There are a number of factors to consider when choosing the right free zone for your business. These include the registration fee and capital requirements. It is also important to check if the chosen trade name is available.
Foreign investors throng to Dubai for its world-class facilities and ease of doing business. They are a great option for startups and SMEs.
Dubai Free Zones offer a variety of tax exemptions that can save your business money. These include 100% foreign ownership, exemption from VAT on imports and exports, and no requirement to have a local sponsor. However, you should always seek advice from a tax expert to ensure that your business complies with all legal requirements. The best way to do this is by working with a company formation specialist, which can assist you with the process and help you choose a compliant name for your business.
In addition, the Decree-Law introduces the concept of ‘disqualifying income’, which is a new element for free zone entities and could prove to be a significant vulnerability. This is a result of the absence of a personal income tax in the UAE, which generates incentives for individuals to erode their corporate tax (CT) base by making excessive payments to themselves and their connected persons. This will be monitored by the CT authorities and needs to be in line with transfer pricing rules and the arm’s length principle.
Qualifying income will be defined in the upcoming cabinet decision, but is likely to include income from sales made by entities located in a designated free zone to mainland businesses where the mainland company is the importer of record. It will also include passive income such as interest and royalties, and dividends from shares held in mainland UAE companies.
100% foreign ownership
Setting up a business in the UAE requires a lot of paperwork and compliance. It is best to hire a company with experience in Dubai free zone company formation to streamline the process and avoid any issues down the road. They will be able to help you with a wide range of services, from choosing a compliant trade name to registering for taxes and obtaining industry-specific licenses.
One of the most important steps in the process is deciding on a trade name for your business. This should be a unique and memorable name that will accurately represent your business. You should also ensure that it is compliant with all naming conventions, as failure to do so may lead to rejection by the authorities during registration.
Once you have a compliant name, the next step is to apply for a business license in Dubai free zones. Different free zones offer different types of licenses, so it is important to choose one that suits your business needs. Once your business has a license, you can start trading in Dubai and the UAE mainland.
A free zone company is an attractive option for foreign investors and entrepreneurs because it offers 100% ownership and zero corporate tax. It is also possible to open branch offices in the UAE mainland, allowing you to expand your reach and market to a larger audience.
No local sponsor
The UAE has made significant strides in establishing itself as one of the world’s top business destinations. This is evident in the latest IMD World Competitiveness Ranking 2021 which placed the country as the 9th most competitive economy in the world and the 6th in Europe, Middle East and North Africa regions. The country offers a great opportunity for investors to set up their businesses in Dubai free zones and benefit from its zero-tax policy and easy-to-navigate rules.
The process for setting up a free zone company in the UAE involves submitting passport copies of the shareholders, their addresses and occupations to the local authorities. Once the details have been verified, a letter is issued to open a bank account in order to deposit capital. This capital must be retained until the license is issued. Depending on the type of company, the authorities may request a business plan in brief.
There are various free zones in the UAE that cater to different industries. For instance, Dubai Media City is home to global media enterprises, such as news agencies and publishing houses. Dubai Internet City is a hub for global technology companies and Dubai International Financial Centre caters to the finance sector. Besides the tax benefits, free zone companies can also enjoy customs duty exemptions which add to their savings and convenience.
Easy to set up
The UAE offers a lot of opportunities for foreign investors and entrepreneurs to start businesses in the country. While it is a great place to do business, many investors are concerned about the cost and process of setting up a company in the country. While this can be a challenge, there are some things that can help make it easier. Here are some of them:
One of the most important factors to consider when starting a free zone company is its location. It is best to choose a free zone that has a reputation for being supportive of foreign investment. This way, you can be assured of getting the right support from the government. In addition, a good location will also help your business get a foothold in the local market.
Another important factor to consider is the legal type of your company. You will need to decide whether you want to set up a free zone company or a mainland company. Depending on the legal entity you choose, there are different rules and regulations that apply.
A free zone company is a legal entity that operates within a designated area of the UAE and is exempt from import and export duties. It can be owned by 100% foreign shareholders and does not require a local sponsor. Additionally, free zone companies are tax-exempt and have access to a large market.