Dubai Freezone Company Formation Guide -AM Audit | Audit Accounting Firm in Dubai
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2020/11/19

Dubai Freezone Company Formation Guide

Tanvi Fal Dessai

We often find it reluctant to set up our own company. But creating a company in the UAE is a reasonably simple and hassle-free process. However, incorporating a business in the UAE involves a UAE resident owning 51% of the firm, commonly referred to as a partner or sponsor, and many other factors, such as employment policy, immigration policies, higher freight charges, etc.

But does it apply everywhere?

You must have surely heard of Freezones!

The government has established several free zones in the UAE to encourage more foreign trade investment, each of which is regulated by its Free Zone Authority. Free zones can independently draw up their business regulations of the UAE’s company (or mainland) laws. Foreign companies are allowed to own a business in a free zone. Out of the more than forty free zones in the UAE, most of the free trade zones are located in Dubai as it is the economic and financial hub of the UAE.

So, does it make it effortless to start a business in Dubai?

It indeed does, particularly in the free zone of Dubai. However, a business person should bear clear criteria before starting a business in the Dubai Free Zone.

So, here is AM Audit giving you Tip-Offs that will allow you to integrate a company process.

1. Choosing the Corporate Company Form

There are, in general, three groups of organizations that can set up free zones in Dubai, which are:

  • Branch of a foreign or local organization.
  • Free Zone Limited Liability Company (FZ LLC) and Free Zone Company (FZ Co.)
  • Free Zone Establishment (FZE).

The difference between both types is the number of shareholders and whether they should be natural or legal. The Free Zone Corporation may be registered with two or more shareholders, while a single shareholder may establish the Free Zone Establishment. These owners can be either an individual or a corporation.

These types of organizations may not be registered in all the free zones of Dubai. Therefore, you ought to check with the individual Free Zone Authorities in the company they can register.

2. Choosing a Business Activity

After choosing the business organization that you want to set up, the next step is to shift your focus to the business operation you want to conduct. Many free zones in Dubai allow for a variety of business activities. So as an entrepreneur, you have several places in which to set up a business. Choosing a company practice is the first decision you have to make, and it is perhaps the most important of all those decisions. 

3. Choosing a Business License

Depending on the type of business operation you want, you will be limited to the kind of business license you will apply for. The following are the general forms of permits that can be issued in free zones in the UAE.

  • Commercial/ Trading
  • Consultancy/ Services
  • Industrial
  • Educational
  • Media
  • eCommerce
  • Offshore
  • Freelancer
  • Warehousing
  • Manufacturing

However, it is essential to note that the Dubai Aiport Free Zone (DAFZA) allows dual licenses to be obtained.

3. Choosing a Dubai Free Zone

As mentioned above, the type of business operation you select will decide the type of license you will receive, which will allow you to choose a free zone to set up a business. It is necessary to note that not all the free zones in Dubai allow the same business license to be issued. 

4. Choosing a Trade Name

The final mission after learning all the other basics is to establish a trademark. It is recommended to inspect the same with the respective Free Zone Authority or with the Department of Economic Development (if necessary) on the criteria for approved trade names and verify if the possible name has already been registered.

The guidelines of the Department of Economic Development (DED) are as follows:

  • The name must not be contrary to the public morality or public order of the country.
  • The business’s legal form must be practiced, i.e., LLC, FZE, DMCC, and so on.
  • It may not have been registered in the nation in the past.
  • It is consistent with the form of operation and legal status required.
  • It does not include names or logos of any religion, ruling body, or external body.

Even after learning the basics listed above, it is still helpful to rely on someone to start a Dubai business. Let’s take a look at the advantages that you can reap from making use of them.

Why Avail Professional Services in Dubai?

Availing legal services while a company is formed in Dubai offers a range of opportunities that can impact you and your newly merged company, even in the long run. The advantages are as follows:

  • Conservation of time and money-the creation of a business without any support would lead to a loss of time and resources when this time and resources should be concentrated on more critical activities.
  • Legal aid – a professional would be well versed in both the laws and regulations of Dubai and, ultimately, the UAE, which you, as an entrepreneur, might not be.
  • Guide-A business consultant can serve as a guide when beginning a business, guiding you down the most optimal route for your company. The consultant will support you even after you have set up a fledgling business in the UAE.
  • Customized Services-Every organization has different needs and challenges. These needs and issues involve tailored ideas that can only be offered by a consultant.

 AM Audit is a leading Audit firm, and our expert advisors are well versed in the process of company incorporation. We will help you simplify and speed up the process of starting up a business. If you want to know more, please contact us, we will be pleased to assist you.

Expert Team

  • Ali Chamas

  • Audit Manager
  • Adel Farag

  • Taxation Manager
  • Farah

  • Accounting and tax Associate
  • Sohaib Basharat

  • Financial Auditor & Tax Manager

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