Startup Overseas Forums

I am in the early stages of establishing a company in Dubai. Whilst planning Free Zones look advantageous. What are the draw backs?

Dubai welcomes investors and entrepreneurs, it welcomes foreign workers, international companies, individual investors, and above all it welcomes investment and development. It is a future focused forward thinking state, and nowhere is this more obvious than in the infrastructure that Dubai has developed, and the free zones it has established to encourage international investment.
Until recently, Dubai was seen as a safe investment but now analysts are predicting nightmarish inflation rates like 6.5% and higher. The prices have been going up steadily and the high inflation is having a big negative impact on profit margins and several major companies are looking to other countries or regional free zones to avoid this potential crash.
There have been many free zones in Dubai since the 1980s it is only recently this mad rush for them has developed in conjunction with countries developed free trade agreements (FTA) with their neighbors and others wanting to become part of the world trade organization (WTO).
Dubai has pushed hard and fast to become the main business hub in the Middle East, other nations like Egypt, Jordan, and Lebanon other countries have also been developing their free zones and infrastructure without all the noise generated by Dubai. Moreover, those countries are operating with the advantage of hindsight provided by the Dubai free zone fiasco.
There are almost 20 free zones (working or under development) between Egypt, Jordan, and Lebanon. The UAE is far ahead of them with 15 working free zones and another 13 under development but the other countries are quickly catching up and focusing on development of specialized free zones.
Currently, the competition for the global media industry and regional investors is between 3 regional free zones. There is the Dubai Media City (DMC). There are advantages to Dubai but then Media Production City (MPC) in Egypt has a large and cheaper human resources pool. Jordan's Media City has already attracted organizations with offices in Dubai.
Free zones in Dubai have become a risk not only because of the increase in costs but also because of other factors like the establishment of the new export-oriented free zone by Egypt located east of Cairo after the Cairo Zone reached saturation. More recently, auto-parts manufacturers like Rover, BMW, and Land Rover also moved to Egyptian free zones.
Analysts believe that if ever increasing trends in the costs associated with free zones in Dubai is not controlled soon then there might be a massive outflow of companies to cheaper and newer regional free zones that offering the same level of service at lower production and operational cost.

The other point that you have to remember is that getting set-up in a free zone only entitles you to trade within that free zone - you are not legal to operate / source / prospect or invoice anyone in the Dubai market - or you must have a Dubai license.
Keep this in mind, regards - Steve (Sentinel Business Centres)

Hi,
Please can you tell me. How does one procure a Dubai License in order to trade outside of the Free Zone?
And, how big is the Free Zone itself? How many people, businesses etc? Is there some type of map or listing in order to gauge how big it is, and what goes on inside?
Thanks for reading

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Free Zone Advantages:








1.
100% foreign ownership of the enterprise.









2.
100% import and export tax exemptions.









3.
100% repatriation of capital and profits.









4.
No corporate taxes for 50 years, renewable for an additional 50 years.









5.
No personal income taxes.









6.
Assistance with labour recruitment and additional support services, such as sponsorship and
housing.









7.
No Customs duties.









8.
Full currency convertibility.









9.

No restrictions on the repatriation of capital and/or profits.









10.
No trade barriers or quotas.












One Stop Shop










1.
Simplified incorporation process.









2.
Hassle-free company laws and legal framework









3.
24-hour visa service









4.
Quick access to Knowledge Workers due to fast-track immigration process















DRAWBACKS:









1.



The goods can be sold only from free zone to free zone not to mainland or free zone of other countries










2.



In case you are selling goods to the mainland the tax is high










3.



Rent is very high










4.



commercial space is costly





5.



trade activities is restricted










6.



documents attestation is required from ministry of foreign for trading