5 UAE Free Zone Dos and Don’ts You Need to Know about

The United Arab Emirates (UAE) has become a hub of entrepreneurship in recent years, welcoming aspiring business owners from both the local region and the entire globe. For expats, however, the process of establishing a startup can be a tricky one. Typically, you’ll need to enlist the help of a local sponsor to set up a new business in the UAE, and this individual must be the owner of at least 51 percent of the establishment.

Free Zones are the only other option when it comes to opening a startup in the UAE. These are somewhat akin to offshore firms, facilitating free trade within their boundaries. Instead of needing to set up a Limited Liability Company with a sponsor, you’ll be able to open your business as a 100 percent owner. Your startup will also be exempt from taxes on imports and exports, and it will enjoy access to all the ready-made facilities that it needs for success. The only condition is that you must establish your startup in one of the designated free-zone areas, which means that you can’t just set up shop anywhere in the UAE.

Even so, free zones may be the best choice if you’re an expat looking to found a startup in the UAE. As you get everything in order, you should learn about these important dos and don’ts to ensure that you follow the correct free-zone protocol:

 

DO explore your options.

business

The UAE is home to nearly four dozen free zones, which are spread throughout every one of the seven Emirates. Certain free zones may be a better fit for your business than others, so you should do due diligence and explore this multitude of options before settling on a final decision.

Many of the UAE’s free zones focus on more generalized businesses. The Ras Al Khaimah Free Trade Zone, for example, has housed over 4,000 businesses since its inception in 2000. This sector features four distinct parks, which welcome startups that specialize in everything from technology to business. Dubai’s Jebel Ali Free Zone is another zone that welcomes many different types of startups. The oldest free zone in the UAE, it is situated near the Jebel Ali Port and the Al Maktoum International Airport. This prime location makes it easy for businesses to transport products anywhere in the world.

If free zones like these aren’t right for your startup, then you could consider setting up in one of the UAE’s more industry-focused areas. Businesses that work in the realm of information technology would benefit from operating within the Dubai Internet City free zone, for example. Financial startups have several options, including the Al Maryah Free Zone in Abu Dhabi and the Dubai International Financial Centre (DIFC).

 

DON’T overlook the costs.

Establishing a startup in a UAE free zone isn’t always cheap. You’ll need to allot funding towards visa and licensing payments before you can even open your doors. In addition, free zones typically charge far more in yearly rental fees than you will pay in other areas of the UAE. To rent out office space in the DIFC, for instance, you’ll be paying as much as $3,000 for every square meter. As such, you’ll need to plan carefully and choose a free zone that will accommodate your budget.

However, it’s not easy to anticipate every free-zone-related fee. For example, licensing your startup isn’t usually expensive, but it can come with a number of hidden costs. Between access fees and administration expenses, you could find yourself facing charges that you didn’t expect. Therefore it’s always beneficial to save extra money in case you encounter any of these hidden costs.

 

DO establish a bank account.

bank account

After licensing your startup in a UAE free zone, you must create a bank account for your business. Thankfully, there are countless financial institutions that you can work with. The UAE has many of its own banks, from the Commercial Bank of Dubai to Emirates NBD. If you’re more comfortable working with an international banking institution, then you can find choices such as Barclays and Citibank as well.

Whichever bank you choose, you shouldn’t immediately open an account that requires high minimum balances. Instead, you should base the size of your account on the needs of your startup. Look for a simple bank account with low fees to begin with.

 

DON’T forget to register for a visa.

As an expat, you will need to obtain a visa in order to live and work in the UAE. You must also register visas for your employees. However, the number of visas that you can acquire will depend on the free zone in which you wish to establish your startup. Once you determine how many visas you will need, you must ensure that all applicants complete an entry permit. If you fulfill the required criteria of this permit, then you may submit a status adjustment and undergo a fitness exam. Successful completion of these steps will enable you to obtain your Emirates ID and visa, which will allow you to open your startup.

 

DO seek help if necessary.

You may not feel completely prepared to open your startup in a UAE free zone, even if you’ve followed all the right steps. If you find yourself lost during the process, then you shouldn’t be ashamed to seek help. Try reaching out to other entrepreneurs who have established startups in a free zone. They’ll know better than anyone how to find the most affordable office spaces and how to tackle any issues with administration.

You’ll also need to complete government paperwork to register your startup in a UAE free zone. Most of these documents will be in Arabic, so you should hire a translator to help you if you’re unfamiliar with the language.