22 Jul

Starting A Freezone Company In The UAE, Pros and Cons

Starting a company in the United Arab Emirates is a dream for many people. Acquiring basic knowledge is one of the first steps you take when you start thinking about establishing a business in the UAE. Now, you will read about the pros and cons of installing a Freezone company in the UAE. 

A business setup in Dubai Freezone is as accurate as it sounds. The UAE offers three types of business setups; mainland, offshore, and Freezone. Of course, there are differences between a Freezone company and mainland or offshore company. Still, the most basic one is that if you start an offshore company in the UAE, you will have to have a business partner who would be a resident of the UAE and hold 51% of the company’s shares and assets. Still, if you start a Freezone company, you own 100% of the company, and the condition mentioned earlier does not apply. 

So, here are the gains and losses of a Freezone company in the UAE.

Pros – 

(1) Complete ownership - As mentioned previously, when you do a business setup in the Freezone of Dubai, you can own 100% of your company. No such business partner is required to legally set up your business, which you are not eligible for on mainland or offshore companies.

(2) Exemption from taxes - One of the significant advantages for a Freezone company in Dubai is that you are exempted from all export, import, and corporate taxes, including customs duties. 

(3) Confidentiality - The data of your Freezone company can be kept 100% secret, and there is no requirement of revealing it to any authority, however.

(4) Trade Barriers  - For a company set up in the Freezone of Dubai, there are no trade barriers, and the company is free to trade in any country, all across the globe.

(5) No physical office Required - As simple as it may sound, there is no requirement for a physical office once you start a business; however, Future Vision suggests that a physical office may be set up once your company has grown enough. 

Cons –

(1) Business Limitations - There are almost no barriers to international trade. Still, to trade inside of the UAE, outside of their Freezones, there may arise some restrictions for which you might need to hire a commercial agent. 

(2) Limited Activities - A Freezone company in Dubai has to access to limited activities depending upon the jurisdiction and governance.

(3) Higher Office Rent - Usually, a Freezone company does not buy land but works on rented land, and the rent in the Freezone may get higher when compared with mainland rent, which might cause trouble to the business. 

(4) Region - Another possibility is that your business might not be so much profitable in the Freezone compared with mainland companies, depending on which part you are settling your business and the economic interests of the particular area. 

(5) Specific Businesses - Not all nature of businesses can be run on every Freezone; each Freezone has particular business fields, and other than that, no other kind or nature of work is done. 

As it may seem, establishing a business in a Freezone in Dubai may be beneficial, but it also depends on what kind of or nature of the business activity is taking place. It also depends on the region of your Freezone area. It may seem to be a little more complicated than mainland or offshore companies, but it might not be complicated with the right advice and guidance.

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