As the capital of the United Arab Emirates and the center of the business for the country, Dubai is considered to be the business hub of the Middle East as well as the financial center of the country and geographical area.
One of the reasons that Dubai is such a top location for foreign countries is the astounding growth rate in the area. While originally developed from oil revenues, the emirate now earns only about 5% of the total revenue from the area from oil. The other 95% is largely related to the booming industrial and production companies, financial sectors, real estate market and the significant push to make the city a top tourist destination.
To accomplish this, the emirate has developed a uniquely Western-style approach to attracting businesses. The emphasis has been on developing an iconic city and commerce area that is easy to recognize and is associated with big, progressive and influential projects. This includes buildings such as the Burj Khalifa tower at 2,722ft which has become the tallest structure in the world, offering mixed-use development both in the tower and in the area around the massive building.
Other projects of note include the Burj Al Arab hotel, Marina 101, Princess Tower, The Almas Tower and the Emirates Office Tower to name just a few. The areas of the city around these landmark buildings are thriving hubs for businesses started by both national as well as foreign investors.
Free Zone Overview
In Dubai, there are several free zones which are designed to offer tax-free and customs free benefits to expatriate investors. These free zones are formally known as free trade zones of FTZs. While they are open to foreign investors, there is strict application and approval process that all foreign investors must go through to be able to open up a business within the designated free trade zone.
All of the free trade zones in the emirate are managed and overseen by the Free Zone Authority of the specific location. For example, for the Jebal Ali free zone, which is a port area, the Jebal Ali Free Zone Authority has control over the application process and approval for foreign businesses.
Not surprisingly, the benefits of these free zones are very helpful to the economy. In fact, in fact, most of the free zones in the emirate have approximately a 25% growth rate per year, and most of the areas are expanding rapidly to accommodate companies coming into the area.
Each of the free zones in Dubai is focused or designed with a specific category of business as the focus for that zone. The Authorities for the respective free zones are very careful to approve only appropriate businesses to meet the category for the area.
However, general categories of businesses such as trade, international or service allow for multiple business types within one free zone. Working with a legal firm experienced in assisting foreign companies with their applications, licenses, visas and approvals for the free zones can provide specific information based on the business plan.
Currently, there are 17 free zones in Dubai. These range from the design district to the Healthcare City or the International Academic City. There are also free zones in place or financial businesses, internet and technology companies, commodities trading, media production as well as the Dubai Gold and Diamond Park to name just a few.
Setting Up a Company
When foreign investors choose to open up a company in one of the Dubai free zones, there is not need to work with a national partner. In other words, the company can stay owned 100% by the people with citizenship of another country. Should the company choose to open up outside of the free zone, there is the requirement for at east 51% of the company to be owned by a UAE national partner.
Additionally, once there is approval of the proposal by the free zone authority, those individuals can go to through the investor visa process and assume residency in Dubai. The value in this is not just to be close to the business; there are some very important financial considerations as well. In Dubai, as well as throughout the UAE, there are no corporate or personal taxes, which is an incentive for many to move to this beautiful part of the world.
Ideally, contact a legal firm that specializes in company incorporation and business setup within Dubai and the UAE. This legal representation will be instrumental in ensuring the various documentation, applications and approvals are all in place to avoid unnecessary delays or incomplete or inaccurate information being submitted to the free zone authority.
The attorney will also provide specific information on the need to verify the foreign investor’s identity as well as to meet all requirements for ensuring the legal firm is verifying clients as per the standard practice and protocol.
Part of the process in meeting with the attorney will assist in determining the best type of business model to operate. These business types are pre-set, with your business matching one of the types. The attorney will talk to you about the amount of investment capital that will be required if the application is approved. This can be obtained from a local financial institute or investors abroad, but it will have to be available at the time that the business is registered.
In addition to documentation, identification and corporate or company verification it will also be important to consider names for the business. The top law firms specializing in assisting foreign investors recommend selecting one name and four to five alternatives to avoid delays is the first choice of business name is already in use.
It is also essential for the investor to understand the rules and regulations of during business within as specific free zone. The rules can be complex and may have cultural significance that a person not familiar with the area may not understand. To avoid this working with a Dubai-based or UAE-based legal firm is always the best option.
There will be a need to have a designated office space within the free zone that will serve as a business address. It can be shared office space or larger suite of offices, but most banks in Dubai or the UAE will not open an account for a foreign-owned company without a physical address in a free zone.
Additionally, it will be important to make sure all fees associated with the application, visas and other business startup costs are available. The attorney will review the costs associated with the application and for the services of the legal firm. By having the attorney review all documentation and provide legal representation through the application and approval process there is much less risk of delays or complications.
Finally, with approval, the final step will be to obtain a business license to be able to offer products or services. It will also be necessary to meet with auditing firms in Dubai as the license renewal will need to be completed with an audit report by an approved auditing firm. By meeting in advance, it is easier to find an auditing firm with experience in your industry as well as business model and have this in place well in advance of the license renewal date.