The United Arab Emirates has emerged as one of the hotspots for budding businessmen, brimming with numerous opportunities for people who dare to step into the world of trade and services. With the introduction of UAE free zones, it has become easier than ever to have a business setup in the UAE. There are different free zones across the Emirates that let you conduct a business of your choice with complete ownership. However, there are still some regulations that need to be followed strictly. Licensing is an important part of the business setup process. But do you know how it works across different free zones? Well, we have listed down the most important things one must know when planning to have a free zone trade license in UAE.
Important Things You Should Know About Free Zone Licenses in the UAE
Here are some of the major aspects of licenses in free zones across the United Arab Emirates that you should know before starting with the company setup process.
1. Types of Licenses Issued by UAE Free zones
Without a valid license, you cannot conduct business in a free zone. Different business licenses permit specific business activities, and you can conduct only those allowed under yours. Mentioned below are the types of business licenses that are issued by free zones across the Emirates.
(i) Industrial License
An Industrial License can be issued to the companies that are involved in industrial production outside the UAE and are registered in the free zones. They are allowed 100% foreign ownership and need to obtain no license from the Economic Department. Companies manufacturing equipment, clothes, etc., require this license. To get a manufacturing or industrial license, the company must have a physical office in the United Arab Emirates. With this license, the following activities can be performed:
Pastry & Sweets Manufacturing
Plastic Bottles & Containers Manufacturing
Mineral Water Bottling
Fishing Net Making etc.
(ii) Trade/Commercial License
A trade/commercial license can be issued to companies involved in imports and exports outside the UAE and have registered in the free zones. They can enjoy 100% foreign ownership and do not require to obtain a license from the Economic Department. This license permits the following business activities:
Computer Software Trading
Agricultural Pesticides Trading
Wooden Products Trading
Pipes & Fittings Trading
Audio-Visual, Recording Equipment & Accessories Trading
Food & Beverages Trading
Plastic Bags & Containers Trading
Acids & Alkaline Trading
Perfumes & Cosmetics Trading
Paper Products Trading
Medical Gas Trading, etc.
(iii) Professional/Service License
Companies offering banking, contracting services, etc., need to acquire this license. Professionals providing their expertise as service will require this license to practice. However, there are several rules they should abide by. Mentioned below is the list of activities that can be conducted with this license:
Mechanical Engineering Consultancies
Electronic Engineering Consultancy
Science & Technology Consultancy
Health Awareness Consultancy
Corporate Services Provider
Marketing Research & Consultancies
Project Management Consultancy
Event Management Consultancy
Travel & tourism
And various others
Based on the business activities you wish to conduct, you can obtain a trade license and continue operations.
2. Area Restrictions with A Free zone License
The United Arab Emirates is divided into multiple free zones, and each free zone has a specific set of rules and regulations. Like two faces of a coin, the advantages, and limitations of something come together. Based on the regulations, free zone companies are not eligible to conduct business in the UAE mainland. Companies in the UAE mainland compulsorily need to obtain a license from the Economic Department. Also, they need local sponsors, which isn’t the case for free zone companies. Therefore, you cannot perform business in the UAE mainland with a free zone license.
3. Accessibility Of Different Free Zone Licenses
There are around 40 free zones across the United Arab Emirates. Each free zone is made with consideration to specific business categories. Therefore, every free zone issues licenses to only those business categories that fall under its jurisdiction. You cannot conduct a particular business activity that is restricted in the free zone you choose. Thus, it is very important to make the right decision when selecting a free zone to ensure smooth business operations in the future.
4. How To Obtain A Free Zone License In The UAE?
Getting a business license is a part of the process for business setup in the UAE Free Zone. Once you have chosen a trading name and got it registered with the free zone authority, you can apply for a business license. We already discussed the different types of business licenses. However, you will have to submit some supporting documents for the same, including ID, passport, etc.
5. Business License Renewal in UAE Free Zones
Free zone companies should get their license renewed in their respective free zones through their portal. Free zones have separate business jurisdiction with specific licensing procedures and regulations which are out of the scope of the Economic Department. Any delays in the renewal of a business license can invite penalties and even lead to the blacklisting of your company. You can always seek help from business consultants to get things done right.
The above-mentioned information will help you make the right decisions when starting a business in UAE free zones. Make sure to choose the most suitable free zone and obtain a business license that complies with your company’s business operations.