Top 5 Reasons To Setup Business in a Freezone, Dubai

For many decades, the UAE has been one of the most attractive destinations for foreign investors and entrepreneurs from all over the globe. What makes this place so appealing is the vision of the government, policies supporting the growth of the business, and the insatiable entrepreneurial passion. The financial, as well as tax benefits that are given by the government, are the cherry on the top. But, what is a free zone, and what are the reasons to Setup business in a freezone in Dubai? Let’s discuss.

Among the 7 emirates of the UAE, Dubai has come a long way since its inception. When it comes to company formation or business setup in Dubai, the best option we have got is doing business in a free zone jurisdiction.

Understanding Free Zone

Free Zones can be understood as special economic zones, regions, or jurisdictions governed by the Free Zone Authority. The authority issues licenses to the business concerns or establishments along with providing benefits such as financial and tax exclusions. The operations in the free zone and other related activities concerning license issuance are also taken care of by the Free Zone Authority only.

There are around 45 free zones in the 7 emirates of UAE, out of which about 30 zones are in Dubai. All the big global establishments, including the software giants like Microsoft, Dubai Financial Centre, Dubai Stock Exchange, etc., are all situated in the free zones in Dubai.

If you are an investor who is looking forward to a free zone company formation in UAE, then you have got 3 options:

• Free Zone Company (FZC).
• Free Zone Establishment (FZE).
• Branch of a business concern.

Reasons That Makes Business in A Free Zone in Dubai So Alluring

1. Absolute Foreign Ownership

One of the prominent benefits that make business setup in Dubai freezones so advantageous is the provision for complete ownership of business by foreign investors. This makes it possible for foreign entrepreneurs to avoid the need to find a sponsor of UAE nationality to form a company. For setup business in freezone UAE, the investor’s nationality doesn’t matter.

2. Tax Exemptions and No Requirement For Annual Audit

The mainland companies have to get their accounts audited every year, but that’s not the case with free zone companies. There is no requirement for the annual audit of accounts for the business in a free zone in Dubai. Although, there are some free zones that ask for audited company accounts every three years. But, this still saves you a couple of big bucks with respect to administrative and auditor fees.

The audit fee costs around AED 1000 and 25000 for single-owners and small- to medium-scale companies. The cost is even higher for large companies. We have all heard the phrase; a penny saved is a penny gained. So, even a small amount saved by establishing a company in the free zone totally makes sense financially.

In addition to this, the companies are exempt from paying 5% Value Added Tax when doing business with companies situated in the same or different free zones. Such a benefit is not provided to companies in the mainland.

Furthermore, the free zone companies do have to pay 5% VAT when transacting with companies in the mainland, but there is no requirement for VAT registration as long as the business volume does not exceed AED 3,75,000.

Read More – Tips for Starting  a Business in Dubai

3. No Restriction On Repatriating Business Capital And Profits

When doing business in the UAE free zones, no such rule is there to keep a certain percentage of capital or profits of business within the country. One has the privilege to repatriate the profits earned and capital invested whenever one wants and as much is required.

Not only is this, but the norms relating to international transactions are also liberal in the UAE. Transactions can easily be performed in most major international currencies, including USD, GBP, EUR, etc. One can also reap the benefits of a stable business climate as AED is pegged to the US Dollar.

4. No Duties Have To Be Paid For Import And Export

Another apparent reason that makes investing in free zones in Dubai favorable is the exemption given to companies located in free zones from paying import and export duties. Such a benefit can prove to be opportune for the businesses running industrial operations. They can conveniently import all necessary industrial machines and equipment without worrying about paying any import duties.

This exemption is even beneficial for businesses in the re-export industry. Many companies import raw materials from other countries, assemble them and export them from free zones to make profits.

Factors like these are what make Dubai free zones an enticing destination for business establishments.

5. Labour Restrictions Are Not Applicable In Free Zones

Recently, in September 2021, a rule came into effect in UAE relating to labour employment. According to this rule, 10% of the workforce of private sector companies on the mainland must be made up of citizens of the UAE.

This rule does not apply to companies in free zones. One can hire the most qualified person for the job, from any nationality. Plus, there are no minimum wages norms in the UAE, which is another advantageous point.

Conclusion

We discussed some of the most prominent benefits of setup business in freezone Dubai, UAE. There are several other advantages too, which can help a business prosper. With someone having the relevant experience to guide you in business setup in Dubai, you can choose the most eminent free zone to do your business. So, wait no more and contact Make My Firm now.