Dubai has over 20 different free zones (free trade zones) in which you can set up a company. But which free zone is the best for setting up a company, what is the procedure and how much does it cost to set up a company?
What free zones are there?
There are now over 20 different free zones in Dubai. These differ primarily in terms of the respective industry specialization and the licenses (business licenses) they issue. Here is an overview of the most important free zones in Dubai.
JAFZA (Jebel Ali Freezone)
One of the best known and oldest free zones in Dubai is JAFZA, short for Jebeli Ali Freezone. It was established over 40 years ago to boost Dubai's economic growth. This free zone has its own port and is particularly interesting for industrial companies engaged in trade. Hundreds of billions of US dollars worth of trade passes through JAFZA every year and is an essential part of Dubai's economy.
In addition to the port, JAFZA is one of the few free zones that also offers the option of renting warehouses. This is particularly important for traders in goods and raw materials.
THEZ
One of the fastest growing free zones is the DIEZ, short for Dubai Integrated Economic Zone. This free zone is located in the Dubai Silicon Oasis district and specializes primarily in the technology and service industries. Accordingly, there are many licenses in this area. DIEZ is also the free zone with the IFZA works together.
MEYDAN
The Meydan Freezone is also one of the most important freezones in Dubai and is located next to the well-known Horse Race Stadium in the Meydan district. In terms of licenses and services, the Meydan is very similar to the DIEZ and these freezones are not only geographically close, but also compete strongly in terms of business.
DMCC
Another important freezone in the retail sector is the DMMC, short for Dubai Multi Commodities Center. The freezone has been an important part of Dubai's freezone infrastructure for over 20 years. But the DMCC has also often been named one of the most important freezones in the world beyond its borders.
DMCC originally specialized in trading (precious metals, energy, steel and agricultural products), but now has a broad base and has developed into a comprehensive economic hub in recent years.
DIFC
The most important location for financial and crypto companies is clearly the DIFC, short for Dubai International Financial Center. All major banks and financial institutions, as well as new exchanges, are listed on the DIFC.
Among tourists, the town is best known for its high-end restaurants and clubs.
Advantages of a Freezone company
The advantages of a Freezone company over a Mainland company are relatively clear.
1. in principle Freezone companies in Dubai much cheaper. There are several reasons for this.
- Freezone companies do not need a physical office
- Freezone companies can be founded remotely
- Freezone companies are largely unregulated. Only a few licenses require regulation or approval by the authorities.
2. moreover, freezone companies can be set up and closed more quickly than mainland companies.
3. freezone companies do not need an Emirati sponsor. A company can therefore be owned by a foreign founder without restriction.
Freezone company formation procedure
The process of setting up a company in a free zone in Dubai is relatively clear, as are the costs (more on this later). Here is a step-by-step guide to setting up a freezone company in Dubai.
Freezone choice
The first and sometimes most important step is the choice of freezone. With over 30 freezones, the choice is correspondingly large and you should think carefully about which freezone to choose. The freezones differ mainly in terms of location, costs and licenses.
The location is less important in the selection process, as you don't have to travel to the Freezone every day. Usually 1-2 times a year in day-to-day business.
The costs are of course always decisive, although they do not vary greatly within Dubai. The free zones compete with each other and their prices are therefore very similar. There are therefore no major differences here. Only outside Dubai is it cheaper, but we do not necessarily recommend this.
Foundation
Once you have decided on a free zone in Dubai, the second step is to set up the company. This is usually possible regardless of location or remotely and takes 3-5 working days.
After the foundation, you can theoretically open an account with certain online banks such as 3S Money or Currenxie. For all those who want to open an account with a physical bank or who already Emigrate to Dubaimust perform the following steps.
EVISA / Entry
After incorporation, an EVISA is usually applied for for the managing director (if he does not yet live in Dubai). With this EVISA, entry into the UAE as an employee is officially possible. The EVSIA must then be presented at passport control at the airport and stamped or scanned.
This step is essential; if it is skipped, enormous additional costs are incurred as the VISA process has to be restarted.
VISA / Emirates ID
With the stamped EVISA or the EVISA stored in the system, you can then start the process for the RVISA (Residency VISA) and the Emirates ID start. This process is in turn divided into 3 essential steps.
- Medical Check - The medical check is a brief examination for highly infectious diseases such as: HIV/AIDS, syphilis, hepatitis A, B and C, tuberculosis and polio.
- EID application - If the medical check is positive, you can apply for an EID. With this completed form, you then go to biometrics.
- Biometrics - During biometrics, fingerprints are taken once. This provides clear identification for future transactions with the Emirates ID.
Once these three steps have been completed, the Emirates ID will be sent to the address provided. This usually takes 3 working days.
Account opening
As soon as the manager or you yourself have the Emirates ID, you can Open a bank account in Dubai. It is important that the company is not only set up correctly, but also has a legitimate appearance. Letterbox companies without physical or digital substance are generally rejected. That is why it is important to have a comprehensive web presence if you cannot prove that you have an office or similar. Website, LinkedIn and social media are mandatory.
Depending on the type of business you run, there are different banks that make sense. WIO is recommended for start-ups or service providers, Mashreq for companies of different types and corporations will be well served by FAB or HSBC.
Tax registration
Since 2023, one essential step is to register the company with the Dubai FTA, short for Federal Tax Authority. Those who fail to do so within 60 days risk severe penalties of up to AED 10,000.
In addition, it is necessary to register VAT or VAT exempt from a certain turnover.
Accounting & annual financial statements
Ongoing tax compliance also includes ongoing bookkeeping and annual financial statements. For this purpose, it is recommended that an accountant or Tax consultants in Dubai to get involved.
Costs
The costs vary slightly depending on the free zone. Basically, you can assume that you can get a company with 3 licenses and a VISA for +- €5,000. This is usually required for the managing director.
Additional VISAs for employees increase the costs accordingly. From the 4th employee onwards, it is also necessary to rent a physical office.
Costs are generally higher for 3 or more licenses. The combination of licenses is also decisive. Combining commercial licenses with service licenses usually results in additional costs.
Freezones outside of Dubai generally cost a little less. However, they have a less good reputation and are usually not as reliable when it comes to processing. In some cases, there are also problems when opening an account.
Summary
Setting up a Freezone company in Dubai has numerous advantages and is very popular with expats or global entrepreneurs for good reason. The ease of incorporation, wide range of licenses and tax benefits speak for Freezone. In addition, you can obtain your own residence visa via the Freezone to work in Dubai living to be allowed.
However, the foundation should be well considered and ideally accompanied once. After all, the costs are +-5,000€ for the company formation alone and this should be handled properly. It is not possible to reorganize or move the company to another free zone.
Ultimately, you should also know and comply with the legal framework. These include tax registration, bookkeeping and annual financial statements. Additional permits are required for certain activities, for example.
