One Central – Offices No. 4 Dubai | Office: +971 45686046
ITQAN is a company that specializes in business setup and business growth

Establishing a company in the free zone in Dubai

٢٨ يناير Establishing a company in the free zone in Dubai

The term free zone has different meanings and definitions depending on the type of free zone, but in most cases the term free zone refers to a geographical area where goods are kept, stored, manufactured, traded and re-exported according to a known and specific customs system, but they are not subject to any customs duties. 

The term free zones is also considered to be entities completely separate from the laws of the state, as they are not governed by the laws of commerce in the state and do not require a sponsor. Moreover, the company established in the free zone can be owned by a person of another nationality without the need for a partner from the UAE citizens.

The free zones in Dubai and the UAE in general are not subject to the general laws set by the Ministry of Economy to regulate the commercial activities of companies, as this free zone in Dubai works to provide royal freedom for commercial businesses, in addition to tax exemption and exemption from any customs duties. These advantages in the free zones make them an ideal and honorable front for international companies that carry out many commercial activities. Among the advantages is also that opening and establishing a company in Dubai and in the free zone does not require the presence of a partner or sponsor who is a citizen of the Emirates.

Steps to invest in Dubai

Starting a residence and investment in Dubai requires knowing the procedures for establishing a company in the Emirates, and the procedures for obtaining a commercial license in Dubai.

The procedures for establishing a company in the Emirates and obtaining a commercial license in Dubai include the following:

  • First: The UAE market must be studied well, as well as the needs of the targeted area for investment, and on this basis the type of company activity is determined, whether professional, commercial, or industrial.
  • Second: After deciding on the appropriate type of activity for the company, the company name is determined, and it must be compatible with the type of activity.
  • Third: The UAE requires any foreign investor to have an Emirati partner, and he must own a limited liability company, or contract with an accredited agent office in the UAE.
  • Fourth: Choosing a suitable place to be the company’s headquarters, and all safety measures must be available in it, as well as achieving the element of security and protection in it, and ease of access to public facilities in it.
  • Fifth: Obtaining a lease contract for the company’s headquarters, or a property ownership contract, and documenting these contracts with the relevant government agencies.
  • Sixth: Submitting documents and papers related to the company’s ownership, type of activity, and obtaining a commercial license in Dubai.
  • Seventh: Obtaining initial approval to practice business.
  • Eighth: Receive the commercial license and begin the procedures for creating the company’s commercial register.
  • These are some of the procedures for establishing a company in Dubai, and also obtaining a commercial license in Dubai, in order to reside and invest in Dubai. However, there are some steps for establishing a company in the free zones in Dubai that are added to these steps, including the following:

What is instant license Dubai

The Dubai Instant License is considered one of the most important facilities provided by the Emirates to encourage investment in it. The Dubai Instant License shortens all the procedures for establishing a company in Dubai into one step, by issuing only one disbursement permit. The costs of establishing a company in the Emirates are considered, and the cost of issuing the Dubai Instant License is three thousand Emirati dirhams.

But there is a condition when obtaining the instant license in Dubai, which is that the investor must know that it is only obtained once, which is the first year when establishing a company in Dubai, and upon renewal, all papers and documents related to the company must be submitted in order to obtain the commercial license.

Steps to establish a company in the free zone in Dubai

Now, whatever your financial capacity or the financial budget you set for establishing and founding any investment project in Dubai or establishing a company in Dubai, you can now establish any investment project or service in Dubai due to the multiple needs of the UAE and also due to the ease of providing ways to establish investment projects there, but you must know the appropriate and basic steps in establishing a company in Dubai, which are as follows:

1- Determine the nature of the company’s activity:

Determining the nature of the company’s activity is one of the most important procedures imposed by UAE law when establishing companies in Dubai. This facilitates the procedures and then determines the parties associated with the company’s activity and the permitted legal forms. There are approximately 2,000 permitted economic activities in the UAE, and economic activities are classified into three main types: 

Commercial activity includes real estate, leasing, transportation, financial brokerage, wholesale, retail, storage and communications. Professional activity includes agriculture, health, social work, education and various service activities related to society, i.e. any activity that depends on physical and mental activity to practice it. Finally, industrial activity includes transformation industries such as mining, water, electricity and quarrying, and there are also some tourism activities.

2- Determining the legal form of the company:

Here we are talking about the legal form of the new company that will be established, and this form depends on the nationality of its owners, and the legal form of the company that you plan to establish in Dubai, which is as follows:

  • Joint stock company.
  • Limited Liability Companies.
  • Public joint stock company.
  • Private equity company.
  • Civil business companies.
3- Trade name registration:

The third step in establishing companies is determining the trade name in establishing a company in Dubai, which is what distinguishes one commercial license from another. The trade name is also related to the form and activity of the commercial company and is fulfilled by several important conditions stipulated by the Department of Economic Development on the trade name before approving the name, namely that the company’s trade name does not contain words that are inappropriate for the country, does not violate the public and private taste of the country, and that the trade name accurately and clearly reflects the commercial activity.

4- Obtaining initial approval:

After determining the legal activity of the company and its legal form as well, and registering its trade name, you must now obtain initial approval for the company’s economic activity and follow up in order to obtain the approval of the authorities related to the activity.

5- Preparing the articles of association and choosing a headquarters for your business:

Here comes the moment of concluding or preparing the contract designated for establishing a company in the free zone in Dubai, and this is done by bringing the incorporation contract in agreement between you and the competent authorities in Jebel Ali. You must also choose a location to establish the company in the free zone or establish a company in Jebel Ali to conduct business. All established companies must have an actual address in the United Arab Emirates, and this headquarters must meet the specified requirements and land allocation regulations in addition to the existence of an existing license.

6- Obtaining approvals from the authorities concerned with the facility’s activity.

Some commercial activities and projects require obtaining additional approvals from the authorities concerned with those projects and activities, such as approval from the Ministry of Economy, or a specialized approval from the Ministry of Interior, or a specialized approval from the Ministry of Justice, or an approval from the Civil Defense if the activity, for example, is related to the activities of selling fire-fighting equipment.

7- Obtaining the license

After completing all the previous steps to prepare and establish an investment company in Jebel Ali or establish a company in the free zone in Dubai, you can now receive the commercial activity license, attach some of the required papers and documents, including the economic development steps and pay the commercial license fees for establishing the company, and then register in the Chamber of Commerce as a member.

Costs of setting up a company in Dubai

The costs of establishing a company in Dubai are mainly limited to several expenses, which are as follows:

  • Commercial License Fee (Business License)
  • The price of purchasing the office or company site through which you conduct your business, whether it is rented or purchased.
  • The cost of purchasing the furniture and decor for the office where you do your business.
  • The cost of obtaining work permits for sponsored employees and the required visas for them under your current company name.
  • The cost of opening a new account in the company’s name in a bank and depositing the minimum capital depending on the type of business activity.
  • The cost of the legal form of the company plays a fundamental role in increasing or decreasing the cost of establishment. The costs of establishing industrial companies are higher than the costs of establishing commercial and professional companies in Dubai.
  • Finally, the price of the commercial license.

Permitted types of activities

  • For a free zone company, you must obtain a trade license for each activity that the company will be engaged in such as consultancy, trading, etc. and shareholding or capital participation is allowed.
  • For offshore companies, multiple activities are allowed to be carried out in one company.

Activities prohibited for offshore companies are:

  • Finance – Aviation – Media – Precious Metals – Oil & Gas

While the permitted activities are:

  • Business and Management Consulting
  • General Trade
  • Holding companies and holding shares in other companies in the UAE or abroad
  • Trade (type must be specified)
  • freehold property
  • Accounting, Reporting and Auditing

When setting up an offshore company you will need to register accounts and prepare financial statements but are not required to provide audited financial statements. Free zone companies need to register accounts, prepare financial statements and audited financial statements.