zone work permit fee per person 4,950 4,950

Frequently Asked Questions

What are the benefits if I set up a free zone company in Dubai?

Dubai free zone companies offer several advantages, such as no requirement for a resident shareholder (meaning an FZ company can be 100% foreign-owned), no obligation to hire staff, no customs duties on goods entering/leaving the zone, and high-quality infrastructure.

How many directors will I need to appoint to register in Dubai free zones?

Only one director is required for Dubai Multi Commodities Center, while 2 directors are required for both Dubai airport free zone and Jebel Ali free zone.

How many shareholders are required to incorporate in Dubai free zones?

Only one shareholder is required to set up a company in Dubai Multi Commodities Centre, whereas 2 shareholders are required to set up a company in both Dubai airport free zone and Jebel Ali free zone.

How to register a company in Dubai free zones?

World Company Setup Consultants obtain the necessary permits from the relevant authorities for the establishment of a free zone company in Dubai. They will keep the company name confidential, prepare the incorporation documents, have the documents notarised in public courts, apply for the licence and register the company for tax purposes, and vii) obtain work visas for our customers and employees.

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