Starting your business in one of the free zones in the UAE is a very lucrative and valuable option. It brings diverse benefits for investors and entrepreneurs who want to establish their new company in Dubai. Even experts recommend business owners to look for a free zone in the Emirates in place of mainland or offshore economic zone and that too for the right reasons.
But there are various free zones all with their own specifications, benefits, and traits making it tricky for you to choose the best free zone in the Emirates. If you are also confused about selecting a free zone for expanding your business in Dubai, don’t worry, this guide can help. Ahead, is a complete guide on how to choose the ideal free zone in UAE.
Factors to Remember Before Choosing Free Zone in UAE
Business Activity
Your chosen business activity will mainly decide which free zone is perfect for you. It is so because every free zone conducts some specific business activities. Furthermore, only a set number of business activities can be performed under a business license in the free zone. The license cost will increase if you wish to choose more business activities to conduct. Under some circumstances, you may be asked to acquire more than two business licenses for a single company. Want to save yourself from paying extra fees? You can do that by selecting various activities from the same license type and within a single activity group.
Following mainstream types of business licenses are allowed in the free zones:
- Commercial (trading) license
- Service (consulting) license
- Production (manufacturing) license
- E-commerce license
- General Trading license
- Media license
Capital Requirement
You are required to deposit the share capital amount for registering your company in the UAE. And every free zone has its own minimum share capital deposit requirements. The threshold is defined that you can get to know by the authorities of the respective free zone. Your business activity will decide your capital share to be deposited.
Two types of capital shares can be deposited:
- Paid-up: You need to deposit share capital and give proof of deposit
- Authorized: You don’t have to deposit the share capital
Facility Type
Choosing a free zone also depends on the number of employees and business activities. You can either lease or purchase office spaces or warehouses in the free zones. Plus, keep in mind that a business is only allowed to have a facility within the free zone where that company is registered.
You must consider the infrastructure, location, and availability of chosen facilities within your selected free zone. Not all free zones offer specific facilities such as retail shops or warehouses.
Going for a shared or Flexi-desk at a co-working space is suitable for those who are looking to establish their small business in the Emirates over a few years. If you are thinking about expanding your business which involves hiring employees and direct meetings with clients on a daily basis, you should go for office space in a distinct physical location.
Number of UAE Residence Visas
Choosing a free zone also depends on the number of UAE residence visas you need. Foreign nationality holders who want to open their company in the UAE or start their business need to get UAE residence visas from the designated authority. You will need the residence visas for your employees as well if they are nonresidents. Your facility type will decide the quota for visas. Also, every free zone has its own permissible number of visas. If you conduct your business activities in the Northern Emirates, you can get multiple visas. But if you have your business with a shared desk facility in Dubai, you are eligible for two to three visas. Space requirements for visas also exist: in regards to a physical office, you are issued only one UAE residence visa quota for every 9 to 10 sq. meters.
Legal Entity Type
Every free zone can register only a specific type of business entity. Similarly, Free zone authorities have their own set of guidelines on the legal entity type that a business owner can register for their company. You have the option of incorporating your business as:
- Free Zone Establishment (FZE)
- Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZ Co.)
The number of shareholders that your company can have is limited by the type of legal entity. The limitation also depends upon whether the shareholder is a legal person or a natural individual.
Nationalities of Shareholders
A free zone also has its own certain restrictions for some specific nationalities of shareholders. Therefore, you should look into the free zones’ restrictions on nationalities before choosing one. In the free zones of Dubai, you can have extremely risky nationalities as the shareholders of your company.
Location of Free Zone
There exist many businesses for whom the location of the free zone matters the most. This is especially the case of businesses involved in imports and exports of goods. Some free zones are close to the airport while others are near to the seaports. They aim primarily on providing easy and quick access to target markets of Africa and Asia based on connectivity through air, land, and sea. Location is also crucial when it comes to distance to strategic transportation routes and major stock exchanges for companies performing trade, manufacturing, or logistic business. Choosing a free zone that is strategically located will help you lower your expenses.
Competitor Analysis
Selecting the economic zone also requires a solid and in-depth competitor analysis. See where your competitors are doing business and then make a firm decision on selecting the free zone. Some free zones also require annual audit reports to be submitted when registering your company. So, ensure you have all the essential documents including financial documents before registering your business. You can also enjoy tons of benefits if you timely submit your annual audit report.
You should also have a NOC from your local sponsor as some free zones demand it.
Active Free Zones in UAE
Currently, there are over 40 free zones operational in the UAE. Some of the best free zones are:
Dubai Multi Commodities Centre Free Zone
- Located in the center of New Dubai
- Offers rental office spaces of all sizes
- Provides various helpful and innovative online services
- It is connected to the metro and the new Dubai tram
Jebel Ali Free Zone Authority (JAFZA)
- Flagship free zone
- Perfect for import and export businesses
- ISO certification
- Offers different licenses including an e-commerce license
Ras Al Khaimah Economic Zone ( RAKEZ)
- Offers different licenses including an e-commerce license
- One of the biggest economic zones
- Ideal for manufacturing-related businesses
- Located near seaport and Ras Al Khaimah airport
Umm Al Quwain Free Trade Zone
- Offers extremely fast, affordable, and flexible services
- Allows to conduct a huge range of business activities
- Simple and fast registration process
- Suitable for people who are into advanced tax planning
Sharjah Media City Free Zone (SHAMS)
- Ease of doing business
- Has the facility of in-house immigration
- Has banking partners for opening bank accounts in no time
- Offers low-cost trade license package
Sharjah Publishing City Free Zone (SPCFZ)
- Offers dual license
- First publishing and printing free zone of the world
- Offers a maximum of five business activities under the same license with no additional charges
Consult with Experts
Consulting with experts and corporate service providers will help you to yield the best answer. Riz & Mona Consultancy will assist you in choosing the best free zone that perfectly matches your business. Not only that, but we will also set up your business in the UAE. Do not hesitate to get a free consultation today.
