UAE: How to start a business in the free zone

Although the UAE is prominently known for its oil and petroleum industries, it has expanded its proficiency to advanced businesses. The UAE maintains an advanced position in being a central point for global business activities.

A free trade zone is an economic jurisdiction earmarked for exchanging certain goods and services with preferable import and export customs with other operational benefits. Each free zone is subject to a unique legal and regulatory structure that monitors business operations.

With its global business setup ecosystem, the UAE has over 45 free zones that ensure an influx of international investors and entrepreneurs for specific industrial sectors. Thus, free zones provide a flexible business set up for foreign investors with international standards and a dynamic regulatory framework.

Why a free zone?

The ease of business setup with the favourable tax environment offered by the Free Zone makes it an even more proficient place for a company.

Here we list reasons to set up business in the free zones:

1. Zero personal income and corporate taxes

2. Fast and seamless business setup process

3. Free zones exemption for import and export duties

4. Many Free zones such as Meydan and IFZA Free Zone, RAK, E-commerce City, SHAMS, SPC, Humriyah, DMCC, Kizad, and TwoFour54 offer business setup options that allow 3 to 6 visas without renting a physical space.

Besides, each free zone has various regulatory authorities for approval, processing, and hassle-free company formation. Moreover, certain free zones cater to specific industry sectors and business types.

Popular free zones in the UAE

Determining the suitability of a particular Free Zone depends on the type of business you plan to undertake. With over 40+ free zones, the popular free zones to consider for business setup in the UAE: are Dubai Airport Free zone, Dubai CommerCity Free Zone, International Free Zone Authority (IFZA), Sharjah Media City, Dubai Silicon Oasis, SPC Free zone, Ajman Free zone, RAK Economic zone, Khalifa Port Free Trade Zone, Hamriyah Free Zone, Jebel Ali Free Zone, Dubai World Trade Centre, Dubai Multi Commodities Centre, Dubai International Financial Centre.

Financial free zones

Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) are the unique free zones in the UAE dedicated to financial ventures and business setup in banking, capital markets, FinTech, wealth, and asset management.

Trading free zones

Dubai Multi-Commodities Centre (DMCC) is a centre for global commodity trading in top-tier commodities such as gold, precious stones, base metals, agro, crypto, and financial service system with DMCC Tradeflow, Dubai Gold, and Commodities Exchange.

Jebel Ali Free Zone (Jafza) is one of the free zones with over 8,700 businesses in international logistics, petrochemicals, e-commerce, trading, food and agriculture, automotive, and other specific industries.

International Free Zone Authority (IFZA), situated in the Silicon Oasis Area, is a free zone option for multiple startups to establish business and scale rapidly in a highly substantial city like Dubai! IFZA permits a person to combine Professional, Industrial, and Commercial business activities under one licence.

The broad categories of licenses you can operate in IFZA are services, consulting, and trading.

Fujairah Free Zone, located adjacent to Fujairah port, is a trading free zone for businesses connecting logistics links to the other international ports with warehouses, open land, custom-built units, and trading and virtual offices.

Digital free zones

E-commerce trading is one of the most commonly accomplished business setups. The Commercity Free zone is mainly for digital commerce in the MENA region, which offers specific clusters for e-commerce logistics and business. Meydan Free zone offers various business licences but is most popular among digital entrepreneurs and online marketplace traders!

Dubai Outsource City is a free zone solely for outsourcing companies and shared service providers such as Business Process Outsourcing (BPO), call centres, data centres, warehouses, and IT & HR Outsourcing.

Media free zones

Sharjah Media City Free Zone (SHAMZ) has emerged as one of the cheapest and most popular free zones for entrepreneurs and startups in recent years. SHAMZ offers an extensive list of business activities, allowing investors to undertake multiple business activities per licence.

Dubai Media City (DMC) is an integrated media free zone that hosts diverse international and local media brands. The creative business ecosystem in Dubai Media City provides potential business opportunities for freelancers, SMEs, and entrepreneurs in the media, production, and creative fields.

Other media free zones include Ajman Media City Free Zone, Twofour54, Dubai Studio City, and Dubai Production City.

Academic free zone

Dubai International Academic City is a free zone dedicated to higher education and the academy sectors. DIAC already hosts multiple local and international institutions and universities. The activity allowed in the DIAC includes educational services, online universities, branch schools, freelancing, and non-academic and general activities.

Creative design free zone

Dubai Design District (d3) is the free zone and is the prime creative hub with enormous regional and global brands in the art, design, and fashion industries.

Creative City in Fujairah is the other free zone that offers cost-effective, flexible workspace solutions for specialized creative sectors, such as media, events, education, music, entertainment, design and technology, communication, and marketing.

Technology, AI and futuristic activities, scientific research free zone

Dubai is positioned as the international logistics hub, contributing to the global supply chain system by transporting goods, products, and services across the countries. Dubai South free zone focuses on aviation and logistics sectors with its two offerings: Logistics District and MBR Aerospace Hub.

Dubai Silicon Oasis is a technology park ideal for setting up modern technology businesses with the availability of offices, warehouse facilities, manufacturing sites, industrial units, and even Research and Development (R&D) centres.

Dubai Science Park serves as a centre for supporting entrepreneurs and startups in the science, energy, environment, health, and pharma sectors. The free zone fosters scientific R&D and innovation by offering laboratory spaces, warehouses, and commercial offices with modern infrastructure for setting up a business in a science community.

Renewable energy

Masdar City Free Zone is one of the sustainable urban developments with a comprehensive support system for the business community. The business activities accepted in Masdar free zone include Clean tech and ICT, Renewable energy, HR, Healthcare services, the Energy industry, Oil and gas services, Property development, Business and data centres, Regional HQ, Trading, and holding companies.

Setting up a business in a free zone

Although all the zones have their respective regulatory framework governing the procedure for setting up a business in the free zone, here are the common documents required:

> The Registry Identification Code Form (RIC) and the business plan (original and notarized)

> Copies of business partners’ passports and colour pictures

> CV (curriculum vitae) (summary of professional history)

Steps for free zone company formation

1. Determine business activity: If you start a business, you must first determine your business activity. Your business activity would allow you to select a free zone for your company.

2. Choosing a business name: Although you must follow particular standards before selecting a business name, it varies from jurisdiction, as the regulations are not applicable in the Sharjah Free Zone and RAK Economic Zones.

3. Business licence: It is essential to acquire a business license to trade in the free zone under the economic activities available.

4. Office Spaces: Various free zone offer flexible office space depending on your activity and the Free Zones. You can either rent an office space or work from a virtual address. Ideally, you can start with an affordable small area and, as your business grows, gradually expand your office premises.

5. Company Registration: Registering your business requires an initial approval certificate from the concerned jurisdiction and payment of the registration fee, and then, additionally, you can apply for visas for yourself and your family if necessary.

The UAE free zones offer the most prosperous environment for launching firms, with first-rate facilities, a beneficial tax structure, lax government restrictions, and other conveniences that make running a company easy.

Pratik Rawal is managing partner at Ascent Partners, which provides bespoke business setup and advisory services for entrepreneurs looking to set up metaverse venture in Dubai. Views expressed are his own and do not reflect the newspaper’s policy.