Selecting the ideal Free Zone for your business establishment in UAE is not easy, and certainly not one that should be taken lightly. After all, it will lay the foundation for your venture’s success.
With a plethora of options – over 50 Free Zones across the UAE – the decision-making process only appears to be overwhelming. Every Free Zone boasts its unique set of advantages, regulations, and facilities, which makes thorough research and a strategic approach essential.
Because of this reason, we will look at the various steps you should keep in mind to choose the right freezone setup option. By the end, you’ll have a well-rounded understanding of the factors to consider, which you can convey to your free zone company setup to help you with the entire process.
Step 1 – Defining Your Business Activity
The first step in this journey is to define the nature of your business activities clearly. Each Free Zone has its own unique list of allowable activities, which shapes the scope of what you can do within that zone. Moreover, Free Zones have distinct regulations regarding the number of business activities permitted under a single license. Your selection here can influence your license cost, and in some cases, you might need multiple licenses for your company.
A smart approach to optimize costs is by bundling activities from the same group and license type. Let’s take a closer look using the example of the Dubai Multi Commodities Centre (DMCC) Free Zone. Here, you’re granted the flexibility of up to six business activities under the same license category. An intriguing strategy is that no extra fees apply if the activity codes share the same first two digits. Additionally, operating within the same Free Zone allows you to hold different types of licenses under specific conditions.
When you speak to your freezone business setup consultant, be mindful that various Free Zones impose different regulations. For instance, Dubai South Free Zone doesn’t permit a Commercial and Service license under the same entity. These subtleties are vital considerations.
Keep in mind that legal requirements necessitate holding distinct license types. Some popular licenses include Commercial (trading), Service (consulting), Production (manufacturing), E-commerce, General Trading, and Media licenses, among others. By thoughtfully selecting your business activities, you’re setting the groundwork for a successful business journey in your chosen UAE Free Zone.
Step 2 – Determining Facility Needs
Beyond initial establishment, it’s crucial to consider your long-term expansion and workforce requirements when choosing a free zone. If you anticipate moderate growth, shared co-working spaces can serve as a cost-effective solution. However, if you think you’ll need employee hiring and frequent client interactions, a separate physical office may be more suitable. So, the best thing you can do is evaluate the availability of specialized facilities such as warehouses or retail spaces, as these offerings differ from one Free Zone to another.
Step 3 – Estimating UAE Residence Visas
As your business grows, so does the need for employees. Shared desks typically offer a limited number of UAE Residence Visas, varying between Free Zones. For instance, Dubai often allows two to three visas for shared desk setups, while Free Zones in the Northern Emirates provide higher quotas. If you choose a physical office, visas are often allocated based on square footage, generally offering one visa for every 9-10 square meters. Speak to your free zone company for a better understanding of visa allotment before making a final decision.
Step 4 – Strategic Location
You should consider your business’s logistical requirements when you look at different free zones. Start by evaluating whether proximity to sea ports or airports is crucial for efficient operations. It becomes especially significant for trading companies aiming to minimize transportation costs. For instance, selecting JAFZA positions your trading, logistics, or manufacturing company near Jebel Ali port, granting access to essential facilities.
Step 5 – Share Capital Requirement
Different Free Zones have varying share capital requirements – either authorized (no deposit) or paid-up (mandatory deposit). Determine if a share capital requirement applies to your business setup in the UAE – a common step in registration. The capital is either deposited into your company account or the UAE Free Zone authority’s account, necessitating proof of deposit. Knowing the mandatory minimum share capital for your chosen Free Zone and business activity is crucial.
Two options exist for share capital –
- Authorized: No deposit needed.
- Paid-up: Deposit and provide proof.
Minimum share capital amounts differ across Free Zones, necessitating research specific to your chosen UAE Free Zone. Unveiling these capital intricacies ensures your business meets legal and financial requirements, paving the way for a secure and compliant setup.
Step 6 – Nationality Restrictions
You need to understand if the Free Zone has any nationality restrictions on shareholders. Dubai Emirate stands out by allowing the involvement of shareholders from high-risk nationalities, offering a unique advantage in terms of business ownership flexibility.
Step 7 – Annual Audit Report
You must determine whether your chosen UAE Free Zone mandates an annual audit report, as different zones have varying financial statement requirements. For instance, DMCC Free Zone necessitates submitting an annual audit report by the fiscal year-end or as per the MOA. Moreover, the report must be processed through a UAE auditor listed on DMCC’s Approved Auditors List. Remember, missing the submission deadline results in penalties. You should factor the annual audit report submission in before making a choice.
Step 8 – Reputation with Local Banks
It’s best to go with Free Zones with a reputable track record with local banks. Consulting experienced corporate service providers can help ensure a seamless process of setting up your business and opening corporate accounts.
Step 9 – NOC Requirements for UAE Residents
If you’re a UAE resident, be aware of the No Objection Certificate (NOC) requirements. Different Free Zones have varying regulations – some necessitate a NOC from your current employer, while others do not. This step impacts your setup process and timeline significantly.
Step 10 – Budget for Annual Operating Costs
Before you make up your mind, you need to craft a comprehensive budget outlining the expenses for registration, licenses, establishment cards, rental fees, and visa charges for the first two years of operation. Accurate budgeting will ensure a smooth setup process and ongoing annual renewal.
Setup Your UAE Free Zone Business With TASC Corporate Services
Choosing the right Free Zone for your business setup in UAE is a pivotal decision that requires careful consideration. By keeping the abovementioned points in mind, you’ll be better equipped with the knowledge and insights needed to make an informed choice.
Here at TASC Corporate Services, we strive to turn these complexities into a smooth, navigable path for your business journey. With over 15 years of experience in business setup in UAE, we are uniquely positioned to guide you through every stage of the process. Our team of business setup experts is not only well-versed in the legalities of setting up a business in the UAE but also committed to ensuring your setup process is streamlined and 100% compliant. No matter your industry or the size of your business, we are here to help you focus on what you do best – running your business – while we handle the rest.
Contact us today and let our experts guide you through the process with efficiency, diligence, and full compliance.