Why Dubai Free Zones?
Dubai, the heart of UAE has countless features but its salient characteristics are its reasonable location and oil industry which play a vital role in its economic growth. It is situated near the coast of the Arabian Gulf s’ why its map of development has changed in the last 20 years altogether. Now Dubai has become well-reputed in terms of business for Europeans because it has introduced new dimensions in the field of business. Its feasible structure attracted traders to invest in free zone companies.
The company formation in the free zone in Dubai has innumerable advantages that produce a lot of profit without any hitch to foreign investors at a high level. Businesses set up in Dubai presented matchless facilities to the investors who were reluctant in this matter. Now they have their own free Zone incorporation which is free from the jurisdiction of the UAE . They have its own rules and regulations. Without any custom duty.
Dubai's Free Zones offer companies significant tax benefits, mainly to attract foreign businesses. Companies in Free Zones generally enjoy a 0% corporate tax on qualifying income, as long as they meet specific criteria set by the UAE Corporate Tax Law, effective from June 2023. These requirements include maintaining "adequate substance" within the Free Zone, registering with the Free Zone authority, and earning "qualifying income" largely from activities within the zone. Non-qualifying income may be subject to a standard 9% tax if it exceeds the De Minimis threshold (either 5% of total revenue or AED 5 million, whichever is lower)
Tax Benefits in Dubai Free Zones
To benefit from corporate tax exemptions in Dubai’s Free Zones, companies must meet specific criteria established by the UAE’s Corporate Tax Law, effective from June 2023. Here are the primary requirements:
- Adequate Economic Substance: Companies must demonstrate a substantial economic presence within the Free Zone. This typically includes having a minimum number of employees, conducting core income-generating activities within the Free Zone, and possessing sufficient resources to support these activities.
- Qualifying Income: Only income deemed “qualifying” by the Free Zone Authority is eligible for tax exemption. Qualifying income generally includes revenue from activities conducted within the Free Zone or from international business. Non-qualifying income, including any income from local (UAE mainland) transactions, may be taxed at the standard rate of 9% if it exceeds either 5% of total company revenue or AED 5 million, whichever is lower.
- Registration and Compliance: Companies must be registered with the relevant Free Zone Authority and comply with all its regulations, including maintaining accurate records, submitting tax filings, and following local business regulations.
- Adherence to UAE Corporate Tax Law: All activities must be conducted according to UAE tax laws and regulations, including requirements for documentation and periodic reporting to remain eligible for the tax benefits.
In addition to tax exemptions, Dubai Free Zones provide customs duty waivers, 100% foreign ownership, and no personal income tax.
Advantages of Setting Up Business in Dubai Free Zone
The benefits of a free zone business setup are many. The ideal location makes it very lucrative for trade. Free zones provide many benefits for investors. It is completely under the possession of foreign investors. There is also a chief benefit in a free zone: 100% repatriation of capital and profit. It is partially free from taxes. There is no restriction on transferring funds. It is also under the law of free zone authorities. Its freight charges are meagre.
- 100% foreign ownership.
- Repatriation of capital and profits.
- Exemption from corporate tax for 15 years.
- Customs duty exemptions on imports and exports.
- The business in Free Zone Company is without duty-free.
- Confidential operations with no interference from the government.
- Easy bank account setup and visa facilities for employees.
- Repatriation of capital and profit are 100%.
- The business in a Free Zone operates with various tax exemptions, including customs duties on goods imported for business purposes.
- Investors can get visas for staff and other support services and house facilities without any trouble.
Steps to Set Up a Business in Dubai Free Zones Area
Setting up a business in Dubai’s Free Zones has become an emerging trend. Follow these steps to successfully establish your business in a Free Zone:
- Selection of Business Entity: The initial step is to select a business entity that aligns with your goals. Your license should match your business activity, allowing you to operate different types of activities within the Free Zone. The type of license you apply for will largely depend on the nature of your business.
- Select a Specific Free Zone: Choosing the right location is essential, as each Free Zone is dedicated to specific industries. For instance, Dubai Media City caters to media companies, while Dubai Internet City focuses on IT-related businesses. Selecting an appropriate Free Zone aligns with your business operations.
- Available Company Name: Ensure that the company name is available for registration in the UAE and meets local standards. Avoid names that are controversial or have religious or political connotations to prevent issues during registration.
- Documents & License Application: Once you've decided on the above, apply for a business license. The license type will depend on your business activities. Our team at UAE Company Registration can assist with all paperwork, streamlining the process so you can focus on your business.
- Starting a Business Bank Account: Opening a bank account in the UAE is straightforward, requiring minimal paperwork. UAE Company Registration can help facilitate this process, ensuring your funds are managed smoothly and legally.
Dubai Free Zone Company License Cost
The cost of a Dubai Free Zone company license varies depending on factors such as visa costs, license fees, and office premises. Dubai Free Zones offer bundled packages that include licenses, visas, and office spaces. It’s important to budget accordingly to cover all expenses required to establish your business in the Free Zone.
Types of Business Setups in Dubai Free Zones
- Free Zone Establishment (FZE): Can be registered with a minimum of 1 shareholder.
- Free Zone Company (FZC): Can be registered with 2 or more shareholders.
- Branch Office: Allows you to establish a branch of your parent company in UAE.
Types of Licenses Available in Dubai Free Zones
- Trading License: Allows general trading and exporting of goods.
- Service License: For providing specific services permitted under the Free Zone.
- Industrial License: For manufacturing and production activities.
- General Trading Activities: Holders of this license can import, store and distribute goods verified under Dubai Free Zone
Dubai Free Zones
Explore a wide range of Free Zones in Dubai that cater to specific industries:
- Dubai Academic City
- DAFZA
- Dubai Biotechnology & Research Park
- Dubai Design District (D3)
- Dubai Industrial City
- Dubai Internet City
- Dubai Media City
- Jebel Ali Free Zone
- Dubai Silicon Oasis Authority
- Dubai International Financial Centre (DIFC)
- Dubai Logistics City
- Dubai Studio City
- Dubai Techno Park
- Dubai Technology and Media Free Zone
- Jebel Ali Free Zone
- Economic Zones World
- Dubai Flower Centre
- Meydan Free Zone
- Dubai Humanitarion City
- International Free Zone Authority
- Dubai Aviation City Corporation