United Arab Emirates: FAQs Business Setup In Dubai Airport Free Zone

Last Updated: 3 August 2018
Article by STA Law Firm
Most Read Contributor in United Arab Emirates, July 2018

DUBAI AIRPORT FREE ZONE

1. What was the establishing law of this free zone, and what are the main internal regulations governing it?

Dubai Airport Free (DAF) Zone was established by His Highness Sheikh Mohammad bin Rashid Al Maktoum, ruler of Dubai by Dubai Law No. 2/1996 and received the amendment of Dubai Law No. 2/2000 regarding the formation of legal establishments in Dubai Airport Free Zone.

Dubai Law No. 25/2009 is the main internal regulations which govern DAF zone, which was established by Dubai Airport Free Zone Authority (DAF Authority).

2. Are there any complementary agreements between this free zone and others?

Free zones are generally designated to a specific commercial sector. As such, the licenses they provide only allow for the specific activities and so while they allow for up to 100% foreign ownership and are subject to reduced or different trade barriers, tariffs and quotas, there are generally no agreements between free zones. If a business entity chooses to operate outside of these boundaries, it will have to adhere to the UAE Commercial Companies Law and observe the appropriate licensing procedure required in the Emirate it operates in.

3. Are there any areas of UAE legislation that the free zone entities are still required to comply with? How does this impact business operations within the free zone?

In general, free zone companies have their own civil regulations and procedures, through the criminal laws of UAE are still applicable on UAQFTZ. Thus, the following are the laws which companies operating in UAQFTZ must adhere to:

  1. Federal Law No. 4/2002 regarding Criminalization of Money Laundering;
  2. Federal Law No. 7/2014 concerning Combatting Terrorism offenses;
  3. Federal Law No. 3/1987 the Penal Code and its amendments;
  4. Federal Law No. 1/2004 on combatting Criminal Offences;
  5. Federal Decree-Law No. 5/2012 on Combatting Cybercrimes.

Also, companies established in the DAF zone or any other free zone are only allowed to operate within the free zone and are restricted to perform activities outlined in the trade license. However, if a free zone wishes to trade or provide service outside the free zone, he must adhere to the requirements of Federal Law No. 2/2015 concerning UAE Companies Law.

4. Are there any onshore entities a DAF zone company will need to register and comply within the UAE?

Registration to the UAE General Directorate of Resident and Foreign Affairs is required in order to seek residential permits for employees. There are several other federal ministries which companies may encounter in relation to notarization of legal documents, resident visas, visit visas for investors and more. However, the DAF Authority assists the companies in obtaining service from these Federal Ministries.

5. What is the process of setting up a company within the DAF zone?

There are 4 steps that an investor must follow in order to set up their companies within the free zone:

Step I

Select a company type: The first step for the investor is to select the type of company he wishes to establish among the several options available and the following are a couple of examples:

  1. A Free Zone Company, which can have 50 or fewer shareholders (individual or corporate);
  2. Branch Setup, 100% owned by the parent company with no minimum share capital requirement;

Step II

Select the Business License: The next step involves the type of license the investor is seeking. DAF Zone offers four types of license. These are:

  1. Trade license;
  2. Service license;
  3. Industrial license;
  4. General trade license.

Step III

Select the Facility: Once the legal structure and license are obtained, the office space or the property for lease must be selected. DAF offers a wide range premium office and light industrial units suitable for the type of legal structure.

Step IV

Submit the Application: the last step for the investor is to submit the application along with the required documents for the initial approval and wait for the DAF company formation assistant to approach you.

7. What will the features of a company set up in this free zone be?

There are several features which a company will have incorporation in DAF Zone such as the following:

  • 100% ownership;
  • Easy access to several banks;
  • No interference of UAE National;

8. What are the approved activities that can be performed in the DAF zone?

The companies incorporated in DAF Zone will be able to perform activities as set out in the trade or commercial license. In general, companies can import, export, distribute, store, trade and manufactured goods. The companies can provide consultancy services, post seeking consultancy license which offers expert and professional advice. Companies are also allowed to carry out light manufacturing activities, packaging, and assembling.

9. What can companies set up in this free zone not do?

The answer being checked on this point.

10. What types of business are allowed to operate in this free zone?

The answer being checked on this point.

11. Are there any laws regarding inheritance in this free zone?

There is no specific inheritance law which applies to the DAF zone, though the rights of shareholders are transferable and inheritable, subject to rules and regulations of DAF zone.

12. What are the regulations on taxes within the free zone?

There is no corporate and income tax applied to companies established in DAF zone.

13. What are the accounting and auditing regulations?

DAF authority does not mention any specific rules with regards to accounting and auditing, however, it is suggested that companies should prepare proper books of accounts.

14. Are there any specifics or regulations regarding opening a corporate bank account?

There is no specific requirement as to opening a bank account for companies incorporated in this free zone. Companies are free to open their bank account anywhere in UAE.

15. Are there any specific rules governing when the movable property is removed from the free zone area or transferred into the free zone area from another jurisdiction?

The answer being checked on this point.

16. *Are any specific licenses required to operate as a specific type of company in this free zone?

The remuneration and minimum benefits, the working time and leave of staff working in this free zone are all regulated by the Freezones Rules and Regulations respectively. However, the terms of remuneration and other additional benefits of employment will depend on the Employer.

17. Is there any specific ongoing regulation or monitoring of firms operating as particular types of the company by this free zone authority?

The answer being checked on this point.

18. How are disputes settled with companies in this free zone?

The answer being checked on this point.

19. How are disputes between onshore companies and companies in this free zone settled?

The answer being checked on this point.

20. What are the main rights and duties of an employer and employee working in this free zone?

The answer being checked on this point.

21. In the case of employer-employee disputes, how are these handled in the free zone?

The disputes between the employer and employee are settled by the DAF zone Authority and are governed by the employment contract signed between the parties.

22. What requirements are there for employees who work in the free zone?

Registering with UAE General Directorate of Resident and Financial Affairs is a requirement and corporations must obtain an online work permit and residency permits for their employees. The registration authority in the free zone offers a one-stop-shop clearance for processing such permits.

Generally, the companies must submit the mandatory application form along with the attested degree of the employee. Once the permit is generated, a medical test and should be completed and the procedure to obtain Emirates ID will commence. Following this, the visa status is updated and stamped on the passport.

23. How are staff working within this free zone registered with the authorities?

The answer being checked on this point.

24. What are the governing rules and regulations on the remuneration and minimum benefits of staff working in this free zone?

The DAF zone rules and regulations, which are the Dubai Law No. 2/1996 and Dubai Law No. 25/2009 govern remuneration, minimum benefits and working time and leave of employees working in DAF zone are governed by. Whereas, the terms of additional benefits will depend upon the employer.

25. What rules govern the working time and leave of staff working in this free zone?

The answer being checked on this point.

26. What must be borne in mind when considers property leases in this free zone?

The main features of property lease in DAF Zone is the facilities provided by the DAF Authority such as ready-to-move-in spaces, state-of-art business park, rent on annual basis, P.O. Box number and more depending upon the type of facility.

27. Is it possible to apply for a building permit in this free zone? How is this done and what steps are required?

The answer being checked on this point.

28. What environmental requirements must construction companies building in this free zone consider, an e.g. form of building, landscaping or building height?

The answer being checked on this point.

29. What are the key restrictions when leasing a property in this free zone?

The answer being checked on this point.

30. What are the rules governing the use of utilities in this free zone?

The answer being checked on this point.

31. How do retail premises establish themselves in this free zone?

The answer being checked on this point.

32. Is it possible for hotels for hotels to be operated in this free zine, and how do they establish themselves?

There are no specific restrictions prohibiting hotels from operating in this free zone. The same process would apply as for any other type of business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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