How to Choose the Best Free Zone for Setting Up A Business in Dubai?

There are plenty of business opportunities within the UAE Free zones. However, being a foreign investor, it may be a difficult choice when selecting the best free zone for your company set up in Dubai. If you think this decision is an easy one, you may be making a mistake. Making uninformed decisions regarding your business-free zone may bring you regrets. Since there are many regulations to comply with, making a calculated decision becomes crucial when you are doing business setup in Dubai free zone. You must know that all free zones in the DUBAI allow and restrict different business activities. Also, business setup costs may vary accordingly. Therefore, which Free zone you choose is an important matter.  

How to Find A Perfect Free Zone in Dubai? 

You may already know the seamless benefits offered by free zones for establishing your business and watch it grow. Considering some important points and following specific steps will let you come up with better decisions in terms of your business location. 

The first thing businesses need to do is to start the process of hiring a great business law firm. A good law firm in DIFC can help you with licenses, permits, certifications, banking help as well as any other areas that might be required for a new business set-up. In the last few years, DIFC has emerged as one of the top destinations not only in Dubai, but in the world when it comes to setting up new businesses. By working with a business legal firm, you will be able to ensure that you get the right foundations set up.

1. Type of Business Activity You Will Perform

All free zones have specified the list of business activities that can be performed within that area. Also, there may be different regulations in all free zones regarding how many business activities you can perform using a single business license. Therefore, it would be necessary to decide the business activities you will be performing. 

The cost of your license will be dependent on that; as the number of activities increase, the cost of the license increases. There may be instances when you require more than one license for a single company. Considering this, you may look out for activities that fall under the same category or covered under the same business license. 

For example, DMCC Free zone allows a company to perform six different business activities under the same license, which means there would be no recurring costs for multiple licenses if the code of selected activities starts with the same two digits. You are allowed to have different business licenses for working in the same free zone under several conditions. Based on the free zones and activities you choose; these stipulations tend to vary. Make sure to study which license you need based on your business activity and whether the free zones permit them.  

2. Figure Out the Type of Workspace You Need 

According to your business plan, you will be required to prepare for the future. If you don’t have any plans for a big expansion, or you’re not hiring employees for quite some time, you may get a Flexi-desk at one of the co-working spaces. They are the minimum facility requirement to avail business license in Dubai. 

However, if your business routine would involve meetings with clients and hiring employees, you should better opt for an office. If you need retail shops or warehouses, you will have to choose free zones accordingly. Not all free zones may provide the facilities you need. Also, it is important to note that you can perform business activities only in the one free zone where you have registered.  

3. Know How Many Dubai Residence Visas You Need 

Unless an employee is a Dubai resident, it would be mandatory for them to have a DUBAI Residence Visa. The quota for visas is determined by the facility type. You can only get a limited number of visas for a shared desk. It’s generally two or three, and this number may vary for different free zones. For physical offices too, space is an important factor for deciding how many visas can be availed for your company.  

4. Decide on Your Proximity from Airports and Seaports

You may need to consider the distance of your business setup from the airport and the seaport based on the activities you decide to perform. While setting up a company in Dubai, it is important that you come up with transportation strategies that can reduce your expenses. If yours is a trading company, probably these costs matter more. 

For example, it would be a great idea to register in the JAFZA Free Zone for your logistics, trading or manufacturing company. It’s located in the Jebel Ali port with numerous warehouse facilities, brokerage companies, and logistics. Thus, everything you need would be available easily. Considering these factors, make an informed decision. 

5. Share Capital Requirements  

When setting up a company in Dubai, you may be required to deposit an amount as share capital. You can either deposit it into your company account or the account held by Dubai free zone authority. The free zone authority will also ask you for proof of deposit. Based on your business activity, you will have to find the minimum required share capital in the specific free zone. When it comes to share capital, you get two choices: 

• Paid Up: You are required to deposit the share capital and provide its proof. 
• Authorized: You don’t have to deposit the share capital.  

As said earlier, the amount of minimum share capital would vary for different free zones. Therefore, make sure to collect all these details beforehand.  

6. Restrictions on Shareholders 

There are a few restrictions regarding several nationalities of shareholders in Free Zones. Moreover, setting up a company in the Emirates allows you to have high-risk nationalities as your company shareholders.  

7. Will You Need to Provide an Annual Audit Report? 

Some of the free zones in Dubai require you to submit financial statements like an annual audit report. Although this may not be the case for all free zones, you cannot miss it. For example, the DMCC Free Zone makes it mandatory for business owners to submit the annual audit report at the end of the financial year, as per the MOA. 

The report should be submitted through a Dubai auditor included on the DMCC Approved Auditors List. Not following the deadlines may require you to pay penalties. Regular submission of necessary financial statements entitles you to various considerable benefits. 

8. Enquire from Local Banks

Before setting up a business in Dubai free zones, it is important to know its reputation and whether it will yield profits for you. Asking your friends or browsing the web may not provide you with reliable answers always. In that case, consulting corporate experts and service providers would be a great idea. Local banks or business setup assistants may help you well. While you look into opening a corporate bank account for your company, make sure you’ve done all findings. 

9. NOC Requirements for Dubai Residents 

A NOC from the current employer who is sponsoring your visa may be required, stating that the company has no objections about you opening a business in one of the free zones. You need to be careful about this requirement, although it varies for different free zones. 

10. Set A Budget 

Collect information about the different fees that may be applicable for licenses, registration, establishment cards and rentals for the further few years of business operations. Considering visas for employees and shareholders, you will also be required to estimate the visa fees. All these may be time-taking and daunting but make sure you do it all right.