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Creative Entrepreneurs: How to Set Up a Free Zone Business in Dubai

1/2/2017

Dubai Creative Clusters Authority (DCCA) is responsible for licensing, visa and zoning regulations for eight industries across ten free zone clusters.

Dubai is a cosmopolitan global city, home to a thriving international community of creative, dynamic professionals. Entrepreneurs wishing to establish businesses within the creative realm can move their project forward by establishing their business under a free zone.

Under which authority should you open your business?

There are a number of authorities under which entrepreneurs can open their business. However, a few authorities offer customized services for the creative industry. Dubai Creative Clusters Authority (‘DCCA’) is definitely the authority which is the most specialized in opening businesses in creative industries.

Formerly as known as “Dubai Technology and Media Free Zone Authority”, Dubai Creative Clusters Authority (DCCA) is responsible for licensing, visa and zoning regulations for eight industries across ten free zone clusters. The free zone clusters include, but is not limited to, D3 (Dubai Design District) which focuses on the design industry; Dubai Science Park which supports entrepreneurs in the science sector; Dubai Internet City which helps the Information & Communications Technology industry; Dubai International Academy City which focuses on the high education sector.

What type of license should you get?

The license obtained depends on the legal structure chosen. The main legal structures available are a free zone company or a branch of a UAE/foreign company. For these two types of structure, entrepreneurs will obtain a commercial license. Sole proprietors can also opt for a freelance permit which has the advantage of allowing the entrepreneur to conduct business under his/her birth name as opposed to a brand name.

What are the costs and how long does it take to obtain the license?

The costs depend not only on the authority under which the company is incorporated, but also on the legal structure chosen and the activity of the new entity. Registration fees are often quite low. For instance, under DCCA, the registration fees amount to AED 3,500 for the establishment of a free zone company or a branch. However, license fees vary depending on each free zone cluster. For instance, if you choose D3, license fees can go from AED 7,500 to AED 20,000.

As regards to the timeframe, it varies with each authority. Upon submission of all the required documents, it can take up to two months to obtain the license.

What are the pros and cons of having a free zone company?

The main pros of opening a free zone entity can be summarized as follows:

  • 100% foreign ownership;
  • Guaranteed 50-year exemption from personal, income and corporate taxes;
  • Exemption from customs duty for goods and services;
  • Full repatriation of profits and capital.

Also, some free zone clusters offer a well-developed social infrastructure, with easy access to high-end residential accommodations and attractive retail options.

The main inconvenience of opening a free zone company is that these entities cannot conduct any business activity outside of the free zone. It should also be noted that the simple fact that the business is conducted online does not exempt from this requirement. If entrepreneurs wish to conduct business outside of the free zone, then they will have to resort to agents.

To sum up, creative entrepreneurs wishing to start a business in Dubai have a number of advantages in opening a free zone entity. Plus, some free zone authorities can offer them services specifically targeting the creative industries which can give their business a great start.

For further information about this article, please contact a.motei@motei.com

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