UAE Freezone Company Formation

FZE (Free Zone Establishment) is for single shareholders, giving you complete control like a sole proprietorship with limited liability. FZ-LLC (Free Zone Limited Liability Company) allows 2-5 shareholders, depending on the zone, perfect for partnerships. Both structures offer 100% foreign ownership and limited liability protection. Choose FZE if you’re a solo entrepreneur, and FZ-LLC if you have business partners or multiple investors.

IFZA (Fujairah) and SHAMS (Sharjah) are the most cost-effective, with packages starting from AED 11,900-13,000, including license and flexi-desk. RAKEZ (Ras Al Khaimah) also offers competitive rates at AED 13,500-15,000. While these zones cost 30-40% less than Dubai-based zones like DMCC or Meydan, they’re located outside Dubai. If you need a Dubai address specifically, Meydan Free Zone offers the best value starting at AED 16,000-18,000.

Yes, you can add or remove activities by submitting an amendment application to your free zone authority. Adding activities typically costs AED 2,000-5,000 per activity plus amendment fees (AED 1,000-3,000). The process takes 3-7 days. However, removing activities usually doesn’t reduce your license fee. It’s better to include all potential activities during initial setup to avoid amendment costs later.

Not necessarily. You can complete 80% of the process remotely through a power of attorney. Most free zones accept notarised documents and digital submissions. However, you’ll likely need one visit for corporate bank account opening, though some banks (Emirates NBD, ADCB) now offer video KYC for simple business models. Visa stamping also requires physical presence in the UAE, which typically takes 2-3 days.

Qualifying income refers to revenue that remains exempt from the 9% UAE corporate tax. To qualify, your free zone company must derive income from qualifying activities (listed in Cabinet Decision No. 55 of 2023), maintain adequate substance in the UAE (real office, adequate employees, core activities conducted in the UAE), not elect to be subject to corporate tax, and comply with all transfer pricing regulations. Most legitimate free zone businesses with proper substance meet these criteria.

Yes, an investor visa allows you to work for your own company without needing a separate work permit. You’re listed as the company owner/manager and can perform all business activities. However, you cannot work for other companies on an investor visa. If you want to work elsewhere while running your business, you’d need employment visa sponsorship from that other company.

Your visa quota depends on your office size and business activity. Flexi-desk spaces typically allow 1-2 visas, small offices (15-20 sqm) qualify for 3-5 visas, medium offices (30-50 sqm) get 6-10 visas, and large offices (50+ sqm) can sponsor 15+ visas. You can increase your quota by upgrading office space or applying for additional quota based on business growth and revenue. Each free zone has specific policies.

Non-compliance with Economic Substance Regulations (ESR) results in penalties starting at AED 10,000 for the first offence, AED 50,000 for the second offence within three years, and potential license suspension or cancellation for continued non-compliance. ESR applies mainly to specific activities: banking, insurance, investment fund management, lease-finance, headquarters, shipping, holding companies, intellectual property, and distribution centres. If your business falls in these categories, you must prove adequate presence, qualified employees, and core income-generating activities in the UAE.

Not directly. There’s no “transfer” mechanism between free zones since each operates independently. You’d need to cancel your current license and apply for a fresh one in the new zone, essentially starting over. This means new license fees (AED 10,000-25,000), new office lease, visa cancellations and reapplications, new bank account documentation, and business interruption during transition. Only consider this if the new zone offers significant long-term advantages.

It depends on your free zone and revenue. Many free zones require annual audits for companies with revenue above AED 1 million or those with certain activities (trading, manufacturing). Some zones, like DMCC, require audits for all companies regardless of size. Audit costs range from AED 5,000 to 15,000 annually, depending on transaction volume and complexity. Even if not mandatory, banks often require audited financial statements for account maintenance and credit facilities.