Benefits of Forming Freezone Companies in UAE
- Allows complete foreign ownership, and hence foreign investors do not need to leverage the help of a UAE sponsor. Additionally, foreign ownership is available irrespective of the investor’s nationality.
- Does not pose any currency regulations or restrictions on foreign currency transactions within the country, helping make financial transactions smoother.
- Free Zones are not applicable for import and export duties, helping make these Zones perfect for promoting international trade.
- Allows various tax benefits, including 100% tax exclusion from both corporate and income tax.
- Eligible for complete repatriation benefits, which includes both profits and assets.
- Smoother labour recruitment due to the easy availability of labour and Visa permits, making it easy for companies to find the right staff.
- Permission to employ foreign nationals, simplifying the process of staffing and hiring.
- A plethora of workspace options making it easy for businesses to find warehouses and office spaces easily, making the free zones ideal for SMEs and start-ups.
- Smooth and easy process of company incorporation in Dubai Free Zones, leading to faster start-up times.
- Quick and trouble-free immigration processes helping companies save time and effort
- Makes use of updated technologies leading to better communication and impeccable infrastructure.
- Access to cost-effective and efficient energy sources, making it easier to set-up and establish businesses.
Additional benefits also include the schemes and welfare projects that the government offers businesses that operate within the Free Zone. Most free zone authorities organise regular training and development events that help companies network and build connections within the industry.
Due to their benefits, UAE freezone enterprises have become popular. These programs have increased company incorporation in Dubai free zones. Your business structure choice is crucial. This judgment will affect taxation, compliance, and government programs. Thus, you should consider all choices before making such a choice. To assist you decide, we’ll examine Dubai’s free zone companies’ pros and cons.
Companies in UAE: An Overview
The UAE government has been working hard in the past few decades to attract more foreign investors and creditors. Bringing in such investment also helps the government improve and transform the local economy. One of the most popular choices available to such investors has been company incorporation in Dubai Free Zones. Visionary policies, business-friendly laws and the entrepreneurial potential of the UAE have all been drivers of this rise in popularity. The three main business types or jurisdiction found in the UAE are as follows;
- Mainland Companies
- Free Zone Companies
- Offshore Companies
Like with all options, all three of these offer various benefits and compliance requirements. In this article, we will take a more in-depth look at the advantages and disadvantages of free zone companies in Dubai.
Free Zones Companies in the UAE
Free zones are essentially Special Economic Zones or regions in the UAE that provide trading and business licenses to companies. These zones attract investors to set up business establishments by offering tax benefits and other incentives. Throughout the seven Emirates, there are over forty different Free Zones. The regulatory authority that exercises jurisdiction over a Free Zone is known as a Free Zone Authority or FZA. The FZA is responsible for monitoring and regulating the activities that occur within the zone, and is the body that issues licenses to operations. Businesses can choose from between the three options below when it comes to company incorporation in Dubai Free Zones;
- Free Zone Company
- Free Zone Establishment
- Branch of a Business
The significant costs associated with setting up Free Zone companies in the UAE are as follows;
- Trade Name Reservation and Registration: Before incorporating a company in the UAE, business owners need to reserve a trade name and register it with the relevant authorities. This process can involve fees, which vary depending on the emirate and the type of company.
- Registration or Incorporation of the Company: The next step involves registering or incorporating the company. This process also incurs fees, which can depend on the type of company, share capital, and the number of shareholders.
- Trade License Application: After incorporating the company, business owners need to apply for a trade license to operate in the UAE. The cost of obtaining a trade license can vary based on the company’s activities, location, and other factors.
- Office Rental and Staffing: Setting up a physical presence in the UAE requires renting an office space, which can also come with significant costs. Additionally, hiring employees to staff the office and run the business can add to the expenses.
- Visas and other ancillary costs: Business owners and their employees may require visas to work and reside in the UAE. The costs associated with obtaining visas can vary based on the type of visa, duration, and other factors. There may also be other ancillary costs, such as legal fees, accounting fees, and other expenses related to operating a business in the UAE.
Disadvantages of Free Zone Companies in Dubai
- Restriction when it comes to trading in the UAE mainland as Free Zone companies cannot trade directly with the local market in the UAE.
- Free Zone companies in the UAE will have to take the help of local distributors if they wish to trade within the Emirati market.
- Must pay a 5% duty if they wish to trade with the local market in the UAE.
- Restrictions on certain business activities as each Free Zone is assigned various activities depending on its resources and location.
- Limit on the freedom a business has to perform an activity
- Restrictions on the work location as companies have to stay within the boundaries of the Free zone.
- More costly to set-up when compared to the Mainland company incorporation.
How KGRN Can Help
KGRN Chartered Accountants offer one of the best Free Zone incorporation services in the UAE. Our experts have decades’ worth of experience in the field of business incorporation and consultancy. We have helped countless businesses start the company of their dreams in Free Zones throughout Dubai. Our legal experts will also be able to help you decide on what type of business structure to incorporate as.
Additionally, we can file an application for incorporation on your behalf and help you every step along the way. Our experts will also gauge what licenses and certificates you will need based on the nature of your operations. The team of accountants who work with us can also help you maintain compliance at all times, and manage your taxes efficiently. So, what are you waiting for? Contact us Today for Build the company of your dreams with KGRN by your side!
