Freezone FAQs

What are the benefits for setting up in a UAE freezone?

A freezone is a defined and isolated land or setting, with a special tax, customs and imports regime, that is different from a mainland area. The main advantage of owning a freezone company is that as an expatriate, you can own the business 100% without having to give out any of its shares.

What are the freezone set up costs?

The average fees for setting up a Freezone licence in UAE, using a flexidesk virtual office with 1 or 2 staff visas is around AED 40,000 all in. The costs will vary from Freezone to Freezone and depending on where you choose to establish your license and your staff and office requirements. Freezone companies are lower cost than setting up a mainland company in the early stages, however will more staff the office costs in a Freezone will make this type of licence more expensive in the long run. Setting up your business in a Free Zone offers key advantages such as; 100% foreign ownership, zero personal and corporate tax as well as no import duties.

How long will it take to set up a freezone company in the UAE?

The time taken to incorporate a Company in UAE depends greatly on the complexity of the business to be incorporated. A simple Free Zone Enterprise (FZE) may be incorporated in a matter of days, whereas it can take several months for an Industrial facility to obtain all the permits required to operate safely and legally. On average we say to allow 30 days from start to finish assuming all documents are prepared and the authorised signatories are available.

What commercial space do I require for a freezone trade licence?

The commercial space requirements depending on the size of the business, the location and activity. A simple Free Zone Enterprise (FZE) service or consultancy company may be incorporated in a matter of days using a flexidesk or virtual office space at low cost, whereas in an Industrial or Logistics Freezone the company will need to rent industrial pace in order to obtain all the permits required to operate safely and legally – and the formation it can take several months pending approvals of the commercial space.

Can a freezone company conduct business anywhere within the UAE?

No, a Freezone company can only work with companies in the same Freezone jurisdiction that has issued the licence and with companies overseas. Strictly speaking the freezone company cannot conduct business with UAE mainland companies, although in practice this is a grey area and particularly for services companies these can often be provided if the UAE counterparty is happy to deal with the freezone company. The Freezone company, in some jurisdictions can now apply for a Dual Licence into the mainland to facilitate working with mainland companies.

What are the office requirements for a Freezone company?

A commercial lease agreement is a requirement to incorporate and operate a trade license in all Freezones, however must freezones offer a flexidesk arrangement for a limited number of visas – for example a low cost flexidesk / virtual office can be leased as part of the initiate freezone company formation and this will normally allow for up to 2 visas. Once the company looks to take on more than 2 staff they will need to rent a larger physical office in that Freezone. The Freezone will then normally increase the office rent requirements by about 10sqm per extra person hired on the licence.

Can I sale online in the UAE from a freezone company

An E-commerce platform Licence in a Free zone allows online buying and selling of products in UAE.

Free zones do have their own regulations meaning that companies cannot conduct activities outside of the Free zone.

Therefore to sell to the Mainland you would require a third party logistic company in order to deliver the products to the end user.

If however you wish to sell directly to the local market, you would require a Main land Licence.

An E-Commerce trading activity in the Mainland will qualify you to trade directly to UAE Mainland via an online platform without the need of a third party.

Can I rent an office space in Mainland UAE with a Free zone Licence?

It will be required to obtain a mainland Licence if you wish to have staff working from the mainland office. There is no limitation on the visa eligibility for a mainland entity, An Electronic Quota is issued to every company by the Ministry of Labor(MOL) which shows their visas eligibility and this can be increased by increasing the size of your office space.

Alternatively you may wish to consider renting an office in a Free zone. Free zone companies are limited to a certain number of visas and this normally varies from 1-6 visa packages. If you require more than the allotted allocation, then you may be asked to rent physical space inside that free zone. Office costs in Free zones are generally much higher than mainland locations and there is no Ministry of Labour registration in the Free Zone, so staff with a Free Zone visa cannot strictly work onshore in the UAE without special permission.

How much does it cost to set up a business in ADGM?

The cost summary is estimated below:

ADGM LLC Licence

• ADGM Government Fees : AED 18,950.00 (50 % reduction , this discount is valid until 31st December 2020.)
• In terms of office space requirements, a Flexi Desk is available at ADGM at approximately AED 15,600 per year.
• Should you require a physical office space, fees will vary upon number of employees.
• An internal office can vary between approximately AED 100,000 per year for up to 3 x employees to AED 280,000 per year for up to 9 x employees.

Please note that any corporate services within ADGM will be delivered through a third party ADGM registered Corporate Service Provider (CSP). Sovereign PPG is not a CSP within ADGM.