Apart from being a “perfect gateway” for global trade and having the distinct advantage of almost no tax and a commitment to increase foreign investment, the United Arab Emirates (UAE) is a highly favoured place to set up a business.

Since 1985 the UAE has identified “free zones” where it is easier to set up a business and trade.

If you became enchanted with the modern glamour of Dubai while on holiday or maybe dreamed of becoming an international business owner it might surprise you that it is not impossible to set up a business in the emirate.

With the establishment of free zones, the UAE also dedicated itself to making it as easy as possible to do this.

Why choose to establish a business in a free zone?

The emirate’s free zones have great allure and it’s easy to see why. To attract foreign trade investments and to ensure that the investors enjoy the full benefit of their business set up in Dubai, Free Zones were introduced. Foreign investors can now enjoy 100% ownership rights of the free zone business owned by them. Other advantages include zero tax, visas for investors, staff and family members with 3 years validity, no mainland labour rules and smooth document clearance processes.

Where are the free zones?

The free zones in Dubai are located close to ports or airports. There are 20 Free Zones in Dubai each with a self-contained licensing body.

Where to start?

A new venture will likely be registered as a limited liability company in the free zone where you want to do business. It is important to consider that there are some restraints on companies in a free zone. These requirements include certain proprietary rules and requirements over and above the UAE’s federal business laws and those of the local emirate. For example, businesses operating in free zones can’t do business with companies in the UAE, only with other companies in their zone or internationally.

This will restrict a business’ access to the UAE’s markets and talent pool. Free zone companies can be 100% foreign owned. Some free zones will demand full business plans. According the UAE’s official website setting up a business in a free zone can be relatively easy and requires a minimum of paperwork and time. After choosing your legal entity (mostly likely a LLC) you will be required to choose a trade name, apply for a business licence, choose office space, get pre-approvals, register your business and get your licence.

The website explains that there are three legal entities that can be used for a business in a free zone. These are a Free Zone LLC, a Free Zone Company and a Free Zone Establishment. The difference is determined by the number and nature of shareholders. The website further advises checking with the free zone authority or the Department of Economic Development about the permitted trade names. The next step, according to the website, is to apply for a business licence. The type of business that you will be permitted to do is regulated by the free zones.

Documentation

According to the UAE website you will first have to file the following documents to receive initial approval for your business.

These are:

  • A business plan
  • A copy of an existing trade licence/registration certificate if you are an existing local company
  • Coloured passport copies of the company’s shareholder/s and the appointed Manager/Director for the new company
  • Specimen signature of the company’s shareholder/s and the appointed Manager/Director for the new company
  • 2 years’ audited financial reports for corporate entity or certificate of reference from a personal bank of the individual shareholder
  • Unit title deed
  • Letter of Intent
  • Registry Identification Code Form (RIC) for Manager/Director (Original and notarised)
  • Freelancers need to submit fewer documents and would mostly only need an application for registration, a CV, a bank reference letter, and a registry identification code.

Following initial approval you must get ready to pay registration fees and license fees. For these you will need the following according to the government’s website:

  • A completed application for registration
  • Board Resolution appointing Manager/Director (Notarised and attested)
  • Power of Attorney given to Manager/Director (Notarised and attested)
  • Memorandum and Articles of Association (Notarised and attested)
  • Specimen signature of Manager/Director (Notarised and attested)
  • Passport-size photo of Manager/Director against white background
  • Share capital information

After registration the next step is to apply for licensing and visas. For this you will need a lease agreement prepared by the relevant free zone authority,

Legal Maxims add that licensing processing is done instantly in some free zones but can also take 30 to 40 days in others.