If ever there was a good time to take the plunge and start your own company in the UAE, now must be it.
With a government that is openly encouraging entrepreneurs to have a go along with the prospect of Dubai Expo 2020 and all the opportunities it will afford, it is hardly surprising that free zone trade licences are in demand.
And the UAE Ministry of Economy is keeping this momentum going, recently meeting with officials of several free zones including twofour54, Masdar City, Dubai Airport Free Zone, Dubai Creative Clusters Authority, Dubai Silicon Oasis Authority, and Ajman Free Zone to strengthen partnerships and mutual cooperation.
For those who are unclear, a Free Zone is basically a free economic area and registering a trade licence in one has several benefits for start-ups. These include 100 per cent foreign ownership, repatriation of capital and profits, free transfer of funds, and exemption of import and export duties. Free zone company formation is also much quicker than incorporation outside and is generally less expensive.
Getting a free zone licence is the only way a firm can start operations in the country without local partnership. GN Focus gets expat entrepreneurs in the UAE to share a list of dos and don’ts while setting up business in a free trade zone in the country.
Study all options
British expat Will Rankin and two friends pooled their resources in 2013 and set up a Fujairah Creative City free zone consultancy through Creative Zone in Downtown Dubai. He says doing your research makes a big difference.
“Investigate all the business set-up options — there are dozens, and some might fit your needs better than others.”
“And plan ahead, certain company types have visa limits or geographical restrictions.”
Avoid legal trouble
Rankin urges wannabe licence holders to ensure they are not breaking UAE regulations when setting up. “Don’t fall foul of the law — the onus is on you to understand employment, health insurance, safety and banking laws.”
Sort out all paperwork
German expat Sebastian Tontsch set up a photography company in 2014 through Ras Al Khaimah Free Trade Zone Authority. He feels it is a good idea to get all paperwork in order from day one: “Every step of the way you need stacks of forms with the appropriate stamps and signatures, and if you forget something on one of your many trips to the bank or free zone office, you will waste a lot of time,” explains Tontsch. “I learned to carry everything on a memory stick, and my company stamp became an extra limb.”
Forget fancy bank accounts
Tontsch also urges caution when setting up a business account. “Avoid rushing into getting a bank account for high-flyers with [terms such as] a minimum Dh100,000 balance account.
“Be realistic about your business level and go for the simplest account you can find to begin with — and watch out for those high fees and so on.”
Factor in hidden costs
South African expat Angela Boshoff Hundal set up a copywriting company, Scribe, in 2015 through Dubai Silicon Oasis Authority’s Dubai Technology Entrepreneurship Centre. She found out that aside from licence and visa fees, there were other unexpected costs along the way.
“While free zone licences can be cost-effective, I would advise keeping an additional Dh5,000 aside to pay for unexpected administration fees, access and other card fees, and any other costs that might not have been listed as part of the licence. That way you won’t be caught by surprise.”
Ask for help if you need it
Hundal encourages entrepreneurs to pick up the phone and talk to other business owners when setting up shop.
“I spoke to several people who had already been through the free zone process before deciding on the one I wanted to use,” says Hundal. “Not only did it help me find the most ideal, cost-effective space for my business, it also helped me save time in that I had an idea of the sorts of administration or submission challenges I might face.”
She adds that it’s important to keep track of the names of the people you’re talking to while setting up so you can follow up if there are any problems.
––http://gulfnews.com : http://gulfnews.com/gn-focus/special-reports/free-zones/dos-and-don-t-s-for-start-ups-eyeing-uae-free-zones-1.1886581