Frequently Asked Questions
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What language must the application and the accompanying documentation be in?
Free zones only accept documents and application forms completed in the English or Arabic language.
In order to have an office in Dubai, is it mandatory to live in Dubai?
No, 100% foreign ownership is allowed in the Free Zones. However, most Free Zones require that the General Manager is a resident of the U.A.E. Therefore, most of our clients apply for a residence visa for one of their managers. The Watermill Consultants is happy to assist you with the visa application procedure.
Do I have to rent an office or warehouse in Dubai?
Most Free Zones require businesses operating in their Free Zone to have physical presence there. In most cases to qualify for and to hold a license, the company must be in possession of a valid lease for office space, warehouse space, or development land. Physical presence in Dubai might furthermore be attractive for tax reasons, which we can tell you more about.
What are the advantages of a business setup in a UAE Free Zone? Why is it attractive to register my company in a Free Zone?
Registering your company in a freezone is attractive for the following reasons:
- 100% foreign company ownership
- 100% repatriation of capital and profits
- Exemption from all import and export duties
- No corporate tax
- No dividend tax
- Abundant and inexpensive energy
- Competitive labor costs, skilled labor force and easy recruitment procedures
- ’One-stop-shop’ Administration services
- On-site customers inspection
- Companies registered in a Free Zone can operate 24 hours a day
What is a Free Zone?
Free Zones (also commonly known as free trade zone, free economic zone or tax free zone) are designed for boosting international business by providing 100% foreign ownership and single window administration convenience. Each Free Zone has its own specific requirements regarding permitted activities, office and/or warehouse space. Companies which are not registered in the Free Zones require a local sponsor and allow maximum 49% foreign ownership.
What are the limitations of registering a company within one of the Free Zones?
Some limitations of registering your company in a Free Zone are:
- A Free Zone Company is not allowed to trade directly with the UAE market
- The Free Zone Company can trade within the UAE only through the locally appointed distributors
- Custom Duty of 5% is applicable for local business
- Employees with visas from free zone companies are expected to work only from the company’s offices or other buildings within that free zone
What is the difference between a business setup in a Dubai Free Zone and a Non Free Zone?
A Free Zone license will give you 100% ownership of your company and complete control of your business. Incorporating your business in a Free Zone also tends to be a cheaper and easier process.
An advantage of a Non Free Zone setup, a local DED (Department of Economic Development) Mainland license, is that this type of license allows you to freely operate in any area of the UAE. Even though a local Emirati sponsor who would have 51% ownership of your company, certain businesses simply work better with a Non Free Zone license. In other words, when you have a Free Zone license, you are allowed to operate only within that Free Zone but with a Non Free Zone license, you will not be restricted to one area.
If you are not sure what is the best option for your business, a Free Zone or Non Free Zone, please contact The Watermill Consultants to discuss your options. We will provide you with advice on the best area for your proposed business activity, find you a local sponsor, or when a free zone is the most appropriate, we will advise you on which Free Zone is most suitable for your business.
Is it difficult to obtain a Non Free Zone / DED Mainland license?
The process for obtaining a DED Mainland license is quite different and more strict in terms of documentation and legalities. It can be a challenging process because not only do you have to sign these documents, so does your local sponsor.
What is the minimum capital requirement for a business setup in a Dubai Free Zone?
The minimum capital requirement to incorporate a Free Zone Limited Liability company (FZ-LLC) depends on the business activity. There is usually no capital requirement for branch companies.
Which legal form should I choose for registering my business in the UAE Free Zone?
When selecting a legal form for your business in Dubai, you must take into account the business type, business activities, the number and the nationality of the owners and the ownership options. There is a vast range of legal forms for you to choose from. The most common forms are:
- Free Zone Establishment (FZE) – One individual share holder
- Free Zone Company or Free Zone Limited Liability Company (FZCO or FZ-LLC) – More than one member
- Branch Office
For full explanations of all the options, The Watermill Consultants can provide you with more details.
Why should I not choose to set up my company in a UAE Free Zone?
You might not want to choose to do business in a Free Zone, when your company:
- Practices a regulated profession
- Requires many visas and/or warehouse or office space
- Plans to establish a long term presence in the UAE and would like to reach out to the UAE market
- Has a particular UAE company or individual to partner with
What are some commonly used Free Zones in Dubai?
- Jebel Ali Free Zone Authority (JAFZA)
- Dubai Multi Commodities Centre (DMCC)
- Dubai Airport Free Zone Authority (DAFZA)
- Dubai World Central (DWC)
How long does it take to set up a business in Dubai? What is the indicative time frame for the registration/licensing proces?
This depends on the Free Zone and whether the company will have an individual or corporate shareholder. Even though it is often stated that a company can be formed within 48 hours, our experience is that it is best to keep in mind that it can take between 3 – 6 weeks to get your business up and running.
Is it required to obtain an employment /residence visa after registering my business in the UAE?
This depends on the Free Zone or Mainland license. In some cases it is compulsory, in some cases it’s not.. However, it is desirable that the General Manager of the company does obtain one. The General Manager is authorised to sign on behalf of the company and is responsible for day-to-day business. It is required for the visa holder to be in Dubai every 180 days (6 months) otherwise the visa will be cancelled. In order to obtain the visa the person needs to be in the UAE for approximately one week, during which he/she will need to undergo a medical exam.m.
Which documents are required to setup a company in the UAE?
The required documents for a new incorporation depends on whether the company will have an individual or corporate shareholder. The Watermill Consultants will assist you throughout this procedure to ensure that nothing will be overlooked. An indicative overview of the documents to be submitted:
- Passport copy of shareholder(s)
- Application form
- Memorandum of Association
- Article of Association
- Chamber of Commerce Extract
- Board Resolution (if required)
Do I need to appoint a Local Service Agent in order to obtain a DED Branch of Free Zone Company License?
Yes: When the Free Zone Company (FZC) is under 100% foreign ownership or when the shareholders are UAE citizens and holding less than 51% company share, a Local Service Agent is required.
No: When the FZC has a local partner with an ownership of more than 51%, the DED will consider the FZC to be a UAE company, so a Local Service Agent will not be required.
Can we meet The Watermill Consultants only in Dubai?
The Watermill Consultants is based in Dubai and The Netherlands. We look forward to meeting you in one of these countries.
Which are the most centrally located Free Zones in Dubai?
Dubai Internet City (DIC), Dubai Media City (DMC), Knowledge Village and Dubai Multi Commodities Centre (DMCC).
Which are the most suitable Free Zones for logistical purposes?
Jebel Ali Free Zone Authority (JAFZA), Dubai Airport Free Zone Authority (DAFZA) and Dubai World Central (DWC).
Which are the most commonly used banks for Free Zone Companies in the UAE?
Emirates NBD, Noor Bank, Mashreq and ADIB.
What is the UAE Free Zone employment visa application process like?
The Watermill Consultants will assist you from start to finish. We will start the formal application procedure at the Free Zone. It will take approx. 1 to 2 weeks for the Free Zone to receive your Entry Permit. Depending on the time we will either send you the Entry Permit by courier, or deliver it to the customs at the airport. You will then have to enter the UAE with this entry permit within 60 calendar days from the date of issue. After entering the UAE you will have to undergo a medical exam and apply for your Emirates ID card. Once the medical results have been received your passport will be submitted to immigration together with the medical results and Emirates ID application. After this stage it will take approx. 4 more working days to receive back your passport with employment visa. You are then free to leave the country. For more information, please contact us.