Free Trade Zone Entity
(Requirements, Merits, Demerits)
Steps To Be Followed for Registration-:
- The entity should first seek name approval for the name of the business and generally the Name should reflect the activity. For instance, if the business entity is offering Accounting Services then the name should include the phrase “Accounting Services” and the activities to Be performed by such entity will be limited to Accounting Services and related activities only.
- The Second step in the Incorporation of Business is leasing of office premises. The number of Visas that the business is eligible will be determined based on the size of the Office Premises. Having a place of business is a pre-requisite for the formation of a business in the UAE and hence this is a very crucial step which needs to be addressed as soon as the name of the business is approved by the concerned Government Department or Free Zone Authority.
- Once the Leasing of premises is finalized then the Business Entity needs to be registered and a Trade License has to be obtained. If the business entity is owned by more than one person then the Shareholders Agreement, Memorandum of Association and Articles of Association have to be executed as the case may be. These contracts can be executed only in the presence of the Notary Public. The Contract between the Shareholders/Partners is required for getting the Trade License and also for registering the entity with the Chamber of Commerce.
- Once the Trade License is obtained the Visa formalities have to be done to get the Investor Visa for the Promoters/Partners and also the Employment Visa for the employees of the Business Entity. Once the Visa is obtained the Investor/Employees should get their residence permit stamped on the passport.
- Upon incorporation of the business by obtaining the Trade License the business entity can start its activities. In order to commence the business, the first step would be opening of Bank Account in the name of the business entity.
- Maintenance of the Business Entity would entail renewal of the Trade License every year. Depending on the jurisdiction the requirements have to be met for the renewal purposes. Some of the Free Zones require Audited Accounts to be submitted each year for renewal of the Trade License. The requisite Trade License Fee has to be paid and all other requirements have to be met for the Trade License to be renewed. Irrespective of the jurisdiction the renewal of Trade License is an annual feature as the Trade License issued by the Government
Authority or Free Zone Authority is valid only for one year in most cases.
- Partnership of local UAE Resident is Not required and business can be set up with 100% Foreign Ownership.
- No need to pay Custom Duty On the goods imported in free Zone.
- The Free Zone Enterprises are also given immunity from Tax and enjoy tax free existence
- A Free Zone Entity meant trade within a Free Zone or outside UAE.
- If the goods are moved from Free Zone into Mainland then it would attract custom duty.
- The Business activities that can be performed by the Free Zone Enterprises is decided by the respective Free Trade Zone Authority.
- Proper Documentation is required for transection between Two Free Trade Zones in accordance with the law of respective Free Trade Zone. For eg. If the particular goods are not allowed to be transferred on a Duty Free basis then the goods have to be brought through the mainland by payment of customs duty.
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