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What to Consider with Business Setup in UAE Free Zones

What to Consider with Business Setup in UAE Free Zones

UAE is among the best business hubs across the globe and the reason why UAE has been able to get this status is because of its special free zones. There’s a couple of free zones that are spread throughout its seven emirates. The free trade zones have become a paradise among foreign entrepreneurs and investors as they’re provided with a variety of incentives that aren’t available in mainland or even offshore jurisdictions for business setup. 

 In a free trade zone in UAE, a foreign investor is able to enjoy the opportunity of getting full ownership of a business as well as zero taxation on certain goods and services. It is worth mentioning that free zones in UAE are known worldwide. 

 However, it’s also important to have complete information regarding the advantages and disadvantages with regards to the free zones prior to establishing a business. In this article, we will list all the aspects that you need to put into consideration before you engage in a certain business activity within a free zone. 

Also Read: Best UAE Free Zone: Tips on UAE Free Zone Business Setup

 Choosing the Right Kind of Business 

 You will be able to choose from several kinds of opportunities with free zone business setup. It is important you select the appropriate business type based on the activities of the business, its ownership, and several more factors.

Take note: there are certain geographical limitations for certain types of businesses, which is why there is a need to consider all the options and make an informed decision in order to enjoy the maximum benefits. 

 Free zones may also be restricted to certain industries. For instance, if you plan on establishing a manufacturing company, free zones where you will be able to operate include Dubai Silicon Oasis, twofour54, Dubai Airport Free Zone, Khalifa Industrial Zone, and Masdar City.

Avoiding Legal Problems 

 It’s important to be aware of the fact that the seven emirates of the UAE have different regulations regarding the conducting of business, including in their free zones. This means it is necessary to take legal advice from legal experts prior to starting a business or the process of business setup in a UAE free one. It can provide to be costly or at least entail an additional expense in talking to a specialist in UAE; however, it is an investment that you don’t want to miss out on, most especially when a mere consultation with a business setup expert prevents legal problems which you may run into when setting up and operating your business in the region. 

Prohibited Items in Free Zones 

 Import and/or export of goods in UAE free zones have little to no taxes and duties. However, it’s important that you remember not all goods or products are legal in UAE. There are certain products which are prohibited such as narcotics, weapons, radioactive materials, and many more. Also, imports and exports to economically boycotted jurisdictions are not allowed and are considered as illegal. It is necessary you follow the regulations in order to avoid your business from getting penalized or worse, get into legal trouble. 

Import and export of all illegal items will result to punishment as per the UAE legislation. If you don’t have any idea as to whether what you will be importing and/or exporting are illegal or not, we suggest you talk to a business setup expert in UAE.

Also Read: Essential Steps in Starting a Small Business in UAE

Keeping Extra Cash 

 There’s no doubt that UAE free zones offer a vast amount of opportunities from having an environment that is lucrative to low cost business setup. However, you need to be aware that there can be hidden charges as you set up a business in a free zone. Hidden charges can include administrative fees, card fees, and others. Have at least AED 5,000 as you’re setting up your business in a UAE free zone or hire an expert on business setup in UAE. A reputable firm offering business setup services will provide you with a breakdown of all the potential expenses associated with the process, so there won’t be any surprises and you will be able to prepare for it accordingly.

Different Kinds of Business Entities 

 Another thing to consider with business setup in UAE free zone is the type of entity to establish. There’s an FZE or Free Zone Establishment and FZC or Free Zone Company. For an FZE, there’s only one shareholder that’s required and the shareholder can be an individual (local or foreign) or company. Two or more shareholders are required for an FZC. These entities have their own set of rules and regulations. Different rules also apply for different free zones in different emirates. 

 In order to get the specifics for the business setup process that applies to your idea, consult with the business setup specialists of FAR Consulting Middle East today!