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Starting a business in Dubai requires obtaining a license from the Department of Economic Development (DED) or one of the many free zones in the city. While both options have their benefits, it’s important to consider the nature of your business and your long-term goals before deciding which type of license is right for you.
It is better fitted to know the various requirements before jumping right into the marketplace. This article discusses various pros and cons of DED License vs Free Zone License, as well as the factors to consider before a freezone company formation.
DED License in Dubai
The DED is responsible for regulating and licensing businesses in Dubai. A DED trade license allows you to do business anywhere in Dubai and offers a range of business activities to choose from. Here are some benefits and considerations to keep in mind when considering a DED license:
Benefits of the DED License in Dubai
- No restrictions on the location of your business
- Lower costs compared to free zone licenses
- Access to local markets and customers
- Opportunity to apply for government tenders
- Ability to sponsor employee visas
Things You Should Consider Before Your DED License
- Limited ownership options for foreign investors
- Higher capital requirements compared to free zone licenses
- Greater regulation and compliance requirements
- Limited tax exemptions and incentives compared to free zone licenses
Free Zone License in Dubai
Dubai is home to over 30 free zones, each with its own set of regulations and benefits. Free zone licenses offer foreign investors 100% ownership of their businesses and a range of tax incentives. Here are some benefits and considerations to keep in mind when considering a free zone license:
Benefits of Freezone License in Dubai
- 100% foreign ownership allowed
- No restrictions on the repatriation of profits and capital
- Tax exemptions and incentives, including a mere 9% corporate tax and no personal income tax
- Easy company setup with minimal paperwork
- Access to specialized industries and markets
Things You Should Consider Before Your Freezone License
- Restrictions on the location of your business
- Higher costs compared to DED licenses
- Limited access to local markets and customers
- Limited options for applying for government tenders
- Limited ability to sponsor employee visas
DED License vs Free Zone License: Choosing the Right License for Your Business
When deciding which license is right for your business, it’s important to consider the nature of your business, your long-term goals, and your budget.
Discussed below are some factors to consider when making your decision:
- Business activities: Consider the nature of your business and the types of activities you plan to engage in. If you plan to do business in Dubai and beyond, a DED license may be the right choice. If you plan to focus on a specific industry or market, a free zone license may offer the specialized support and incentives you need.
- Ownership: If you want full ownership of your business, a free zone license may be the best option. However, if you’re willing to share ownership with a local partner, a DED license may offer more flexibility.
- Location: If you plan to do business in Dubai, a DED license may be the better choice, as it allows you to operate anywhere in the city. However, if you plan to focus on a specific industry or market, a free zone license may offer specialized support and access to a dedicated business hub.
- Costs: Consider the costs of obtaining and maintaining a license. DED licenses tend to be more affordable but may require more capital upfront. Free zone licenses tend to be more expensive but offer tax incentives and other benefits that may offset the cost.
- Compliance: Both DED and free zone licenses come with their own set of regulations and compliance requirements. Consider the level of regulation and compliance that your business can handle, and choose the license that offers the appropriate level of support and guidance.
Make the Right Decision For Your Business With Expert Guidance
In conclusion, choosing between DED license vs free zone license in Dubai requires careful consideration of your business activities, ownership preferences, location, costs, and compliance requirements. Both options have their benefits and considerations, and the right choice depends on your unique business needs and long-term goals.
At A&A Associate, we offer a range of services to help you make the right choice for your business, from license application and setup to ongoing compliance and support. Our team of best business setup consultants in Dubai can help guide you through the process and ensure that you have all the information you need to make an informed decision. Contact us today to learn more about our services and how we can help you start and grow your business in Dubai.
