As with any major business decision, setting up a freezone company in Dubai can come with its fair share of challenges. While the benefits and incentives, such as tax exemptions, 100% ownership, and ease of repatriation of profits, may seem highly attractive, it is important to be aware of potential obstacles that you may face along the way.
Being well-prepared and seeking professional guidance can help ensure a smoother setup process and allow you to take full advantage of the opportunities a freezone business setup has to offer.
Limited business activity options:
Each free zone is built around specific industries. Some are focused on media, while others are linked to trading, manufacturing, or services. If the planned activity does not match the zone’s focus, the setup may not be allowed. This limits the flexibility to choose any business activity in any zone.
Restrictions on operating outside the free zone:
Companies in free zones are mainly allowed to carry out business within the zone or outside the UAE. Trading or providing services in the local UAE market may not be allowed directly. To do so, the company may have to work through a local distributor or open a branch with separate approvals.
Office and space limitations:
Not all free zones offer a wide range of office sizes or warehouse options. Some have limited space or only provide shared desk areas. This might not match the long-term growth plans or space preferences of the company. Moving to a bigger space within the zone later might also take time.
Document processing time:
While many zones have short setup processes, some may take longer due to internal checks or incomplete paperwork. Delays in approvals, visa processing, or company registration sometimes happen, especially during peak times. This might affect the expected launch timeline.
Different rules across free zones:
Each free zone has its own rules, forms, and list of accepted activities. The process in one zone might not match another. This may cause confusion for people comparing multiple options or moving from one zone to another.
Bank account opening delays:
Even after receiving the company licence, setting up a bank account may take time. Banks carry out their own checks, and each has different policies. In some cases, additional documents or meetings may be asked for, which might delay financial activities.
Visa quota limits:
Free zones provide visas based on the type of office or package selected. Smaller packages may only allow one or two visas. If the business is planning to hire more people, a larger office or different setup might be necessary later on.
