In recent years, many Trade License Zone have arisen to assist freelancers, consultants, and small firms in obtaining UAE licences. Before forming a corporation in one of Abu Dhabi’s or Dubai’s Free Zones, consider the following questions.
1. What are the main startup expenses in a Free Zone?
While many Free Zones advertise inexpensive setup fees, there are a variety of mandatory expenditures that can pile up.
The five main expenses in any Free Zone are:
Trade Name Holdings
- Registration
- Merchandise
- Office Lease
- Visas and other fees
These are divided into one-time and yearly fees. While the registration fees are reasonable, installing in any Trade License Zone for less than 30,000 AED (based on a virtual office arrangement).
Why create a business in a Free Zone?
Establishing a business in a Free Zone has several benefits, including:
- 0% foreign ownership
- 100% capital and profit repatriation
- 100% exemptions for corporations and individuals
- Duty-free import and export (but you cannot import into mainland UAE)
Trading in a Free Zone has some advantages. Many Free Zones provide free training and networking activities regularly. Most charge a fee for meeting spaces and encourage members to exchange business possibilities inside the Free Zone.
Do I need a business bank account?
Usually, a business bank account is necessary before applying for a trade licence. Some banks may need a copy of the company’s trade licence before opening an account. You should always seek guidance from your selected Free Zone first; they will have helped many enterprises establish themselves and will be able to propose the most efficient banks. In certain situations, the company bank account may be ‘soft opened’ with only the initial paperwork and then completely opened after the final Trade Licence is received.
Do I need to show a lump sum?
Many Free Zones need a bank deposit and proof of cash before completing your setup.
Need a local partner?
The significant distinction between forming a corporation in a Free Zone and onshore is the lack of a local partner. This implies you may keep 100% control of your company. But there are drawbacks. Some firms and governments prefer doing business with onshore companies over free zones. Some sectors, notably those requiring onshore regulatory permits to operate inside the UAE, need an Onshore licence before you may use it. In a Freezone, a counterparty default might occur due to an invoice or contract disagreement with an Onshore supplier or customer. So free zones benefit certain businesses but not all.
How much are the conference rooms and how many free hours?
Most Trade License Zone have at least one meeting room available for hire at a reasonable rate, and depending on your office leasing package, you may be allowed to use it for free for a few hours every month.
Do Free Zones allow one sort of business?
It’s not uncommon for Free Zones to specialise. TwoFour54 in Abu Dhabi is a media-free zone with numerous well-known media enterprises, whereas Dubai Healthcare City targets healthcare providers and suppliers. It’s vital to examine the Free Zone and ensure your firm will fit in. Ultimately, your organisation will profit from operating in a collaborative atmosphere where networking is commonplace.
Some sectors aren’t allowed or acceptable for a free zone, so conduct your research and consult an expert.
