Company Setup in Dubai
Throughout the years, Dubai has grown from a small fishing village in the gulf into one of the most vibrant business markets in the Emirates. This was possible due to Dubai’s shift from an oil-based economy to one centered around business, trade, and innovation. The focal shift from oil production to tourism, commerce, and overall economic development has allowed Dubai to step to the forefront of the global market.
With an economy that has resisted the adverse effects of the pandemic, Dubai is now one of the most popular regions to conduct business in all the UAE. This is, in part, due to an open market environment with lucrative tax exemptions, privacy options, and favorable operating conditions. Additionally, Dubai is in a convenient geographic location, allowing for easy travel to and from the region and making the import and export of goods an efficient process.
Looking for the right location for your new business in Dubai or want to expand your business? It’s important to get guidance from experts to help you with company registration and documentation; it will save you time in company formation in Dubai.
Why Conduct Business in Dubai?
There are many reasons to start a business in the UAE. Between a rich multi-cultural business environment and progressive policies, there is something for everyone. In Dubai, you’ll get to experience:
1. Ease of Doing Business
Forming a business in Dubai is a simple, streamlined process aimed at helping businesses get started faster with less red tape. If business owners perform their due diligence and have all appropriate documents, processing a business license can take as little as a week.
2. An Open Market with Low Taxes
The UAE government has long fostered its economy by implementing low and tax-free incentives for companies operating in the region. Some sectors, such as Dubai’s free zones, feature benefits like no taxation and 100% repatriation of profits. This gives investors and entrepreneurs the power to conduct business efficiently and maximize profit margins.
3. Robust Infrastructure
Along with boosting the economy, UAE officials also have placed considerable resources in developing the infrastructure throughout the region. Dubai and many surrounding emirates enjoy a modern, streamlined transportation system, abundant office spaces, and state-of-the-art connectivity. This allows your business to run more efficiently with minimal logistical loss.
4. Convenient Location
As we’ve mentioned, Dubai has a convenient location that makes it the epicenter for most business operations in the UAE. Its central position also lends itself to short travel times between Dubai and anywhere in the Middle East, Africa, Asia, and Europe. Most are less than 5 hours flight away!
5. High Living Standards
Dubai enjoys a comfortable lifestyle with an abundance of real estate opportunities, educational facilities, and recreational activities. And with a low crime rate, Dubai is one of the safest cities in the modern world.
Easy Steps for Business Setup in Dubai
Founding a new business in the UAE is a streamlined process that’s been designed for ease of use, but it’s still a big step! Despite the relaxed nature of the application process, you will still need to perform careful research before starting your business. This will include drafting a comprehensive business plan, a market analysis of your product, and a forecast for the demand surrounding it. Once you have a clear grasp of your chosen business plan, the remaining aspects of the application process will be a breeze. To begin, you’ll need to:
1. Choose a Trade or Business Name
Every business needs a name! You will want to submit a request to the Department of Economic Development (DED), taking special care not to pick a name already chosen by another company and one that does not violate any restrictions for profanity. Business names that violate these regulations will be denied.
2. Choose a Legal Structure
The legal form your business embodies will play a significant role in how your company operates on a day-to-day basis, including how to handle assets, profits, and losses. Some legal structures available to you are:
• Limited Liability Companies (LLC)
• Sole Establishments
• Local branches for larger corporations
• Civil companies
• Foreign company branches
• Holding companies
• Free Zone companies
3. Determine Your Business Activity
Your business activity will have a tremendous effect on the sector in which you’ll operate. There are many different business activities to choose from, ranging from service-based industries to trading and manufacturing.
4. Draft a Memorandum of Association (MOA)
You will need to draft this document to help define your company’s relationship with shareholders and board members. An MOA will serve as a publicly available record of your company name, address, and shareholder identities.
5. Secure Any Additional Approvals
For some companies, the DED will require additional documentation and approvals, including reference letters from embassies, banks, and regional government authorities to prove that you and your shareholders are in good professional standing.
6. Submit Required Documentation
When applying for a trade license, you will want to have several important documents handy. These include copies of passports for all partners, shareholders, and board members. You will want to carefully research which documents you’ll need to avoid issues with the application process.
Once these documents have been successfully submitted, you’re all set! Depending on the sector and your chosen business activity, processing time can take a few days to several weeks.
7. Rent Office Spaces
Once you’re received your business license, you’ll need to obtain office spaces for you and your employees. There are several different workspace options, including private offices and shared workspaces, depending on your needs. The size of your office space will also determine the number of visas you and your employees are eligible for.
8. Open Bank Accounts
To properly conduct business, you’ll need to open a bank account. Dubai has a number of globally respected banking institutions to choose from, including HSBC, Citibank, and Barclays, to name a few.
9. Apply for an Establishment Card
If you intend to hire staff or obtain investors from outside the country, you’ll need to acquire an establishment card. This establishment card is valid for one year and will need to be renewed promptly to avoid fines.
10. Applying for Visas
Once you’ve received your establishment card, you are eligible to apply for visas for yourself and your staff. The number of visas available to you will vary depending on where you decide to conduct business.
11. Register Employees for Social Security
One of the final steps in the business setup process will be to register your employees for social security. Once employees reach retirement age, they are entitled to income based on their average salary and the number of years they’ve invested.
Choosing Where to Form your Company in Dubai
One of the most critical factors in forming a new company in Dubai is deciding where to locate your business.
1. Free Zone Companies
Free zones are a popular option for many foreign investors. They offer significant benefits that make business formation a highly profitable investment of time and resources. Benefits for business setup in Dubai’s free zones include:
• Exemption from all tax responsibilities, including corporate and income taxes.
• 100% foreign ownership
• A well-defined infrastructure
• Proximity to an enormous customer base
2. Mainland Companies
Mainland companies can conduct business throughout the UAE. The mainland economy is one of the most developed in the UAE, offering a streamlined approval process, flexible regulations, and more business activity options than other sectors.
3. Offshore Companies
An offshore company is a business that is legally situated outside of its originating nation. Business setup in Dubai’s offshore offers a number of advantages, including exemption from taxes, privacy protections, and strong intellectual property rights. This jurisdiction also gives owners the ability to protect their assets and streamline their business operations.
As mentioned previously, there are several documents you’ll want to have on hand when applying for your business license. Failure to provide these documents can result in issues with the application process or outright rejection. The documents you’ll want to have available include:
• License application
• Governmental forms
• Name reservation certificate
• Initial approval letter
• All external approvals
• Tenancy contracts and Ejari certificate
• Copies of passports for partners and no-objection certificates (NOC) for any partners
• Emirati IDs for partners, shareholders, or board members
Legal Structures for Companies in Dubai
An essential aspect of forming a business in Dubai is choosing the right legal structure. Your legal structure will dictate how your company handles its assets, profits, and losses. By picking the correct legal form for your company, you will be able to efficiently manage your business operations while having a thorough understanding of the regulations and laws surrounding it. Some of these structures include:
• General Partnership
A general partnership company is owned by two or more partners that bear unlimited liability for all debts and obligations.
• Public Shareholding Company
A public shareholding company is a public entity where business capital is separated into equal shares owned by the shareholders, with liability limited to the number of shares in play.
• Private Shareholding Company
Private shareholding companies differ by being a privately owned business that maintains a controlling interest in another company’s assets and investments.
• Limited Liability Company (LLC)
An LLC is a popular business entity and is often recommended for businesses hoping to sell goods within the jurisdiction. In the event of liquidation or legal obligations, a limited liability company limits the owner’s responsibility for debts accrued during the business.
• Professional Company
A professional company is an organization that conducts business using intellectual efforts. These often include lawyers, doctors, and scientists. One must secure a professional license to form a company of this type in Dubai.
• Joint Venture Company
This business entity is a contractual agreement between a foreign entity and a local party to conduct business in a particular region. Licensing requirements for this company type will fall to the original partner.
A partnership-en-commendam is a business structure that involves one or more partners that bear unlimited responsibility for a company’s profits, losses, and financial obligations.
• Sole Proprietorship
A sole proprietorship is a legal entity operated by a single individual that controls all company operations and bears the responsibility for all profits and losses.
Business Licenses Available in Dubai
To conduct business in the UAE, an investor must obtain a business license. This license legally allows you to handle business and can vary in type depending on the industry you intend to enter.
1. Commercial License
A commercial license allows investors to conduct trading activities in the region. Some of these activities include:
• Importing and Exporting
• Real Estate
• Selling Electronics
• Selling of construction materials or supplies
• Retail stores
2. Industrial License
An industrial license is a legal approval to conduct business in manufacturing, including industries that develop raw materials into a final product. Some business activities that fall under this license are:
• Industrial production
3. Professional License
This license type is given to individuals based on their expertise in a particular field. This includes doctors, lawyers, and accountants that spend years developing their craft. Businesses operating under this license are allowed 100% foreign ownership but must seek a local service agent to assist.
The Cost of Company Formation in Dubai
For new investors, the costs for business setup can prove to be a bit prohibitive. However, developing a clear idea of the various license types, jurisdictions, regulations, and fees will help you discern a cost-effective way to start your new company.
Costs for business Setup in Dubai’s Mainland
The cost incurred in forming a business in the mainland can vary depending on several factors, including:
• The nature of your business
• Office rent and fees
• Notary Fees
• Trade license fees
• Government registration fees
Free Zone Business Setup Costs
The final price for forming a business in one of the many free zones is dependent on a few aspects like:
• Registration fees
• Trade name reservation fee
• Annual business renewal fees
• Annual office space rent
• Visa fees per person
• The number of visa permits you require
Frequently Asked Questions (FAQs)
- Which business can I start with 50,000 AED in Dubai?
You can start a Retail Business in Dubai. However, it will depend on the type of products you are planning to sell. With an investment of 50,000 AED, you can open either an offline or online retail store. Moreover, you can use this amount to start a small service provider business, as there are many different types of services that other businesses require.
- Which businesses are profitable in Dubai?
Here are the most profitable business ideas in Dubai, UAE:
• E-commerce and Online Business
• Tourism and Hospitality
• Fintech and Digital Payments
• Real Estate Development
• Health and Wellness
• Event Management
- Which business can I start in Dubai?
If you are planning to setup a business in Dubai, here are some of the business ideas for your consideration:
• Real Estate Agency
• Consultancy Service
• Beauty Salon
• Construction Sector
• E-Commerce Solutions
• Travel and Tourism
• Health Sector
- How to start a business in Dubai?
Here are the key steps to set up a business in Dubai:
• Choose a business name or trade name
• Choose a legal structure
• Apply for a business license
• Choose an office space
• Get pre-approvals, register your business, and get your license
- How to start a startup in Dubai?
Key steps to start a business are as follows:
• Select a business activity and jurisdiction
• Decide the company structure
• Choose a company name
• Apply for trade license
• Get external approval and register your company
• Rent an office and start your business
- How can I register my online business in the UAE?
To register your online business, you will first have to decide on a legal structure for your business. Then you will have to choose a location and a name for your company. Next, you’ll need to apply for a license and for an initial approval certificate. After you draft a Memorandum of Association (MOA), you’ll have to get the final approval of your license. Then, you’ll have to make sure you have all the import/export requirements complete for your area. The final step will be to open a corporate bank account.
- How many business activities can be performed under one license in Dubai?
In Dubai mainland, you are allowed to have ten activities. In Dubai free zones, you can have two business activities under one license.
- What is the cost of setting up a business in Dubai?
The cost of setting up a business in Dubai will largely depend on the type of company you have and the location in Dubai that you plan to have it setup in.
- How can I get a trade license in Dubai?
First, you will have to choose a business name and the legal structure for your company. Then, you’ll have to decide on the business activities that will be included in the business license. Then, you’ll have to complete and submit the permit for approval.
- What is an LLC company in UAE?
LLC, which stands for Limited Liability Company, is the most common form of business in the UAE. An LLC can be created by a minimum of two shareholders and a maximum of 50 shareholders.
- What documents are required to start a business in Dubai?
Here are some important documents to start a business in Dubai:
• License Application
• Attested LLC Agreement
• Governmental Forms
• Name Reservation Certificate
• Initial Approval Certificate
• EJARI Registration Certificate
• Chamber of Commerce and Industry Registration
• UAE Central Bank Approval
• Health Ministry Certification
- How can I get residency in Dubai?
You can get citizenship in Dubai if an employer provides sponsorship. You can also get citizenship in Dubai by buying property.
- Which business is best in Dubai?
Retail is one of the most popular and established businesses to setup in Dubai. Financial services, tourism, schooling, and healthcare are also considered one of the best businesses to start in Dubai.
- What is the difference between Mainland, Free Zone, and Offshore companies in Dubai?
For a Mainland business, the cost to setup a business is usually high.
In a Free Zone, the cost to setup a business is usually cheaper than on the Mainland.
It costs the least to setup business in the Offshore of Dubai. Full ownership is granted only if they have a business outside the UAE. There is no need for an office space, so a visa is not granted.
- What is the process of business setup in Dubai?
The key process for starting a business in Dubai is as follows:
• Choose license type and business activities
• Apply for business license
• Submit your documents
• Decide your office location
• Get your license and start your business