Registration in the free economic zones
Each company existing in the UAE belongs to one of two types: 1) local companies; 2) companies in free economic zones. Of course, it is more profitable for foreign businessmen to open a business in free economic zones, which were created to attract foreign investors.
Companies registered in DMCC, Dubai can work using 100% of foreign capital, while the local companies should own only 49% of the foreign capital and 51% of the local capital (capital owned by the local residents and that owned by foreigners). Other important advantage of registering a firm in free economic zones is the absence of taxation and simple documentation.
What is DMCC in Dubai? Now there are more than 30 free economic zones in the UAE, which include Dubai World Central, Dubai Airport Free Zone, Hamriyah Free Zone, Fujairah Creative City Free Zone, etc. Each zone can have its own distinctive features and requirements regarding the creations of the new enterprises in its territory, which should also be considered.
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Dubai Multi Commodities Center: UAE's most prestigious free zone at your service
Dubai Multi Commodities Center (DMCC) Free Zone is by far the fastest growing and most modern economic zone in Dubai and the UAE as a whole. Since the appearance of the free zone in 2002, nearly every year it marked the particularly rapid pace of development. In 2014, DMCC launched an online portal for all companies registered in it. From that moment, almost all services became available online, which significantly accelerated the processing of documents and requests.
DMCC is deservedly considered one of the most prestigious free zones for starting a business. This is due not only to its geographical location, but also to the opportunities offered by DMCC Dubai rules and regulations.
About DMCC Administration
DMCC Administration is the free zone’s own governing body. The purpose of the DMCC Administration is to expand commodity trade flows through Dubai. To achieve this, the DMCC Administration has been granted territorial ownership and jurisdiction to develop and manage the territory in which it has created a specially designed project known as Jumeirah Lakes Towers. DMCC free zone rule and regulations are established exclusively by the Administration.
The policy of the DMCC Administration is:
- To manage the free zone and use the territory in which the free zone is located in such a way as to best contribute to increasing the long-term economic and strategic potential of the free zone;
- to ensure consistency in the application of the DMCC Rules and other laws, regulations and policies applicable in DMCC directory;
- to receive the proper return on investment in planning, building and maintaining the JLT Infrastructure and other issues.
Requirements for opening a company in DMCC free zone
All DMCC companies are registered with the consent of the DMCC Administration, which gives permission to open a company and obtain a license.
Application to the administration must comply with the following standards:
- be provided in the required form;
- include details of the original directors, if applicable, of the company secretary;
- include the Memorandum and Articles of Association of the company;
- include payment of the appropriate DMCC fees established by the Administration;
- include other documents or information as the Administration may require in its sole discretion.
Required documents for DMCC company setup:
- Passports of all proposed shareholders, directors, managers, secretaries, legal representatives (for residents of the UAE: a copy of passport, visa and Emirates ID).
- Proof of the permanent address of each shareholder, director, manager, secretary, legal representative.
- Business plan (if necessary, according to the DMCC list of permitted activities).
- Letter of the absence of objection from the existing sponsor for each shareholder, director, manager, secretary, legal representative (if applicable).
Among other requirements for DMCC business setup such ones can be distinguished:
- A company name should end with the word DMCC.
- The minimum number of directors is one. The director may have any citizenship. Corporate directors allowed.
- A company can be created with one or more shareholders.
- The registered office must be in DMCC business centre Jumeirah Lakes Towers.
Types of companies and licenses in DMCC free zone
The following types of companies can be registered in this free zone:
- DMCC Free Zone Limited Liability Company (FZ LLC). It can be created with one or more shareholders.
- Branch. For existing companies seeking a legal presence in the DMCC Free Zone.
This free zone welcomes all activities. DMCC free zone company can obtain one of such licenses:
- Trade license - the right to carry out trading activities specified in the license.
- Service license - the provision of services specified in the license.
- Industrial license - for conducting light manufacturing activities specified in the license.
In some cases, when a company wishes to conduct several types of activities that are similar in nature, DMCC authority allows an unlimited number of activities that will be conducted under one license. However, if these activities are not related, separate licenses will be required. DMCC offers a General Trading License, which allows the customer to trade practically in anything.
The goods and categories covered by the General Trade License are determined by customs and are subject to change based on customs requirements. There are certain classifications of goods that are not covered by the General Trade License, including military equipment, gold and gold jewelry, diamonds and diamond products, as well as tobacco and tobacco products.
Company opening fees
For company formation in DMCC Dubai you will need to pay the following fees:
- License: AED 20,010 in case of a common license and AED 50,020 in case of General Trading License.
- Registration of a company in Dubai in the DMCC (one-time registration costs): 9,010 AED in case of common license and AED 29,000 in case of General Trading License.
- Cost of Memorandum of Association (MOA): AED 2,010.
- Company Approval: AED 1,000.
In addition, DMMC regulations provide a fee in case of obtaining a resident visa. It is AED 3,300 for every year and a refundable deposit of AED 3,000. Fees in DMCC are slightly higher than in the most inexpensive free zones such as RAK free zone.
Types of offices for company registration in DMCC
DMCC business directory provides the following types of offices for its customers:
- Flexi-desk (shared) - starts from 16,000 AED (annually). An additional 1,000 dirhams security deposit (refundable) and 610 dirhams for administration.
- Service office - starts at AED 50,000 (annually). An additional 1,000 dirhams security deposit and 610 dirhams for administration.
- Physical office for rent: - starts from 800 dirhams per square meter a year.
- Physical office for sale: Starts from 7000 dirhams per square meter per year. It is suitable for DMCC company formation with large investments.
Benefits of starting business in DMCC
Opening a company in this free zone has a number of significant advantages, the main of which are described below:
- No personal income tax and corporate tax - zero rates are valid for fifty years. This is constantly expanding DMCC company list with new startups and corporations.
- Full business ownership for foreigners - for the opening of companies there is no requirement that part of the shares should belong to local persons. The same conditions apply in Ajman free zone and other popular free zones.
- Simple company registration process - most steps of the registration process are done online. DMCC customer care will provide advice on all issues of interest. As a result, the registration of a company in Dubai has become very simple and affordable for everyone.
- Government sponsorship support - if you want to bring your own employees from abroad, the government goes to meet you and does everything so that they are able to arrive and work in the company.
- A wide range of activities -there are more than 600 activities in the DMCC free zone from which you can choose the one that suits you best. DMCC works with more than 20 business sectors, such as gold and diamonds, energy, construction, technology and many others.
- Available licenses - up to six activities from one industry can be registered in one license. This reduces DMCC fees for doing business.
Documents required starting a DMCC Free Zone Company
- Permissions and licenses (depending on the type of activity);
- Package of constituent documents;
- A certificate of opening a bank account;
- Company name registration;
- Certificate of registration in the Commercial register;
- Certificate of registration in the Chamber of commerce and industry.
When registering a DMCC free zone company, you will probably face many unpleasant bureaucratic peculiarities, which are impossible to evade. To make this procedure a little easier, you should opt for the establishment of a joint Arab-foreign company.
The purchase of a ready-made business in a DMCC free zone usually passes quickly and without problems. You will not need to register a company in a DMCC free zone in Dubai, enter into all kinds of contracts with banks and other institutions and prove that you have the necessary amount to contribute the authorized capital. A sole task is to conduct successful negotiations with the seller of the business and find the optimal price of the enterprise, which will suit both parties.
By the way, the Arabs have their own peculiarities of negotiating. For example, they never directly refuse a business proposal. You will hardly hear a word “no” from the Arabs, but if they tell common phrases like “I need to consider your offer” or “I can give you an answer later”, you should be ready for refusal.