How to start a logistics company in JAFZA
As the backbone of global commerce, logistics companies require strategic locations that not only provide easy access to international markets but also offer a competitive edge. The Jebel Ali Free Zone (JAFZA) in Dubai exemplifies this ideal. As the site of the Middle East’s largest port, handling a staggering 15 million TEU annually, JAFZA stands as a vital intersection in international trade. It also contributes significantly to Dubai’s economy, accounting for approximately 23% of Dubai’s foreign direct investment and over 20% of Dubai’s total export value. This status as a key logistics and trading hub establishes it as an optimal base for businesses aiming to broaden their global footprint and leverage the substantial trade flows through the region.
This article looks at the key aspects of setting up and operating a logistics company in JAFZA, from navigating the regulatory framework and registration process to understanding the zone’s beneficial trade and tax policies.
Why JAFZA?
As the UAE’s oldest free zone, JAFZA has a well-established reputation as a leading centre for international trade and logistics and unmatched expertise and resources for companies seeking expansion into global markets.
Its strategic location adjacent to Jebel Ali Port, the largest in the Middle East, provides immediate access to one of the world’s busiest shipping lanes. Additionally, being just a short drive from the heart of Dubai and major international airports ensures easy access to the city’s vast commercial and financial resources and swift and efficient movement of goods by air, an ideal combination for businesses looking to tap into both regional and global markets efficiently.
Complementing this, JAFZA’s infrastructure is tailored specifically to logistics and trade companies’ needs with advanced facilities, efficient customs processes, an absence of any currency restrictions and minimal import and export tariffs.
What types of business activities are permitted in JAFZA?
Companies in JAFZA must align their operations with one of five primary business categories: Trading, Service, Industrial, Logistics, or E-Commerce. Each category requires a specific trade licence, reflecting the nature of the business activities.
- Trade licence: Common in JAFZA, this licence allows companies to engage in the buying and selling of products within the free zone. It’s ideal for businesses involved in various trading activities.
- Service licence: Tailored for businesses offering services or expertise, this licence covers a range of activities including consulting, administrative services, and training. It’s suitable for firms focused on knowledge and service delivery.
- Industrial licence: This licence is essential for manufacturing companies. It enables them to import raw materials, engage in the production process, and assemble final products, catering to firms involved in manufacturing from start to finish.
- Logistics licence: Designed for businesses specialising in logistics, this licence encompasses activities such as storage, transportation, distribution, freight forwarding, and inventory management, vital for companies in the supply chain and logistics sector.
- E-Commerce licence: For businesses operating in the digital marketplace, the e-commerce licence permits the buying, selling, and trading of goods in virtual spaces, catering to the growing sector of online commerce.
What business types does JAFZA offer?
- Free Zone Establishment (FZE): An FZE is a single shareholder limited liability company within the free zone. This entity type is ideal for individual entrepreneurs or businesses who wish to operate under a single ownership structure.
- Free Zone Company (FZco): Similar to an FZE, an FZco is a limited liability company, but it allows for multiple shareholders. Shareholders can be individuals, corporate entities, or a combination of both, making it suitable for joint ventures or partnership-based businesses.
- Public Listed Company (PLC): A PLC in JAFZA is a company that is publicly traded and can have an unlimited number of shareholders. This entity type is designed for larger businesses seeking to raise capital through public stock offerings.
- Branch of a Company: A branch office in JAFZA allows an existing company, whether local or international, to establish a presence in the free zone. This entity operates as an extension of the parent company and is not considered a separate legal entity. It is suitable for companies looking to expand their operations into JAFZA without forming a new company.
Business registration process in JAFZA
The process and complexity of registering a logistics company in JAFZA depends primarily on the chosen business structure (such as FZE, FZco, PLC, or branch office) and the specific nature of logistics activities planned. Additionally, factors such as the scale of operations, the number of shareholders, and compliance with specific industry regulations also play significant roles in determining the registration process’s intricacy.
- Initial approval and documentation
The first step is obtaining initial approval from JAFZA authorities. This involves submitting a business plan and details about the company’s intended activities. Required documents typically include a completed application form, passport copies of the shareholders and directors, and a No Objection Certificate (NOC) from the current sponsor for UAE residents.
- Choosing a business activity
Selecting the right business activity is crucial as it determines the type of licence required. JAFZA offers a wide range of activities, and companies must ensure that their intended operations align with the categories permitted in the free zone.
- Registration and licensing procedures
After receiving initial approval, the next step is formal registration. This involves submitting the legal documents, such as the Memorandum of Association (MOA) and Articles of Association (AOA) and paying the requisite registration fees. Once the company is registered, you can apply for the necessary business licence. The type of licence (Trading, Service, Industrial, etc.) depends on your chosen business activity.
- Office space and facility requirements
Companies in JAFZA are required to lease or purchase office space or a physical facility. Options range from flexi-desks and serviced offices to warehouses and industrial plots, depending on the business’s nature and scale.
- Compliance and legal considerations
It’s imperative to comply with JAFZA’s legal and regulatory framework. This includes adhering to employment laws, environmental regulations, and other industry-specific legal requirements. Regular audits and renewals of licences are part of the compliance process.
How can Global Link help?
Global Link has over 16 years’ experience working with local and global businesses, providing bespoke consultancy services for company incorporation and financial services in Dubai and the wider UAE.
We can guide you through the process of starting a logistics company in JAFZA, offering expert guidance on choosing the appropriate business activity and legal structure, assisting with securing all the necessary licences and permits and liaising with JAFZA on your behalf to ensure a swift and compliant establishment.
If you need advice on this or any other company incorporation, visa or PRO service, please get in touch with us on +971 4 553 9901 or email us at [email protected] and we will be happy to assist you.