Top tips on how to set up your business in a UAE free zone

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One of the main attractions of the UAE for businesses is the wide range of economic free zones, which allow 100% foreign ownership and offer an easier route to setting up a business than forming an on-shore company.

But success won’t come from picking a zone at random – proper planning, research and due diligence is critical when it comes to choosing and setting up business in a free zone. Here are some of the most important factors to bear in mind when choosing your free zone.

  • Work out what your business is

This might seem obvious, but many UAE free zones have strict rules on what business types they permit. What legal structure do you need? Will you only be offering consultancy services? Will you be doing any on-site work with your clients? Where will your clients be? Will you be importing any physical products for sale? It’s important to work through all the possible options to make sure you find a free zone that fits your requirements for the foreseeable future.

  • Don’t just go on the name

Many UAE free zones are themed around a particular industry – Dubai Media City, Al Ain Industrial City, Dubai Multi Commodities Centre, and so on – but many are flexible about the types of businesses they will accept, sometimes out of necessity. For example, many IT-focused firms operated out of Dubai Knowledge Village for many years, in part because the popularity of Dubai Internet City made it hard to find space there.

  • Consider ALL the costs

Free zones often try to entice potential tenants with keenly priced starting packages, but as with any offer, these may not be the full story. Work out what your requirements are for office space, visas and staff, connectivity, warehousing, and other resources, now and several years ahead. Also make sure you account for any compulsory services the free zone may require you to take, along with whatever capital requirements it may impose on your business.

  • Location, location, location

While the UAE is a relatively small country with a good road network, making sure your choice of free zone is conveniently located is still a good idea. If your free zone presence is likely to be more virtual, you may not mind setting up somewhere remote, but if it will be your main base, think about how close it is to your residence, as well as to your clients and suppliers. Also think about your employees, if you plan to have them; while a free zone out in the desert may offer the best rates and decent facilities, will lower-paid staff be able to reach it easily? And if you are planning to live in a different emirate than the one your free zone is based in, make sure there won’t be any issues with visas or other permits.

  • Think about your partners

If you will be dealing in physical goods of any kind, think about what your partners, both on-shore and off, will need. Does the free zone have the capability and the know-how to handle and store the goods you will be importing, especially if they are perishable, fragile or high-value? Just as critical is getting goods out into the local market; will your local distributor be able to get the access they need?

  • Do some soft research

When you’re narrowing down your choices, don’t just go on what the free zone tells you. Try to find out what experiences others have had. Talk to free zone tenants with operations similar to yours. Take someone for a coffee, and get them talking about their day-to-day experiences in the free zone. Find out which shipping firms or local distributors do business with free zone companies, and ask them how they find it. And if you have the support of a national trade body, ask them what they’ve heard about your prospective free zone.

  • Plan for the paperwork

Once you’ve chosen your prospective free zone, the most critical next step is getting the required documents in order. Paperwork is often the main factor in determining how long it will take to set up your free zone entity, so getting it right first time can save days, weeks or even months of headaches. Most UAE institutions should be aware of free zone requirements, but take extra care if you need to provide any international documentation.

Note: This article was originally published on Accelerate SME and it has been republished on Zawya with full copyright permission.

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