Over the past few decades, globalization has transformed the world into a wide open market and as a result of that many cities have also reformed into business centers. One of the factors that has come into play, is the idea of free zones. Dubai Free Zone has grown quickly into a new business mega hub, drawing in investors and businesses from all parts of the globe. One of the most important factors in the development of this region to its present-day extent is the introduction of free zones, which are areas that allow foreign investors to operate free of numerous restrictions. In this blog, we'll discuss what free zones are, the zones' advantages, the formation of the company, and the costs entailed.

What is a Free Zone in Dubai?

A free zone also referred to as a free trade zone, is defined as a specified area in Dubai within which foreign investors may operate without restrictions as to ownership, and shall be granted various tax exemptions and benefits. These types of zones are created to promote the growth of the targeted economy, draw foreign investments and promote certain sectors or business activities.

Benefits of Doing Business in Dubai Free Zone

Setting up a business in one of the free zones in Dubai comes with its own advantages as discussed below:

1.Total foreign equity: Free zones permit 100 percent foreign ownership of companies as opposed to the mainland companies that always involve local sponsors.

2. Tax incentives: free zone companies benefit with 0% corporate or personal income tax for a period of (usually it is 50 years), and are also exempted from custom duties for imports and exports.

3. Repatriation of Capital and Profits: there are unrestricted capital and profits repatriation hence easy funds transfer.

4. Less Complicated Steps: Most free zones have provided less complicated business incorporation steps and minimal bureaucracy thus making it easy to establish and run a business.

5. Excellent Geographical Positioning: The location of Dubai in between the east and west, having great airports and seaports makes it easy for carrying out international trade.

6. Multi-currency operations: There are no limitations on a business's operability in a variety of currencies.

How to Setup a Company in the Dubai Free Zone?

Establishing a venture within a free zone in Dubai involves a number of steps as described below:

1.Identify the Best Free Zone:

•  Identify the various free zones and select the best between them for your type of business.

•  Discuss their locations, industries they focus on, and what each one of them offers.

2.State the Business Activity:

•  All business activities that you intend to carry out will have to be explicitly stated for the pertinent free zone authority’s approval under which you will be operating.

•  All activities to be conducted shall be within the laws of UAE.

3.Approve a Trade Name:

•  confirm the guidelines for naming businesses in The United Arab Emirates.

•  Names should be retained in the registry of those dealing with free zones.

4.Fill and Submit Necessary Forms:

•  Comprehensively prepare and submit all other applicable materials which normally includes:

 - Passports of shareholders and directors

 - Business plan

 - Reference letters from banks

 - Application forms that are properly completed

5. Choose an Office:

• Decide upon the space that you need for example an office, warehouse, or operating without a physical location.

• Opt for the packages offered in the free zone or that of other licensed third parties outside the zone.

6. Attain Initial Consent:

• Suitable free zone authority’s address should be written and preliminary or initial approval awaited thereafter

7. Since Securities Accounts Are Adequately Invested, Open A Corporate Bank Account:

• Pick any domestic bank and apply for a business current account.

• Deposit the required share capital (if any).

8. Complete Registration and Licensing Accordingly:

• Comply with registration charges and manage to apply for a physical trading license. 

• Return the documents regarding the establishment of the parent companies.

9. Seek Visas:

• Processes and secures the relevant visa that includes you, the owner of the business as well as other employees.

Cost to Open a Company in Dubai Free Zone

Starting a business in a free zone in Dubai comes with its operational costs which include but are not limited to:

1. Licensing Cost: 

   - Range: AED 10,000 to AED 50,000 and above on an annual basis

   - This includes the application for the relevant license pertaining to the respective free zone

2. Registration Cost:

   - Range: AED 5,000 to AED 20,000

   - This is a one-off charge for registering the business with proper authorities

3. Office Space:

   - Virtual Office: AED 10,000 upwards per annum

   - Physical Office: AED 20,000 to AED 200,000 and above on an annual basis

   - It varies according to the size and location of the premises, and the free zone

4. Visa Costs:

   - for each Visa: $3000 to $5000

   - Visa application, medical test, and Sheik's ID are included

5. Share Capital:

   - Dependent on the free zone and company structure

   - Can be anywhere between AED 0 and AED 1,000,000 plus

6. Other Costs incurred:

   - Name reservation - AED 1,000 to AED 2,000

   - Documentation attestation – AED 2,000 to AED 5,000

Total Estimated Cost

- Cheap: AED 30000-50000 (for a small startup with virtual office)

– Medium: AED 100,000 to AED 250,000 (for a normal setup with physical office)

– Expensive: Over AED 500,000 (for start up especially for those in service sector targeting several clients)

Nevertheless, it is fundamental to state that the prices are likely to differ, depending on the nature of the free zone, type of business and the level of business operations undertaken. In some free zones, there are packages which contain all the necessary fees that will be required and usually this is cheap.

Also the budget plan should include running costs on a continual basis, for example, utilities, salaries of employees and marketing expenditures.

Start your freezone company in Dubai with a Flyingcolour business setup

The flyingcolour business setup will help you to setup your business in freezone by the following points:

• We will help you to choose the most appropriate activities that your business will require.

• We will assist you in completing the structures of the organization. 

• We shall support you in all the steps of the activities so that you are comfortable and free from outside interference in all the processes including the projects, to ensure that your business is set up easily and effectively. 

• Flying Colour will assist you in strategic and better business choices because we possess extensive knowledge and experience in most industries and know what the right order is. 

• Instead of you, our public representative officer will visit and liaise with the concerned authority to tackle the problems without any effort on your part and without having to involve you at every stage where you are not required. 

• Our Relationship officers will be in constant interaction with you with respect to the setup and progress of your business in the free zone and ensure you enjoy the best level of professional customer service. Whatever it is you are looking for, we will try to deliver it. Flying Colour is the ultimate center for your enterprise requirements.

Conclusion

There are plenty of reasons why entrepreneurs and business owners seeking growth into the Middle Eastern region and other countries would prefer to set their businesses in Dubai free zones. Dubai is strategically located and it has the best infrastructure facilities and favorable policies that attract businesses from all over the world regardless of their industries.

In as much as the process of business setup in Dubai free zone is not complicated, it is advisable to evaluate the business factors such as the needs of the business, the available finances, and the future of the business before determining which free zone and which type of business setup to go with. Flyingcolour business setup will be able to help with some of these problems and help achieve an efficient and effective setup.

As new innovations and new ways of helping businesses are continuously introduced by the government of Dubai, the chances of growth and prosperity in the free zones are expected to go even higher which encourages many international businesses to position themselves in them.