Dubai has been an attractive destination for entrepreneurs all over the world, for a long time. Some of the benefits for entrepreneurs is low tax, a strategic location between the east and the west. The growing economy, and a government committed to support businesses. While this might be some of the most well know reasons why to consider starting a business in Dubai. The free zones are also a major reason. So, what is a free zone and why should you think about one?
Free zones are economic areas where services and goods can be traded, normally at custom rates and special tax. They are also known as free trade zones and are geographically defined areas within the UAE, permitting 100% foreign ownership and are in most cases dedicated to a specific industry. The free zones were originally made to improve business in the region by offering advantages to foreigners. Today there are currently around 50 free zones across the UAE. We have put down some reasons why you should think about starting a business in a free zone in Dubai.
1. Quick Setup Process
The set up process in most free zones is uncomplicated. The exact application process will depend on your chosen free zone and business activity. In most cases you are only required to provide some basic documentation such as business paperwork and passport copies. The process often takes around a week or two.
2. Tax Benefits
This is possibly the most interesting reason why you should think about starting a business in a free. If you set up a business in a free zone in Dubai, you will benefit from 0% corporate and personal tax, your business will also be free from VAT, currently at 5%. Free zone businesses are also free from export and import tax and can trade with no currency restrictions.
3. Foreign Ownership
When setting up a business in a free zone, you will maintain 100% ownership, which is different from if you set up a mainland business.
4. Trading in the UAE
Businesses in Free zones are not allowed to trade directly with the local market in the UAE, however this is easy to overcome. There are different options for you to choose if you want to trade within the UAE.
5. Privacy Protection
Free zones are especially popular when it comes to entrepreneurs who are aware about privacy. In Dubai there is no open directory of company ownership and company information such as shareholder details are never revealed to the public.
6. Customer Support
Free zones often support when it comes to starting a business in their free zone and many also assist with opening corporate bank accounts. Many entrepreneurs also contact company formation specialist to help with analysing the market, choosing the right free zone, setting up a business and a corporate bank account.