If you’re an entrepreneur looking to start a business in the UAE, a free zone license in Dubai could be the right option for you. A Dubai free zone license features significant financial and logistical conveniences, which makes it an attractive choice for first-time business owners.
However, there are some things to consider before you settle on a free zone license in Dubai:
How much capital do you have?
The biggest advantage of a free zone license in the UAE is that it saves businesses from paying most taxes, duties, and customs. Free zone companies are also not always required to rent or purchase office space, which further lowers their startup cost.
Therefore, business owners with limited funds may opt for a Dubai free zone license initially until their company is profitable enough to branch out into the Dubai mainland. If capital is not an issue, then business owners can determine whether the perks of a Dubai mainland license (government contracts, freedom to trade overseas, among others) justify the higher price for them.
Where are your clients located?
A free zone typically restricts a company from conducting business within its vicinity. When opening a free zone company, it is essential to ensure that the surrounding areas can generate enough business for your business. If not, then a different free zone or the Dubai mainland may be a better choice for you. With an e-commerce license in Dubai free zone, you can import goods into the country without import duty levied on you. But you can only trade goods within the free zone area.
In order to reach clients in the wider market or trade internationally, free zone businesses ultimately relocate to the mainland or open branches outside of the free zone.
How much business experience do you have?
For first-time business owners, the hassle of business registration and other startup processes can be overwhelming. In Dubai’s free zones, the managing authorities have created straightforward processes for setting up and operating a business.
This eliminates the need to coordinate with multiple government departments, as is the case in the mainland. Most mainland businesses need to receive approvals from the Department of Economic Development as well as other relevant authorities such as the Ministry of Human Resources and Emiratisation.
For eg, If you are planning to get a restaurant license in Dubai free zone, you just have to get approval from the relevant free zone authority along with the approval from the Department of Health and Safety and Department of Tourism and Commerce Marketing.
How many employees do you plan to hire?
Unlike Dubai mainland companies, a free zone company is issued a limited number of employee visas depending on its company structure and the size of its premises. For instance, in the Dubai Multi Commodities Centre (DMCC), a company is entitled to one visa for every 9 square metres of serviced office space. If your company requires a larger staff, a Dubai mainland license may be better suited for you.
How soon do you plan to diversify?
Free zones in Dubai tend to be industry-specific. A company located in Dubai’s Healthcare City, for example, may not be able to expand its business to other sectors unless it relocates outside of the free zone. Therefore, business owners should consider their future plans for growth can accommodate this restriction before acquiring a Dubai free zone license.
Are you interested in exploring your business options in one of the UAE’s free zones? Our trusted business setup consultants in Dubai offer expert advice on starting a free zone firm and guide clients through every step of the process. Contact Decisive Zone for more information.
Decisive Zone is a business setup company helping you find the best-suited solution when establishing a company in UAE. Decisive Zone will advise you on the corporate structure and jurisdiction to choose from, while covering all technical, administrative and financial aspects of UAE business setup.