Dubai is known for its bustling trade and commerce atmosphere. The Emirate has worked hard to create a business-friendly environment with state-of-the-art infrastructure and investor-friendly policies. One key element that has propelled Dubai into a global business hub is its free zones.
What is a Free Zone?
A free zone is a specially designated area within Dubai that is essentially considered 'outside' the UAE for legal and tax purposes. It allows 100% foreign ownership of companies without requiring an Emirati partner. The free zone authority itself sponsors all companies operating within it.
Companies licensed in a Dubai-free zone can freely import goods and services without tax or currency restrictions. They can also freely repatriate profits and capital. Free zones offer all the advantages of setting up offshore companies, yet their operations are onshore within Dubai.
Benefits of Setting Up in a Dubai Free Zone
Here are some of the key benefits offered by free zones in Dubai:
100% Foreign Ownership - No requirement for an Emirati partner or agent. The free zone itself acts as the local sponsor.
Full Repatriation of Profits - Zero restrictions on repatriation of profits or capital back to the investor's home country.
Asset Protection—Assets within the free zone are protected through special registration processes and segregation from local commercial entities.
Zero Import Duties - No taxes or import duties within the free zone or when goods enter mainland Dubai.
Zero Corporate & Income Taxes: This program provides Relief from all corporate and personal income taxes for up to 50 years, renewable.
Access to Dubai's Infrastructure - Take advantage of Dubai's advanced logistics networks, connectivity, facilities and quality workforce.
Types of Free Zone Company Licenses
There are several types of company licenses offered by the free zones based on the nature of activities:
Trading License: For Import/Export, Distribution and Storage of Goods
General Trading License: For Trading in Specific Goods (determined by respective free zone)
Service License: For Provision of Services
National Industrial License: For Light Manufacturing Activities
Logistics License: For Cargo Handling and Logistics Activities
List of Major Free Zones in Dubai
Here are some of the significant free zones established in Dubai so far:
Jebel Ali Free Zone (JAFZ)
In 1985, JAFZ was Dubai's first free trade zone and is now home to over 7,500 companies. It is located next to the Jebel Ali Port and focuses mainly on logistics, warehousing and trading companies. Jafza offers very competitive rates for storage, office space and worker accommodation.
Dubai Airport Freezone (DAFZ)
Specifically targeting aviation-related businesses, DAFZ offers licenses for freight forwarding, aircraft engineering & maintenance, cargo handling services, trading, and general services. The free zone is located just minutes away from Dubai International Airport.
Dubai Multi Commodities Centre (DMCC)
DMCC focuses on the commodities trade and offers the entire ecosystem for this industry, including trading desks, secure vaults, freight forwarding, laboratories and more. It also houses the Dubai Diamond Exchange and various commodity exchanges.
Dubai Silicon Oasis (DSO)
As a technology park-free zone, DSO caters to businesses in IT, microelectronics, chip design, and other high-tech industries. It provides purpose-built warehouses, offices, and R&D facilities with the latest IT infrastructure.
Dubai Media City & Dubai Studio City
Both zones have been built specifically for the media industry, including TV, music, film, entertainment, broadcasting, publishing, journalism, and PR agencies. Dubai Media City is home to CNN, Sony Pictures, and the BBC, while Dubai Studio City hosts various Bollywood production houses.
Dubai Healthcare City
This free zone allows companies to offer medical, wellness, pharmaceuticals and complementary medicine services to take advantage of Dubai's medical tourism. DHCC offers the latest medical infrastructure for hospitals, clinics, medical universities, rehabilitation centres, etc.
For a complete list of all free zones in Dubai, see DED's official website. Each free zone caters to specific industries and offers tailor-made facilities and procedures to attract foreign investment.
Company Formation in Dubai Free Zones
The process of company formation in any UAE free zone is relatively straightforward and can be summarised in these steps:
Select your business activity and free zone based on their industry focus.
Choose a location and office/space that meets your requirements.
Apply for your trade license and visa quotas online. Most free zones offer one-window company setups that include license, space, and visas in one package.
Get regulatory approvals from respective departments (trade control, civil defence, etc.)
Set up your workspace as per approval.
Obtain a trade license and establish a company.
Sponsor visas for staff and employees
Commence business activities as a free zone company.
Reputed free zones like DMCC offer fast-track company formation services, flexible payment plans, and onsite banking facilities to simplify setting up a Dubai company.
Conclusion
Dubai's free zones offer unmatched incentives, making the Emirate a top choice for global entrepreneurs and investors. Catering to diverse industries and business activities enables almost any foreign business to set up a base in Dubai and leverage its strategic advantages.
Free zones eliminate barriers to entry through efficient business setup processes, tax exemptions, 100% ownership, and access to funding and talent. This explains why Dubai garners so much FDI each year.
By catering to diverse industries like IT, commodities, media, logistics and healthcare - these zones are accelerating Dubai's vision of becoming the top destination for investment and commerce globally.
Key Takeaways
Free zones allow 100% foreign ownership of companies in Dubai without needing Emirati partners
They offer tax exemptions, fast company setup, full repatriation of capital/profits
Dubai has over 30 free zones catering to industries ranging from IT, media, and commodities trading to manufacturing
JAFZ, DMCC, DAFZ and DSO are some of the top free zones
Each free zone offers specialised facilities and services tailored to their focus industry
Frequently Asked Questions
Q: How can I select the correct free zone for my business in Dubai?
A: Analyse your business activities and choose a free zone that allows and caters to that industry with relevant facilities/infrastructure.
Q: What are the yearly costs for renewing my Dubai Freezone company?
A: Renewal costs vary across free zones but usually include license renewal fees (5-20K AED) and office rent.
Q: Can I get a UAE residency visa by setting up a company in a free zone?
A: Every free zone company license includes quotas for sponsoring work residence visas for employees and owners.
Q: Can a Dubai-free zone company work and operate in mainland UAE?
A: Yes, you can do business in mainland UAE by appointing a local service agent or through a commercial license from DED.
Q: Do free zone companies in Dubai need audited financial statements?
A: Most free zones do not require yearly audits if your turnover is under certain thresholds (e.g. 5 million AED in DMCC).
Q: What industries cannot operate in Dubai's free zones?
A: Banned activities include oil exploration, military activities, radioactive materials, environmentally hazardous chemicals, etc.
Q: Can I open a business bank account for my Dubai Freezone company?
A: Yes, all reputed free zones offer the ability to open a business bank account with leading banks on-site.
Q: What taxation benefits do Dubai free zone companies have?
A: They enjoy up to 50 years of 0% corporate tax, 0% income tax, and 0% import/export duties within the UAE.
Q: Can I use a PO Box as a registered business address for my Freezone company?
A: No, you need to lease actual office or warehouse space or use third-party flexi desk options to get a trade license.
Q: What are the main business activities allowed in JAFZ?
A: Trading, importing/exporting goods, light assembly, warehousing & logistics, consulting services related to Jafza industries.
Q: Do employees working in a Dubai-free zone need medical insurance?
A: Yes, according to new Dubai Health Authority rules, every employee must have valid health insurance coverage.
Q: How long does it take to get my Dubai Freezone license approved?
A: Approvals can take 2 to 4 weeks, but some zones like DMCC offer express 48-hour company setup approvals.
Q: Can I get a housing visa by sponsoring my family on a Dubai Freezone company?
A: No, free zones can only sponsor employee work residence visas. For family visas, you need mainland companies.
Q: How many business activities can I include in a Dubai free zone license?
A: Generally, there are 2 or 3 related activities. However, zones like DMCC allow over 50 activities to be added in one flexible license.
Q: Can a foreigner have 100% ownership of a Dubai Freezone company?
A: Free zones legally allow 100% foreign ownership with zero requirement of Emirati partners or local sponsors.
Q: Which free zone is best for import and export business in Dubai?
A: JAFZA is specially optimised for trading & logistics companies that import/export goods regularly via sea and air.