Are you a foreign investor in the UAE and wondering which free zone is the best for you?
This is what most entrepreneurs will ask themselves. And for a good reason.
There are a lot of options. This article explains the options that we usually recommend to our customers after identifying their needs. It will be as if you are in a sales meeting...
...But then online.
Which Free Zone To Choose?
All free zones have a couple of similar characteristics. 100% foreign ownership possible. Tax free besides import duties (* since 2018, certain types of companies are subjected to 5% VAT).
But there is a lot of difference in price and what you can do with the company.
In order to understand what free zone is best for you, there are three important questions we always ask our clients.
Will you do business inside the UAE?
What is the activity you will be doing?
What kind of UAE “presence” do you need for you and your business?
Why are these questions important?
Companies that have their clients outside of the UAE and don’t do business inside the UAE can use Dubai for its business image and banking services. In that case, you could use an offshore company.
Most of our clients use offshore companies. They are cheaper than the free zone companies and easy to set up.
If your business requires the characteristics mentioned, you do not really have to look any further.
We recommend the RAK FTZ Offshore company. There are other options, but this is the best. To understand why, read: Different Offshore Companies In UAE
RAK Free Trade Zone Offshore Company
The RAK FTZ Offshore Company is ideal for doing business internationally. You can use the company actively for trading, consultancy or freelance work. You can also use the company passively like holding IP or investment (discover more: Use The RAK Offshore As Holding Company)
This legal entity is very flexible to use and the process of setting one up is straightforward. This company can have a Dubai bank account. It will also have a registered office in Dubai, so for the outside world it looks like a Dubai company.
use a RAK offshore to have a local office, get visas, or import goods into the UAE.
All in all a good choice for most foreign investors.
But what if you want to want to do business inside the UAE or you simply need more substance? Then, the other two questions become important:
Question 2: What is the activity of your business?
The logic behind free zones is to provide a business hub for similar companies to create synergy. That is why there is a media free zone, a creative free zone and commodities trading free zone.
As a result, this means that not all activities are suitable or can even be accepted by every free zone.
Question 3: What kind of UAE “presence” do you need for you and your business?
Not all free zones offer the possibility to rent an office space or a warehouse. Or perhaps these are available, but not in a desirable location.
And do you wish to get a visa or hire staff? Then there are a lot of differences in requirements and costs.
Once we know the answer to these two questions we will usually advice to use one of three free zones.
We have dealt with a lot of free zones in the past and these are currently the best functioning and competitive free zones: the Fujairah Free Zone, The Ajman Free Zone and the DMCC (JLT) Free Zone.
Fujairah Free Zone Company
The Fujairah Free Zone is by far the most flexible and easy to set up. Whenever the business activity fits, we always recommend this free zone to our clients. This Free Zone is one of the fastest to set up your business and requires the least amount of paper work.
Moreover, with their low annual fees they offer on of the cheapest solutions for those who wish to have a visa. This is really the best free zone in the UAE to work with. But can you also set up a company like this?
The Fujairah Free Zone Company is perfect for international consultants like business consultants, managements consultants and lifestyle consultants.
Other activities that the Fujairah Free Zone is good for: Internet entrepreneurs, designers, music and entertainment industry, e-commerce, event managers, writers, publishers, online marketing, advertisers, online trainers and many more.
Trading or manufacturing companies cannot use the Fujairah Free Zone.
Ajman Free Zone Company
The Ajman Free Zone is comparable to the Fujairah Free Zone Company in price and ease of set-up. The zone is located close to Dubai, providing you with the option to rent an office space, and manufacturing or storage facilities. Its port makes it ideal for trading.
This Free Zone is ideal to use when you have a trading or manufacturing business.
Moreover, their annual fees are amongst the cheapest in the UAE and they offer the cheapest general trading license in the entire UAE.
This Free Zone also can be a fast way to set up your business and requires a minimum amount of paperwork. It does require the shareholder or a power of attorney holder to visit the office of the free zone (in Dubai) during incorporation.
Dubai Multi Commodities Centre Free Zone company (JLT Free Zone)
The incorporations mentioned above are often used for lightweight businesses. When your business needs real “substance” or rent an office space to hire staff, you go to the DMCC.
The Dubai Multi Commodities Centre Free Zone is better known as Jumeirah Lakes Towers (JLT). Here you can easily rent an office space in a luxurious building of any size you want. When you set up your business here, you are in the centre of New Dubai and on a prime location to receive your clients, giving you the ultimate professional image. The Free Zone is connected to the metro and to the new Dubai tram.
This free zone is very innovative and most services like visa applications and incorporation can be done online via a revolutionary online members portal.
Having said that, the process of setting up this type of company requires a number of different steps. Our experience is that the set-up takes a couple of weeks at least. Also, the costs are significantly higher than the other Free Zone options. You will be required to hire an office space or flexidesk.
Other Free Zone Options
There are lots of other free zones and this space is evolving all the time. Procedures change and. The free zones compete with each other for business, which gives them have an incentive to be favourable. However, sometimes a difference in procedures makes them unable to deal with reality.
Make sure to ask our agents the latest news on what particular free zones are good for you.
There are a lot of different free zones in the UAE. Making a choice can be overwhelming. But with a few questions it is easy to identify which free zone is the best option for you.
Contact us by filling in the form below if you want to talk to someone about setting up your company.
We can identify for you which free zone to choose.
You might also be interested in the following:
Things To Know About Starting A Business In Dubai
Visit the RAK Offshore and Dubai free zone
page to find out more details about setting up your business in the UAE.
In case you want to use the UAE for tax planning, the article UAE Tax Treaty Network Expanding
might be of interest.
Buying a property in Dubai? Read our article on holding Dubai real estate with a legal entity