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UAE Free Zone

UAE free zones

How to set up a company in UAE free zones?

In UAE, the Free zones are considered as a boon for investors as they offer a catena of benefits to boost international businesses. While working in these free zones, the foreign investors have the privilege to possess complete ownership (100% ownership) and various tax exemptions. Presently, more than 50 free zones are located in various parts of the country.

What is a free zone?

A Freezone is a selective demarcated geographical area that enjoys various business incentives and the laws applicable to these areas are normally different to the jurisdiction in which it is based. The main objective of setting up a freezone is to encourage the development of a business, boost foreign investment, increase employment and diversify the economy.

Each free zone is established by a specific decree and it has its own licensing authority and corporate regulator. Further, they are governed by different sets of rules and regulations. The entities working in the UAE free zones are not allowed to operate commercially on the UAE mainland.

Major benefits of setting up a company in Freezone are as follows-

  1. The foreign companies within free zone are not subject to any tax or custom duty.
  2. The incorporation process is very quick and normally completes in 15 days.
  3. The foreign investors can hold 100% ownership in the free zone.

Procedure to set up a company in free zone

  1. Determining the legal type of the company

In the free zone, mainly two types of entities operate; namely, Free zone company and Limited liability company (LLC). The option to set up an LLC is only available in selective free zones, therefore, free zone entities are normally preferred by the foreign investors.

  1. Company name registration

After determining the legal nature of the company, the investor needs to choose and register the name of the company with the free zone authority. This is also known as trade name registration.

However, it is important to note that there are certain restrictions while choosing the name. The name shouldn’t be offensive; the words refering to Allah, religious groups, political groups, etc should be strictly avoided. If you want to name your company after a person, it must be the partner or director of the company with their full names. Further, the name shouldn’t be identical or in resemblance with any existing company.

  1. Business license

After the business name is approved, the investor needs to go for business license application. It is important to note that the required documents vary in different freezone.

One of the essential conditions is that the shareholder needs to submit a copy of his passport, which must be valid for a minimum period of 6 months. In some free zones the entire applicable process can be done virtually whereas some requires the interested investor to complete the formalities physically.

The shareholder also needs to submit the Memorandum of Association (MOA) of the proposed company.  Normally, the authority can approve the same within 10 days. After setting up the company, can make a request for the company establishment card (CEC). The investor can make a request for e-channel registration after the CEC is available.

Main free zones in UAE

Some of the major free zones of UAE are as follows-

  • Dubai International Financial Centre (DIFC)
  • Dubai Airport Freezone Authority
  • Dubai Design District
  • Jebel Ali Free Zone
  • Ras Al-Khaimah

Final thoughts

The process of incorporation is quite smooth. However, the interested person needs to take assistance of best qualified company lawyers while drafting Memorandum of Association and other legal documents to avoid any further disputes.

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