Hi Fabrizio,
I'll try to expand my answer for other readers to understand more...
First let me answer the second part of your question: Cost estimates:
From my recent research across different freezones in the UAE, one company license including 1 visa and a rent of a small tiny office space: ~20-40,000 AED. Renewal for second year varies but you can expect something like 15,000AED.
Outside freezones can be anywhere, so let's focus on Dubai for simplicity:
- A small office rent costs 20-40,000 AED
- Registration fees from Dubai Economic Department costs ~5-10,000 AED depends on business activities selected [visit the DED website for exact costs if you like, they have a estimated cost calculator]
- I'm not sure about costs of visas but I think including medical tests, etc.. a visa can cost something like 2,000? If anyone knows better please correct me if I'm wrong.
If you add up the costs are similar for a startup, but once the business becomes larger, generally the Freezone becomes introduces more costs and limitations.
2 main categories of companies in UAE: FreeZone and non-free zone companies.
Advantages of Freezone:
- The number 1 advantage for expats is that you can own a 100% business in a free zone. Otherwise, you must partner with an Emirati.
- Clear set of guidelines
- If products are for export only ouside the GCC countries, export fees can be cheaper from a freezone than from outside the freezone, e (depends on target countries)
- Dealing with one authority for everything: visas, rent, utilities, internet, etc...
Disadvantage of FreeZone:
- Some freezone licenses are limited to a small number of visas, can be to 2 employees only.
- Plenty of freezones in Dubai and UAE to choose from, each has its own prices and business activities they focus on
- Most of the freezones are isolated from the public, so it's not ideal if your target customers are UAE residents.
- Prices are fair for small businesses (office space and 1 or 2 visas). once the space and visa requirements increase, the prices shoot up.
Advantages of Dubai-Land or in general, Outside Freezone Companies
- Freedom to select the place to rent based on the market and target customers
- Freedom to select the budget for rent instead of the fixed package that you get from freezones
- Much wider business activities to select from
- I find it better to be dealing directly with the government when it comes to visas and work permits. In freezones, you deal with the Freezone authority (which deals with the government) so its additional layer. Some authorities simplify the process because they're professional but other freezone authorities can delay things.
Disadvantages of Dubai-Land or Non-freezone companies:
- The number 1 disadvantage is to find an Emirati who has the willingness to partner in a business for any reason other than making easy-money
- The LLC law guarantees the expats' rights in a business partnership but in general, if the expat and UAE national partners didn't get along properly, things can get frustrating (court cases, etc..)
- If its an industrial business that focuses in exporting goods to areas outside the GCC, then sometimes the export fees are larger than some freezones
- While there is high level of integration and online applications in Dubai/UAE, still the business owner has to deal with multiple government organisations during opening a business outside the freezone. For example, if the business is in Dubai: Register the business in Dubai Economic Department then rent a shop/office independently, then deal with immigration for visas, then pay utilities in DEWA and Etisalat/Du independently. As I said, these are integrated service provided but some people focused prefer the "one-stop-shop" of the free-zones, even if it was slightly more expensive.
Overall, in my humble opinion (which is subjective), I see that Freezones are a better option only if:
- You can't find a UAE national partner, or
- If your core business includes exporting goods to far distentions, or
- If you're in a hurry and you want a visa immediately
I wish this helps.
Regards,
Ahmed
