Business Set up in Dubai / UAE

GLOBAL OFFICE is specialising on company formation in all UAE Free Zones. Our services range from E-Office set ups for individuals and small companies to full set ups in Dubai for mid to large sized companies. We provide all the services necessary to get legally established as a business in the UAE.

Contact us: co@globaloffice24.biz, Mobile +971-50-8462421

What kind of set ups are available in Dubai / UAE?

First of all the future business owner needs to decide if he wants to set up in UAE mainland (i.e. outside free zone boundaries). In this case a local Emirati sponsor is needed. Currently the law still requires that the investor can only hold 49% and 51% is legally owned by the sponsor. This type of investment is usually governed by a written agreement in English and Arabic detailing the sponsor’s influence in the business and the level of sponsorship fee the investor has to pay on an annual basis. Due to the fact that commercial real estate prices are on a free fall, setting up outside a free zone can be cheaper than inside free zone boundaries. The benefit of Free Zones is 100% ownership, all assets stay with the investor. Free Zones are government entities.

What is a Free Zone?

According to the World Federation of Free Zones (FEMOZA) a Free Zone is a portion of a clearly defined and isolated land or setting, with a special tax, customs and imports regime, usually involving a status of extra-territoriality. Free Zones provide state of the art infrastructure and are designed as special investment models allowing total ownership of the business in the UAE. Therefore, to establish a business entity in one of the UAE’s many Free Trade Zones (FTZs) can be an attractive option for foreign investors who wish to keep 100% ownership of their business. An independent Free Zone Authority (FZA) governs each free zone, and is the agency responsible for issuing FZ operating licenses (which can be service, trading or industrial/manufacturing). However, not all businesses will fit into a free zone. Purpose of the business has to be clearly defined and laid out in a detailed business plan.
Investors can either register a new company in the form of a Free Zone Establishment (FZE), which means the company has one shareholder (individual or corporate person), or a Free Zone Company (FZC, FZCO, FZ-LLC are common forms). In this case the company needs a minimum of two shareholders (usually maximum of 5 shareholders permitted). Alternatively investors can establish a branch office of their existing or parent company. Free Zone companies are in general limited liability companies.

What Investment Benefits do UAE Free Zones offer?

Basically all UAE Free Zones (Dubai – Abu Dhabi – Northern Emirates) offer complete tax exemption for min. 15+ years.
• 100% ownership for the investor and free capital / profit repatriation
• Tax exemption for up to 15 years, some FZ go up to 25+ years (with respect to potential implementation of taxes as repeatedly requested by IMF and World Bank, incl. VAT in the UAE in a couple of years this represents a very attractive solution for the investor)
• Low energy costs & competitive labour costs (working hours per week: 46 – 48 h)
• No trade barriers, no foreign exchange controls
• Fixed exchange rate (AED: US$ 1 = Dh 3,6725)

What types of Free Zone Companies can be registered?

Basically all free zone entities are limited liability companies.
Branch Office (associate of an already existing mother company in UAE or abroad)
Free Zone Establishment = FZE (single partner – can be individual or legal entity)
Free Zone Company = FZCO, FZC, FZ-LLC (minimum 2 partners/shareholders)
Offshore Company (registered agent required, businesses are not allowed to operate within UAE, number of allowed activities strongly regulated)
What are the Share Capital Requirements?

Except for branch office so far each legal entity needs to show share capital when registering in a free zone (Note: registering as an LLC company on the mainland UAE no longer requires to show share capital). Share Capital has to be physically paid into a corporate bank account in the UAE. Dubai Free Zones require from AED 50,000 – 1 Mio depending on the type of set up and which Free Zone is chosen by the investor. Northern Emirates have now started to scrap share capital requirements for new businesses to facilitate set ups. Dubai so far sticks to the high price strategy for set ups which requires to show share capital.

What is the cheapest set up for a small company?

Currently the cheapest set up option is E-Office or Flexi-Office with a Northern Emirates business license. Start-up cost are AED 20.000 – 25.000 p.a. Number of visa are usually limited to 1 or 2. Only one free zone currently offers E-Office with up to 5 visa.

Are there annual audit requirements for free zone companies?

Yes, with few exceptions, the majority of free zones require the investor to submit an annual audit after the first year of operation in order to get the license renewed. Audit companies are plentiful in the UAE and relatively cheap.

What is the time frame for setting up a company in a UAE free zone?

This strongly depends on the free zone chosen (Dubai, Abu Dhabi or Northern Emirates) and the company structure. If shareholder is a legal entity such as Ltd., Plc. SA or similar a number of documents from the parent company need notarization and UAE Consulate attestation in the home country. A set up in a Dubai / Abu Dhabi free zone can take anything from 6 weeks to several months. Red tape is considerably high, rules and regulations change frequently and free zone staff is not always trained up to date on their own rules and can give misleading or incomplete information. Usually the costs for hiring a specialized consulting firm to handle the entire set up is advisable. Note: a lot of consulting firms and free zones promise set ups within 24 hours or less than a week. This is unrealistic!

What are the factors that need to be considered when choosing a free zone?

Distance from international air- and seaports
Facilities and infrastructure offered at the free zone
Real estate options
Types of activities allowed by the respective free zone authority
Annual rent for office space and size of office units
Minimum capital required, registration, trade licence fees
Processing time of application

What are good Dubai business opportunities?

This largely depends on how much funding an investor is willing to bring to UAE. Banks usually do not fund any expat start-up business in UAE. Currently good business opportunities in Dubai are to be found in the following areas:

Medical, Hospitals, Clinics, Spas, Hair Salons
Green Building Technology
Consulting Business around Oil/Gas Industry
Training & Education
Restaurant Business
Facility Management – Real Estate
Online Auctions
Franchise Businesses
Childcare business, nurseries, kindergarden, experienced and trained nannies
Import / Export (especially food items, electronic equipment)

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