What are the benefits of setting up a business in a free zone?
Every free zone has its own regulations and is governed by its own authority, but they offer many similar benefits, such as complete foreign ownership, 100% repatriation of capital and profits, zero personal and corporate income tax, and easier business setup process, to name a few. Additionally, some free zones provide opportunities and benefits for various business categories which may include the freedom to do business even without a physical office, exemption from customs duties, and minimum auditing and bookkeep requirements.
Another important factor that entrepreneurs also look at is the cost. Free zones are generally a more affordable option than the mainland, but if you are looking to save further on your company setup, you might be wondering which is the cheapest free zone in Dubai or the UAE.
What is the cheapest free zone in the UAE?
If you’re asking about the price of investing in a specific free zone, the answer is: It depends on your business needs. You can’t really choose the “cheapest” free zone, if there’s any. Capital and tax requirements should not be the determining factor when choosing where to set up a company because you may end up paying “more” if you choose a free zone that doesn’t offer the most benefits for your business category.
For instance, you can choose a free zone with the cheapest capital requirements, but you can also end up with the following:
- Spending more on logistics and manpower
- Getting restricted form various business operations you will need
- You cannot register your company at the customs (you cannot do import/export operations).
- You cannot onboard semi-government organizations/participate in government tenders (your license won’t fit the requirements).
- You cannot conduct activity in the emirate you planned to have most of the customers (for example, all your customers are in Abu Dhabi, where company setup costs twice more than in Ras Al Khaima, but you decided still to set up in RAKEZ because it’s cheaper. As a result, you will not be able to invoice Abu Dhabi customers, especially if they are government/semi-government organizations, and you will still have to set up another AD entity. Thus, you end up paying more.)
On the other hand, a certain free zone may have a higher capital requirement yet offer incentives and exemptions along the way that can help you eventually save more on overall costs. So again, it depends.
How to choose the best free zone for your business?
As mentioned above, you have to consider all the factors involved when choosing a free zone other than just the capital and other fees involved. Here are some tips that can help you choose the best free zone in the UAE for your business:
1. Look for free zones that support your business activity.
Free zones have different lists of allowed business activities, and they also offer different benefits for specific business activities. From the 50+ free zones in the UAE, you can start narrowing down your options by shortlisting the ones that permit your business activity. It’s good to note as well that some free zones allow various activities to be filed under the same license, which can help you save on additional licensing costs.
2. Identify the facilities that your business needs.
Not all free zones offer the same types of facilities. Some free zones are better for those that require shared desks or co-working spaces, while the others are better for those who need bigger, physical offices or those who need warehouses. Shared desks usually provide a limited number of visas, such as three to four visas in Dubai and more in the Northern Emirates. As for a physical office, depending on the free zone where you will set up, this may or may not be a requirement. We recommend that you speak with professional business setup consultants to make the right choice.
3. Choose which location suits your business activity.
There are seven emirates in the UAE, and some emirates have more free zones than the others. If you are planning to expand your business in other free zones in the future and you prefer them to be close to one another, then we recommend that you choose an emirate with more free zones. You also have to determine if your business needs to be close to an airport, a sea port or other transportation hubs, especially if you are establishing a trading company.
4. Consider company setup fees and mandatory rent requirements.
You also need to research and plan ahead for the expenses that the operation in a certain free zone may require. They can include business registration fees, visas, licenses and rental fees, among others. Look for a free zone where the rental costs fit your budget and will allow you to maximize your revenue as well.
Each free zone in the UAE is different, so you cannot really tell which one is the cheapest for your business unless you do your research and consider all the factors involved in budgeting and expenses. It’s best that you seek expert advice from ExpressPRO when setting up a company in the UAE to learn all your options, such as which free zone to choose, and more.
Fill out the form below to schedule a free consultation with us and find out the cheapest free zone for your business, without limiting your potential for growth and expansion.