- September 24, 2023
- Posted by: DBS
- Category: Business
If you are considering expanding your business operations to the United Arab Emirates, specifically to Sharjah, establishing your company in one of the free zones could be a strategic move. Setting up a business in Sharjah Free Zones offers numerous advantages such as 100% foreign ownership, tax exemptions, and simplified regulatory processes. In this article, we will provide you with valuable insights and practical information on business setup in Sharjah Free Zones, helping you make informed decisions and navigate the process with confidence.
Table of Contents
Overview of Sharjah Free Zones
Introduction to Sharjah Free Zones
Sharjah, one of the seven emirates of the United Arab Emirates (UAE), offers numerous opportunities for businesses to establish themselves in its free zones. Sharjah Free Zones are designated areas that provide favorable business conditions and incentives. These zones are designed to attract foreign investment and promote economic growth. Setting up a business in Sharjah Free Zones can offer several advantages, including tax exemptions, 100% foreign ownership, and simplified legal processes.
Benefits of Setting up a Business in Sharjah Free Zones
There are several benefits to setting up a business in Sharjah Free Zones. Firstly, companies established in these zones enjoy 100% foreign ownership, allowing investors to retain full control of their businesses. Additionally, businesses in Sharjah Free Zones are exempt from personal, corporate, and income taxes for a specified period. This tax relief can significantly reduce the financial burden on businesses and enhance their profitability. Furthermore, Sharjah Free Zones offer state-of-the-art infrastructure, advanced logistics facilities, and robust transportation networks, making it easier for businesses to operate efficiently and smoothly.
Types of Free Zones in Sharjah
There are several free zones in Sharjah, each catering to specific industries and sectors. These free zones include Sharjah Airport International Free Zone (SAIF Zone), Hamriyah Free Zone (HFZ), and Sharjah Publishing City Free Zone (SPCFZ). SAIF Zone is suitable for companies involved in manufacturing, trading, and service activities. HFZ specializes in petrochemical, steel, and construction materials industries. SPCFZ is dedicated to the media and publishing sector. The choice of the free zone depends on the nature of the business and its specific requirements.
Choosing the Right Free Zone
Researching Different Free Zones
Before selecting a free zone in Sharjah, thorough research is essential. It is important to understand the advantages and facilities offered by each free zone and compare them with the requirements of your business. Consider factors such as proximity to target markets, infrastructure, accessibility to transportation networks, and the presence of relevant industry clusters.
Understanding the Requirements
Each free zone in Sharjah has specific requirements and regulations that businesses must comply with. These requirements may include minimum capital requirements, specific licenses, and restrictions on certain activities. Understanding and assessing these requirements is crucial for ensuring a smooth setup and operation of your business.
Comparing Costs and Facilities
While choosing the right free zone, it is important to compare the costs and facilities offered by different zones. Consider factors such as lease rates, utility charges, administrative fees, and the availability of office spaces and warehouses. It is also advisable to assess the ancillary services and amenities offered by the free zone, such as banking facilities, business support services, networking opportunities, and access to skilled labor.
Legal Process and Documentation
Registering Your Business
Once you have chosen the appropriate free zone, the next step is to register your business. The registration process typically involves submitting the necessary documentation, such as the company formation application, shareholders’ details, and passport copies. It is important to ensure that all documents are accurate and comply with the requirements of the free zone authority.
Obtaining Necessary Licenses
To operate legally in Sharjah Free Zones, businesses need to obtain the relevant licenses. The type of license required depends on the nature of the business activity. Licenses can be obtained for trading, industrial, service-oriented, holding, or national industrial activities. The application process for licenses varies among free zones but usually involves submitting the necessary documentation, such as business plans, lease agreements, and NOC (No Objection Certificate) from relevant authorities.
Lease Agreement and Documentation
As part of the legal process, businesses setting up in Sharjah Free Zones need to enter into a lease agreement. The lease agreement specifies the location, size, and duration of the leased property or office space. It is important to carefully review and negotiate the terms and conditions of the lease agreement before signing.
Types of Companies in Sharjah Free Zones
Free Zone Establishment (FZE)
A Free Zone Establishment (FZE) is a company formed and owned by an individual or a corporate entity. FZEs have a single shareholder and are required to have a minimum share capital, as per the free zone’s regulations. FZEs are suitable for businesses looking for full ownership and control.
Free Zone Company (FZC)
A Free Zone Company (FZC) is a company formed with two to five shareholders. FZCs offer the advantage of shared ownership and can be formed by individuals or corporate entities. Each shareholder’s liability is limited to their respective share capital.
Branch of a Foreign Company
Foreign companies interested in establishing a presence in the Sharjah Free Zones can opt for setting up a branch. A branch of a foreign company operates as an extension of the parent company and is subject to the regulations of the free zone authority.
Branch of a Local Company
Local companies based in the UAE can also set up branches in Sharjah Free Zones. Similar to the branch of a foreign company, the branch of a local company operates as an extension of the parent company.
Professional Firm/Service License
A Professional Firm/Service License is suitable for individuals or companies offering professional services such as consulting, legal advice, design, and engineering. This license allows individuals to operate as professionals or service providers within the Sharjah Free Zones.
Procedures and Timelines
Initial Approval and Reservation of Company Name
Before starting the documentation process, businesses need to obtain initial approval and reserve a unique company name. The approval process involves submitting the required documents and details of the proposed business activity.
Submitting the Application
Once the initial approval is obtained, businesses can proceed to fill out and submit the necessary application forms. Along with the application, the required documents, such as the lease agreement, business plan, and shareholder details, need to be submitted.
Payment and Issuance of License
After the application is reviewed and approved, the free zone authority will issue an invoice for payment of the registration and licensing fees. Once the payment is made, the license is issued.
Visa and Immigration Process
Upon obtaining the license, businesses can initiate the visa and immigration process for their employees. The process involves applying for residence visas, work permits, and other necessary permits for foreign employees.
Obtaining Corporate Bank Account
After securing the necessary documentation and licenses, businesses can proceed to open a corporate bank account. Operating a corporate bank account is essential for conducting financial transactions and managing day-to-day business operations.
Business Activities and Licenses
A Trading License allows businesses to import, export, distribute, and sell specific goods within the Sharjah Free Zones. The license is suitable for trading companies involved in buying and selling tangible products.
An Industrial License is required for businesses engaged in manufacturing, processing, or assembling of goods. This license allows businesses to operate industrial facilities and carry out activities related to manufacturing or industrial production.
A Service License is for businesses providing services such as consulting, IT services, advertising, marketing, or any other professional services. This license enables businesses to offer their expertise and services to clients within and outside the free zone.
A Holding License is designed for businesses that wish to hold shares or invest in other companies. This license allows businesses to maintain investments and hold assets within the Sharjah Free Zones.
National Industrial License
A National Industrial License is suitable for businesses involved in manufacturing goods that require the use of controlled or restricted raw materials. This license comes with specific requirements and compliance measures set by the authorities.
Banking and Taxation
Opening a Corporate Bank Account
Opening a corporate bank account in Sharjah Free Zones is an important step for businesses. It allows businesses to manage finances, make transactions, and streamline their financial operations. There are several banks in Sharjah that offer corporate banking services tailored to the specific needs of businesses.
Available Banking Options
When opening a corporate bank account, businesses have a range of banking options to choose from. Consider factors such as the bank’s reputation, services offered, online banking facilities, currency support, and any additional benefits or incentives provided.
Taxation in Sharjah Free Zones
One of the key benefits of setting up a business in Sharjah Free Zones is the exemption from personal, corporate, and income taxes. Businesses operating within the free zones are generally not subject to taxes for a predetermined period. However, it is always advisable to consult with tax professionals to ensure compliance with any relevant tax regulations.
Employment and Labor Laws
Hiring Local and Foreign Employees
Sharjah Free Zones provide businesses with the flexibility to hire both local and foreign employees. However, regulations and procedures for hiring foreign employees may vary depending on the free zone and the employee’s nationality. Compliance with labor laws and regulations is crucial when hiring employees, and businesses must follow the employment contract registration process.
Labor Contract and Regulations
When hiring employees in Sharjah Free Zones, businesses must follow the labor contract and regulations outlined by the Ministry of Human Resources and Emiratization (MOHRE). These regulations include provisions related to working hours, leave entitlements, termination procedures, and other employment-related matters.
Work Visa and Residency Permits
Foreign employees working in Sharjah Free Zones require work visas and residency permits. The process of obtaining these permits involves submitting the necessary documents, such as employment contracts, passport copies, and medical examinations, to the relevant authorities. The visa and immigration process can be facilitated by engaging professional service providers or PRO services.
Facilities and Infrastructure
Office Spaces and Warehouses
Sharjah Free Zones offer a wide range of office spaces and warehouses to cater to the diverse requirements of businesses. From small offices to large commercial spaces, businesses can find suitable facilities that meet their specific needs. Warehouses equipped with state-of-the-art facilities are available for companies involved in manufacturing, storage, and distribution activities.
Logistics and Transportation
Sharjah Free Zones benefit from a well-developed logistics and transportation infrastructure. The free zones are strategically located near major seaports, airports, and highways, facilitating the movement of goods and materials. Efficient logistics services, including cargo handling, customs clearance, and transportation, support businesses in their supply chain operations.
Utilities and Amenities
Sharjah Free Zones provide access to essential utilities and amenities to ensure smooth business operations. These include reliable power supply, water and sanitation services, telecommunications infrastructure, internet connectivity, and advanced IT support. Additionally, free zones offer amenities such as dining options, recreational facilities, and specialized business support services.
Support Services and Pro Services
Company Formation Services
Professional company formation services are available to support businesses throughout the setup process. These services assist in preparing the necessary documentation, liaising with authorities, and ensuring compliance with legal requirements. Engaging professional company formation services can save businesses time, effort, and resources.
Public Relations Officer (PRO) services play a crucial role in managing administrative tasks and government-related procedures. PRO services can assist with visa applications, employee sponsorships, document attestations, government liaisons, and other administrative functions. Outsourcing PRO services can streamline operations and ensure compliance with regulatory obligations.
Visa and Immigration Assistance
Visa and immigration assistance services help businesses navigate the complex processes involved in obtaining work visas, residence permits, and other immigration-related requirements. These services ensure adherence to immigration laws and regulations, saving businesses time and effort in managing employee visa processes.
Compliance and Legal Support
Compliance and legal support services provide businesses with expert guidance on regulatory compliance, licensure, and ongoing legal obligations. These services help businesses stay updated with changes in laws and regulations, ensuring smooth operations and minimizing legal risks.
Business Setup Consultancy
Business setup consultancy services offer comprehensive guidance throughout the process of setting up a business in Sharjah Free Zones. These consultancies assist businesses in selecting the right free zone, understanding legal requirements, and managing the setup process efficiently. Engaging the services of experienced business setup consultants can ease the burden on businesses and ensure a successful setup.
In conclusion, setting up a business in Sharjah Free Zones offers numerous advantages for both local and foreign investors. The favorable business conditions, tax exemptions, flexible ownership, and state-of-the-art infrastructure make Sharjah Free Zones an attractive choice for businesses. By understanding the different free zones, legal processes, types of companies, procedures, taxation, and support services, businesses can navigate the setup process effectively and establish a successful presence in Sharjah.