How to Choose the Best Free Zone for Your Business in the UAE?

Posted on January 30, 2023

UAE is a prime destination for international businesses looking to expand their operations. One of the ways to achieve this is by setting up a business in a Free Zone, where companies can enjoy a range of benefits such as 100% foreign ownership, 0% taxes, and easy access to international markets.

However, with over 45 Free Zones in UAE, choosing the right one for your business can take time and effort. Factors such as location, business activities, and infrastructure play a vital role in making the right decision.

This guide will help you understand how to choose the best Free Zone in UAE for your company by considering the essential factors and exploring the available options. This will ensure that you make an informed decision and select the Free Zone that best meets the needs of your business activities.

10 Steps to Choose the Right Free Zone for Your Business in UAE

Here are some of the tips that can help you choose the best free zone in UAE for your business:

1. Select a Free Zone suited to your business activity

Each Free Zone has its unique set of authorized activities that can be carried out within that particular Free Zone. Some examples of Free Zones and their respective industries include:

Dubai Airport Free Zone (DAFZ): logistics and transportation
Dubai Silicon Oasis Authority (DSOA): technology and IT
Dubai Media City (DMC): media and advertising
Dubai Biotechnology and Research Park (DuBiotech): biotechnology and research
Dubai Multi Commodities Centre (DMCC): commodities trading and precious metals

Each Free Zone also has varying laws about how many commercial activities may be conducted under the same company license. The more activities you select, the more expensive a license will be.

You may need to obtain two or more business licenses for the same firm. Commercial trade licenses, Service (consulting) licenses, Production (manufacturing) licenses, E-commerce licenses, General Trading licenses, and Media licenses are among the most common.

2. Select the facility suitable for your business

If you do not intend to expand your business significantly in the next few years, you may obtain a Flexi-desk or shared space at a co-working space. These locations are also required for obtaining a company license in the UAE.

If you intend to meet with clients regularly and hire personnel, you must set up an office at a particular physical place.

You should consider both the location, infrastructure inside a Free Zone, and the availability of desired amenities, as not all Free Zones have such specialized facilities as warehouses or retail establishments.

3. Finalize the number of UAE resident visas you will need

Each employee in your UAE-based firm will require a residence visa. The kind of facility determines the visa quota. For example, a shared desk can only issue a restricted number of visas, which varies for each Free Zone.

With a shared desk in Dubai, you can generally acquire two or three visas, but you can get more if you run a firm in the Northern Emirates.

There are additional visa space requirements: for a physical workplace, you get one visa quota every 9-10 square meters.

4. Decide if your space needs to be close to the seaport

You must decide whether your firm in the UAE should be near a seaport or an airport. You want to have the best transit routes and hubs feasible so that your costs are as low as possible. This is especially significant if you establish a trading firm in the UAE.

For example, if you choose the JAFZA Free Zone for your logistics, trade, or manufacturing business, you would be based near the Jebel Ali port. Furthermore, there are several storage facilities, brokerage firms, and logistics, so you will be near everything you want for a trading company.

5. Check if you need a share capital amount

Depositing a share capital amount is a frequent requirement when forming a corporation in the UAE. This must be placed into either your company’s or the UAE Free Zone authority’s account.

You will also need to furnish the Free Zone with verification of the deposit. This implies you must know ahead of time the legal minimum share capital in a given Free Zone for your unique company activity.

There are two types of share capital available:

Authorized: You are not required to deposit any share capital.
Paid-up: You must deposit share capital and submit deposit evidence.

The share capital amount is different for each Free Zone. Therefore, you must investigate the UAE Free Zone where you wish to set up your company and determine the minimum share capital level for you.

6. Identify the restrictions on shareholders

Certain nationalities of shareholders in Free Zones face limitations. A good feature of forming a corporation in Dubai Emirate is that you may include high-risk countries as shareholders.

7. Requirement for a regular audit

Some UAE Free Zones demand the submission of financial statements including annual audit reports. It is a requirement in the DMCC Free Zone to submit an annual audit report after the fiscal year or as defined by the MOA.

In addition, the report must be filed by one of the UAE auditors on the DMCC Approved Auditors List. You will face fines if you do not submit the report by the deadline.

You will be eligible for some perks when you frequently submit financial statements. These advantages include applying for business loans at local banks, recruiting new investors, and learning about a company’s financial health.

8. Research about the banking relationships of the Free Zones

This is critical before establishing a corporation in a specific UAE Free Zone. Using the internet or asking a friend will not provide the most accurate response. This is why you should seek advice from business service providers and specialists.

They should be knowledgeable about establishing a business in the UAE and aiding with the creation of corporate accounts in the leading UAE banks. Do this before registering your firm to ensure that you may open a corporate bank account for your company.

9. Find out the NOC requirements

A letter of authorization (NOC) is simply a letter from your existing employer sponsoring your visa. It says your corporation has no objections to establishing a business in a certain Free Zone.

You must carefully evaluate this since, for example, in the SAIF zone, a UAE citizen must produce the NOC from their present sponsor. There is no such need for a Free Zone like the DMCC Free Zone. For example, if you work in a governmental agency or on a spouse visa, you must produce a NOC from your employer in the Dubai South Free Zone.

10. Finalize your budget

Determine the relevant fees for registration, licenses, establishment card, and leasing fees for the first and second years of business operation.

You will also need to estimate your visa expenses, including visas for shareholders and workers who want to start work within the first year. This will guarantee that your company is correctly set up and updated every year.

Conclusion

Choosing the right Free Zone in the UAE for your business is crucial for its success. With so many options to choose from, it is essential to consider your company’s specific needs and goals.

Factors such as location, business activities, infrastructure, legal and regulatory requirements, cost, reputation, ROI, and scalability should all be considered when making your decision.

By researching and comparing the different Free Zones and their offerings, you will be able to select the one that best aligns with the needs of your business and increases the chances of success.

Additionally, the Free Zone authority can provide necessary support and guidance throughout the business setup process and beyond; it is vital to consider their level of customer service and the support they provide to the businesses established in their area.

We hope that our blog helped you understand how to choose the best free zone in UAE for your business. If you have any questions, feel free to contact us!