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Dubai free zone company registration

The 3 Dos and Don’ts of Dubai Free Zone Company Registration

Few other global cities in the world can rival Dubai when it comes to entrepreneurial opportunities. This city-state is an attractive business destination for many entrepreneurs looking to start their own business.

Dubai offers many business benefits to startups.

It’s in an enviable location, strategically situated between three important markets: Asia, Africa and Europe. It is home to world-class infrastructure, modern amenities, and a stable economy. It is also expat-friendly, providing many tax benefits not found in other countries.

If you want to start a business in Dubai, then consider one of Dubai’s many free zones. Free zones offer aspiring entrepreneurs certain incentives such as 100% foreign ownership, no corporate taxation, and full exemption from import duties, just to name a few.

To help your entrepreneurial dreams get off the ground, follow the key dos and don’ts of free zone company formations below.

1. DO know the difference between company formations

One of the first things to do, before incorporating a company in Dubai or anywhere else in the UAE, is understanding the difference between company set up in Dubai. There are three types of company formations available to foreign investors and entrepreneurs: Mainland, Free Zone, and Offshore.

Of the three, only Mainland and Free Zone company formations allow entrepreneurs to conduct business in the UAE. Offshore companies cannot conduct business in mainland Dubai or the UAE.

While both mainland and free zone company formations are onshore companies, there are significant differences between them. These differences cover everything from ownership status to space requirements and allowable business activities.

2. DON’T engage in business activity without the right license

The jurisdiction of your company formation will determine the type of business license your company qualifies for.

For free zone companies, a business can only be conducted within the designated jurisdiction that has been selected or outside the UAE. To conduct any business locally, a free zone company is required to work with a local distributor or agent.

Business models that may require a local distributor or agent include import and export companies. Courier services will also require the help of a local distributor.

Most free zone company formations do not require approval from government authorities outside of the designated free zone. External authority approval is only necessary when special activities must be performed.

3. DO select the right free zone jurisdiction

In Dubai alone, there are over 20 free zones for a foreign entrepreneur to choose from. The UAE as a whole boasts over 45 free zones.

Each free zone caters to a specific activity. Dubai Media City is the ideal jurisdiction for creatives or those who work in the media industry. For startups catered to the finance industry, the Dubai International Financial Centre is the ideal setting.

4. DON’T proceed without a legal written agreement

While, in this instance, this pertains to businesses looking to conduct business activities within mainland Dubai, this is a good general business rule to abide by.

In the case of free zone companies looking for a local distributor or agent, a notarized written contract guarantees all services and fees are confirmed. Never rely on a verbal agreement when conducting business in a foreign country.

Doing so may put your business in financial risk before it gets off the ground.

5. DO work with a consultancy firm

To help ensure ease of navigation through the legalities and the required paperwork, work with a business advisory firm. Their local knowledge of Dubai and the other emirates in the UAE will be invaluable as you go through the process of incorporating your free zone company.

Not only will a business advisory firm be able to give you timely advice to ensure successful incorporation, but their experience in the field will also make dealing with local government bureaucracy easy and simple.

When sourcing a consultancy firm, work with a company that provides professional company formation services.

The right advisory firm for your business needs will be one that provides advice on investments in Dubai, business opportunities, company registration, and free zone company formation in Dubai.

If this is your first experience in incorporating a business abroad, working alongside a business advisory firm will be a cost-effective solution to incorporating a business in Dubai.

6. DON’T forget to do your research

This is a crucial requirement when trying to incorporate a business in a foreign country.

Before you start the process of incorporating a free zone company, take the time to visit Dubai and explore its culture and its residents. This will allow you to learn about the people you will be working with as well as the importance of local culture in business negotiations.

During your stay, be sure to visit the specific free zone you would like to incorporate your company in. This will ensure you understand any preconditions set by the free zone. Your visit will also inform what office sizes are available in your specified free zone.

Making your mark in Dubai

As a global trading hub and economic powerhouse, Dubai is the perfect place for any entrepreneur looking to start a new business abroad. When it comes to doing business, the opportunities and advantages present in Dubai are limitless.

Incorporating any new company can be a challenge, but particularly more so in a foreign city.

Luckily, if you’re an entrepreneur looking to set up a free zone company in Dubai, there are many resources available to you, including professional consultancy, to get your business started on the right foot.

Atit Shah

Atit Shah is a Digital Marketing Specialist and founder of Digiblogic. He is a foodie who loves Social Media, e-commerce marketing, traveling and photography. Digital marketing is his true passion and is something he has been obsessed with. Find him on Linkedin.