Initially, the idea behind free zones in Dubai and UAE was to form business communities, that would be united around a certain industry. This is how a free zone DMCC (Dubai Multi Commodities Centre) and many other free zones in Dubai and UAE were established. From its inception date, DMCC free zone authority was admitting trading companies. Later, DMCC started accepting service companies, restaurants, medical establishments and so on. Today, despite sometimes highly specialized names of free zones in UAE, one can form free zone companies in UAE from a wide spectrum of industries.
Let's assume that you already know what type of business in Dubai you want, what services you will be offering, and you concluded that Dubai free zone company setup is exactly the right choice for you. (If you are still not sure, as to whether you require a Dubai freezone company or you may need a local company, go to our BUSINESS IN UAE (https://uae-consultants.com/starting-business-dubai/) page, scroll down, read and decide.) But what to do next?
We suggest to take the following next step: determine your budget. If your budget is below USD 10,000, you may consider to set up your business in Ajman, Sharjah, Ras Al Khaimah, Fujairah or Umm Al Quwain. Conducting business in Dubai free zone may be well above your planned budget. In the event, your investments are USD 20,000 – USD 30,000 or above, no need to look further than company formation in Dubai free zones.
In case your investments allow it, you will definitely choose Dubai free zone company formation. To complete registration, it will take you 2 to 3 weeks. The minimum share capital required for registration in one of Dubai free zones is USD 13,700. If there are two shareholders in the company, you will need to double the amount, for shareholders to become eligible for investor visas. Share capital needs to be deposited into the company's bank account by the end of the company's registration process. Once a company is incorporated, shareholders may dispose of share capital, as they deem necessary.
The average budget for free zone company set up in Dubai is approximately USD 9,000. An issued business license is valid for one (1) year and it needs to be renewed on an annual basis. A license specifies business activity or activities free zone companies in Dubai are allowed to conduct. If your plan is to trade and to render services and the services are not related to the products/goods you wish to distribute, you will need to obtain two different licenses. In certain cases, even adding seemingly related business activities on one license may be associated with additional charges.
Now let’s assume that your company has been successfully formed. It is time to mention all of the annual expenses that you need to account for.
These are as follows:
1) office rent,
2) mandatory medical insurance for employees,
3) expenses for auditing services.
All companies in UAE are requested to submit audit reports to relevant registration authorities on an annual basis. At the moment, auditing requirement is more a formality, rather than a conspiracy theory. An audit report can demonstrate registration authority that the company is active and conducts business activity.
HERE YOU CAN SEE A LIST OF UAE FREE ZONES
If your budget is low or you are looking for a suitable residency option, do not forget that there are also other free zones in UAE, with some of them being in other emirates outside Dubai.
There are certain advantages in connection with a business set up in free zones in UAE outside Dubai. First of all, these are costs with regards to company registration. A new company can be incorporated for an overall fee of USD 4,000 (with minimal resident visa quota). Next, there is no requirement to deposit share capital into a company's bank account. It is sufficient to declare share capital amount in statutory documents only. What is also important, most free zones in UAE that are based outside Dubai, Sharjah and Abu Dhabi, waived the requirement for an annual audit. This allows to minimize your annual expenses on business operations and does not spend USD 1,500 – USD 2,000 on auditing services every year. Another advantage of registration in a free zone outside UAE is that there is at the moment no mandatory requirement to provide employees with medical insurance (we recommend to check it before you apply for company formation). Health card suffices for this purpose. And again, this decreases your annual operational costs.
It is a mandatory requirement for freezone business setup in Dubai & UAE, in general, to rent an office space in order to obtain a business license. Rental options that different free zones in UAE offer vary. However, all rental offers of Dubai free zones and of free zones in other emirates can be presented as follows:
Flexi-desk is frequently mistaken for a virtual office. This is rather a workstation in a room, a desk and a chair. This workstation is usually rented for usage, for nearly five (5) hours per week. Additional time is offered by free zone at an extra charge. Not all Dubai free zones offer flexi-desk facilities.
On the websites of Dubai free zones, you can find information on available facilities for lease. We recommend checking this information in person with free zone representative prior to registration.
At the moment when you decide to initiate company formation in Dubai free zones, you may find out that facility you intended to lease is unavailable. By that time, it will be too late and costly to move to a different free zone.
Office rent in Dubai for 3-4 employees will cost you USD 15,000 – USD 20,000 per year. Rent of an office similar in size in a different emirate is usually priced at USD 8,000 – USD 10,000 per year.
Overall expenses associated with company formation in Ajman, Sharjah, Umm Al Quwain, Ras Al Khaimah, and Fujairah start at USD 5,000 per year. Such a company allows you to apply for one (1) resident visa. The said fee already includes the cost of license and rent of a flexi-desk facility.
The most reasonable setup option in one of the free zones in Dubai is priced at USD 10,000. This also includes the cost of a flexi-desk rent. Your additional expenses for company's license maintenance in Dubai will be auditing services or additional USD 1,500 – USD 2,000 a year.
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