what is a free zone

The United Arab Emirates is gaining fame among businesspeople from everywhere in the world due to the strong economy it represents, and free zones are the favorite locations for foreign investors to establish their companies. But what is a free zone and what does it offer to investors? Let’s find that out here.

In this article, you will learn everything you need to know regarding free zones in the UAE, the main reasons why they are so popular among foreign businesspeople, the benefits they offer to new investors and entrepreneurs, and some useful tips you should follow to start your company setup process. Let’s observe:

1. What are the UAE free zones?

2. Top reasons why free zones are popular.

3. Should you consider setting up your business in a UAE free zone?

4. The setup process you need to follow to establish your company successfully.

5. Types of licenses you will need to obtain.

6. How can Connectfz help you set up your business in a UAE free zone?

1. What are the UAE free zones?

Free zones are also known as free trade zones, and their main function is to serve as economic locations where different services and goods are traded. They also serve as special areas where international businesses can be boosted due to the many benefits they provide to their investors and entrepreneurs, which is the main reason why they are popular among foreign businesspeople.

Understanding what is a free zone and the way it works is essential to any investor, who plans to set up a business in them. It is also important to study what kind of business does every free zone manages within since there are certain free zones especially established to trade goods and services from certain industries.

1.1. What free zones are available to set up your company?

Currently, you will be able to find 45 free zones available across the United Arab Emirates, including the most popular ones that are located in Dubai, Abu Dhabi, Sharjah, Ras Al Khaimah, Ajman, and many other cities. Some of these free zones you can access in the city of Dubai are the following ones:

  • Dubai Airport Free Zone (DAFZA).
  • Dubai International Financial Centre Free Zone (DIFC).
  • Jebel Ali Free Zone (JAFZA).
  • Dubai Media City Free Zone (DMC).

As for the available free zones in Abu Dhabi, using an Abu Dhabi free zones map you will be able the find some locations like:

  • Khalifa Industrial Zone Abu Dhabi (KIZAD).
  • Abu Dhabi Ports Company Free Zone (ADPC).
  • Abu Dhabi Global Markets Free Zone (ADGMFZ).
  • Masdar City Free Zone.

If you are interested in setting up your business in other free zones from other popular cities, you can find these:

  • Sharjah Publishing City Free Zone (SPCFZ).
  • Ajman Media City Free Zone (AMCFZ).
  • Ras Al Khaimah Economic Zone (RAKEZ).
  • Umm Al Quwain Free Zone (UAQFZ).

2. Top reasons why free zones are popular.

what is a free zone

Knowing what is a free zone and the reasons why they are so popular among foreign investors is what will allow you to decide whether you desire to set up your company in them or not. Here we will give the many reasons why free zones are outstanding trade areas where both local and international companies can achieve success easily.

First, the benefits and advantages that any investor can obtain when setting up a company in the UAE free zones, which allow them to grow easily in the country and without going through hard processes. Some of the main benefits that you can obtain as a new investor can be:

  • Exemption from taxes on personal and corporate income. Also from import and export customs duty for services and goods.
  • 100% foreign ownership of your company and full repatriation of capital and profits.
  • Pre-built world-class infrastructure, office space, and warehousing.
  • Business-friendly legal framework and company regulations.
  • The easy setup process and quick access to professional workers.
  • Friendly business environment and easy company incorporation process.
  • Efficient resources such as global connectivity, transportation, and more.

These benefits are the main reasons for free zones’ popularity and they also contribute to what is a free zone by making them the most beneficial trading areas for everyone.

3. Should you consider setting up your business in a UAE free zone?

That is absolutely correct. Once you get to know what is a free zone and the advantages you can get by setting your business in it, you will realize that it is the best option for foreign businesspeople to develop their desired companies with guaranteed success in the process.

And when you compare the differences between a free zone and the mainland, it is evident some disadvantages of not choosing a free zone, such as foreign ownership. In the mainland, companies only obtain 51% of it, while in the free zones they can obtain 100% of it. Regulations are more flexible too, allowing your company to achieve success in no time.

4. The setup process you need to follow to establish your company successfully.

Now that you are aware of what is a free zone and how beneficial it can be, let’s take a look at the process you will have to go through in order to start building your company in any of the UAE free zones. Keep in mind that choosing the most appropriate free zone location is the very first step to start the process, and then you must follow these steps:

4.1. Determine your business activities.               

Take into account that certain free zones were established to manage business activities from certain industries, and in this case, you should find the most suitable one for you. However, most free zones count on a variety of business activities that you can freely choose, which provides you with many beneficial alternatives.

4.2. Create a proper name for your company.

Certain rules and norms need to be followed when giving a name to a company in the UAE free zones. The best recommendation, in this case, would be avoiding offensive content. If you are planning to name it after a person, this person has to be an important member of your business. Do not use initials but the full name.

4.3. Apply for a business license according to your company’s activities.

Prepare the paperwork you need to apply for the licenses and submit it to the government authorities, who are the ones in charge of providing this important document. You will receive the requested licenses after processing the incorporation documents you have submitted previously. You can finish this process faster if you count on a professional business partner.

4.4. Open a corporate bank account.

Now that you have the trading license and your more important documents, you can open a corporate bank account, which can be whether a local one or an international one. Just like the previous step, you can ask for your business partner’s help to save time if you need it.

4.5. Submit your application to get visas.

It is essential to have visa documents to stay and work in the country, and even more to run a company in the UAE free zones. Having a business partner like Connectfz will be more useful in this process and you will get better results.

5. Types of licenses you will need to obtain.

what is a free zone?

Some of the key costs you will have to consider when you establish your company in any of the UAE free zones are the licenses. Even though you will pay a very low fee to start setting up your business, in time you must invest money in these key costs to ensure a better future for your company. Remember that you can apply for the license at the Department of Economic Development.

In most free zones, you will find several available licenses, including:

  • Trading / Commercial license: it provides a time-limited authorization to perform commercial, industrial, and consulting activities.
  • General trading license: it allows your company to trade any kind of goods and products.
  • Service license: it permits certain companies to offer their services, such as law firms, business consultancy firms, and accounting firms.
  • Industrial license: it allows companies to import raw material, manufacturing, and exporting finished products.
  • Warehousing license: it allows investors to avail warehousing facilities on lease for distribution, packaging, and storage of products and goods.
  • Manufacturing license: it allows companies to manufacture their products and goods.

5.1. Reasons why you need a trade license in the UAE free zones.

The main function of a trade license is to prove that your company will legally perform its business activities. This legal document was created to provide legitimacy to any company established in the UAE free zones. We recommend you to get your trade license before your company starts operating in the country, and when you get the license, you will be able to open a bank account.

Besides the main function of the trade license, it can also provide certain benefits for your business, including personal protection and personal privacy, and in some cases, it allows you to join certain business groups, such as investment groups or business-oriented groups. Moreover, your customers will feel more comfortable and will be able to trust your company’s services.

5.2. How much is the trade license?

The cost of a trade license will vary depending on the free zone you are located at and the number of business activities that your company will be performing. The cost of this license ranges from 10,000 to 20,000 AED per year. However, its cost will be different according to the determined fees provided by the free zone authorities.

For example, if you are located in Abu Dhabi, the Abu Dhabi free zone trade license could cost from 7,000 to 15,000 AED depending on your business field and the number of activities you will perform in the free zone.

5.3. Other key elements you should consider.

Besides the trade license, you should also keep in mind other elements that you will need in a UAE free zone to set up your company completely. These key costs are:

  • Trade name reservation.
  • Your company’s registration.
  • Office rental.
  • Visas and more ancillary costs.

Having a sponsor in Dubai and the UAE can also be an element you should consider, although it is not necessary when you are in a free zone. However, if you decide to hire one, make sure to obtain a reliable sponsor for your company.

6. How can Connectfz help you set up your business in a UAE free zone?

If you have more questions regarding what is a free zone and related elements, you can ask for professional support. Finding the best free zone for your company and setting it up in it can an easy task if you request the Connectfz team‘s support and services. We offer you our search services to find the different locations and compare their benefits to decide which one is the most suitable one for you.

Once you have selected your desired free zone, we can offer you guidance and useful tips to start building your business without wasting time or an excessive amount of money. By using our services, you will be able to understand everything you need to know regarding your selected location, including regulations, advantages, necessary documents, and more.

Besides, we offer several business services you might need to improve your company’s functions and operations in a matter of time. For example, you can request our HR consultancy services and payroll services to make improvements in your human resources department, making it more efficient. Other services you might need could be visa services, banking services, among others.

Would you like to contact Connectfz to know more about company setup in UAE free zones? If you have any question, do not hesitate to call us on +97143316688 or email us at info@connectfz.ae, and you will talk to one of our representatives that will gladly answer all of your questions.