Setting up a business in the Dubai Freezone offers numerous benefits that make it an attractive option for entrepreneurs worldwide. The Dubai Freezone is known for its business-friendly environment that enables foreign investors to run their businesses efficiently and profitably. This article discusses the key benefits of setting up a company in this dynamic region.
Key findings
- Low tax burden promotes financial growth and profit maximization.
- 100% ownership allows full control over the company without local partners.
- The possibility of 100% capital and profit repatriation offers financial flexibility.
- No corporate or income tax increases the attractiveness for international business people.
- Strategic location and modern infrastructure support global trade and expansion.
1. Low tax burden
In Dubai, companies in the free zones enjoy a low tax burden , making them an attractive location for company formation. Corporate tax is completely exempt and there is no VAT for these companies. This represents a significant financial advantage, especially when compared to the high tax rates in other countries.
Simple accounting and the possibility of complete tax exemption significantly reduce administrative burdens while protecting privacy.
The following table shows the tax advantages in Dubai compared to Germany:
| Tax type | Dubai | Germany |
|---|---|---|
| Corporate tax | 0% | Up to 30% |
| VAT | 0% | 7% - 19% |
| Income tax | 0% | Up to 45% |
These tax incentives are particularly attractive for those who want to set up an offshore company, as they not only reduce costs but also increase financial flexibility.
2. 100% ownership
The ability to set up a company in the Dubai Freezone with 100% ownership offers numerous advantages. This means that foreign investors can have full control over their companies without having to involve a local partner. This is particularly attractive for those who want to be independent in their business models and strategies.
- No need for a local sponsor : This greatly simplifies the startup process.
- Full control over business decisions and profits : Investors retain complete decision-making power and benefit from all profits achieved.
- Flexibility in management : Entrepreneurs can freely choose and implement their business strategies.
The Dubai Free Zone allows ownership structures to be flexible and tailored to the needs of international businesspeople, fostering a dynamic and innovative business environment.
3. 100% capital and profit repatriation
The Dubai Freezone allows companies to fully repatriate their profits and invested capital . This provides significant financial flexibility and encourages reinvestment in the company or repatriation of funds to investors. The freezone ensures that no local taxes or duties affect repatriation.
- duty-free
- no reporting obligation
- quick release of documents
In January 2022, the Ministry of Finance announced that it would introduce corporate taxation. This will come into force on either July 1, 2023 or January 1, 2024. Capital and dividend income, among others, are exempt from this.
4. No corporate or income tax
In the Dubai Freezone, companies benefit from significant tax relief . There is no corporate or income tax for companies, which makes Dubai an attractive location for starting a business. This is especially true for freezone companies, which are completely exempt from taxes if they qualify.
Dubai’s tax freedom allows companies to fully reinvest their profits and accelerate growth.
The simple accounting, which only includes income and expenses, as well as the low requirements for tax returns, significantly reduce the administrative burden. This not only promotes efficiency, but also the privacy and data protection of entrepreneurs.
5. Strategic location
Dubai offers an optimal strategic location between Europe, Asia and Africa. This central position enables companies to access important global markets and facilitate international trade. The proximity to these major economic centers is crucial for developing new business opportunities and provides a unique platform for global expansion.
Dubai's geographical location is a decisive advantage for companies that want to operate internationally.
The benefits of Dubai’s strategic location include:
- Access to a broad market of over 2 billion people
- Easy access to important trade routes
- Fast connections to international seaports and airports
6. Modern infrastructure
Dubai offers a modern infrastructure that rivals the world's leading economic centers. The city has an excellent road network, a comprehensive public transport network and an advanced telecommunications infrastructure - these elements are crucial in supporting business activities and increasing corporate efficiency.
- Airports and seaports : Dubai has modern airports and seaports that not only facilitate the movement of people but also ensure smooth transportation of goods.
- Transport networks : The well-developed transport networks enable easy business travel and efficient logistics.
- Telecommunications : The state-of-the-art telecommunications infrastructure supports digital communication and business processes.
Dubai's infrastructure provides a solid base for companies that want to operate in a dynamic and competitive environment.
7. Large network of successful business people
Another great advantage of setting up a company in Dubai is access to a huge network of business people and entrepreneurs. This is because the city is an important trading location and a popular destination for international companies. Due to the large network, entrepreneurs in Dubai have greater access to potential investors and business partners than in other cities in the world.
An absolute MEGA TEAM! All questions are answered quickly and perfectly. We are happy to have founded the company with you. Even after the company was founded, you are always available to us! A huge THANK YOU to you!
8. Skilled workers
Dubai offers easy access to an international pool of skilled workers , making it an attractive location for companies looking for talented and competitive employees. The city attracts thousands of foreign nationals willing to work in a dynamic and growing economy. This allows companies to choose from a wide range of skilled workers.
In Dubai, it is also common practice to obtain necessary visas and work permits efficiently, which makes the process of hiring employees much easier.
The following steps are required to hire employees in Dubai:
- Obtaining necessary visas and work permits
- Registration with the Ministry of Human Resources and Emiratization (MOHRE)
- Registration with the Dubai Health Authority (DHA) and taking out health insurance
- Obtaining approval from Dubai Electricity and Water Authority (DEWA) and other utility companies
9. Supportive government
The UAE government has made a strong commitment to ensure a conducive business environment and improve business opportunities. In addition, the government keeps organizing various international events and takes numerous initiatives to expand business activities. The government provides an easy-to-follow, fixed set of rules for doing business. All entrepreneurs must adhere to these in order to establish and run their businesses smoothly.
The UAE government has supported more than 8,000 start-ups.
Some of the specific benefits offered by the government include:
- Simple visa application process
- Fast document release
- No reporting obligation
- No minimum stay per year
10. Digital company formation
The ability to set up a company in Dubai without having to be physically present offers tremendous flexibility and efficiency for entrepreneurs worldwide. Digital company formation in Dubai makes it possible to carry out all the necessary steps online, from choosing the legal form to registering the company. This includes submitting documents and communicating with the authorities.
Documents required for company formation:
- Passport copy
- Three trade names for the company
- Address in home country, mobile number and email address
- Electronic signature
Important note: The passport must be valid for at least 6 months.
The digital platform provides clear guidance and expert support to make the process as smooth as possible. This allows entrepreneurs to focus on building and developing their business without having to worry about the logistical challenges of setting up a company locally.
Conclusion
Setting up a company in a Dubai Freezone offers numerous advantages that make it an attractive location for entrepreneurs worldwide. From tax incentives and the opportunity for 100% ownership to modern infrastructure and a supportive business environment, Dubai is a prime choice for expanding or starting a business. This article has highlighted the key advantages that make Dubai one of the world's leading business centers.
frequently asked Questions
What is a free zone?
A free zone is a specially designated economic area in Dubai that allows foreign investors to have complete control over their companies without local partners and to benefit from various tax advantages.
What tax advantages does setting up a company in a Dubai Freezone offer?
Companies in the Dubai Freezone pay no corporate or income tax and benefit from a low VAT rate of 5%, maximising companies' profits and investment opportunities.
Can I have full ownership of my company in Dubai?
Yes, in Dubai Free Zones, foreign investors can have 100% ownership of their companies without the need for local partners or shareholders.
Is a physical presence in Dubai necessary to set up a company?
No, digital company formation allows most processes to be handled online. A physical presence is only required for the residence visa and opening a bank account.
What strategic advantages does Dubai offer as a location?
Strategically located between the world's major economic centers, Dubai offers access to global markets, a strong economy and modern infrastructure, making it an ideal location for starting a business.
How does the Dubai government support new businesses?
The Government of Dubai offers comprehensive support through simplified administrative processes, financial incentives and a large network of successful businesspeople, which promotes business development and expansion.