Business Setup in Dubai
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Why Set up a Business in Dubai?
Dubai has experienced rapid growth over the past three decades. It went from being an oil-exporting country to becoming an innovation-driven business nation. Dubai is now the preferred choice for foreign investors and business owners. This choice is based on many factors.
Dubai is a strategic location that attracts foreign investment. It also has a friendly government policy. These are two of the biggest reasons why Dubai business owners want to establish their business. Entrepreneurs are also attracted to Dubai’s open economy and sector-oriented zones because of the opportunity to make a fortune and start a business.
Ease of setting up a business in Dubai, U.A.E.?
It is easy to start a business in the U.A.E. This is perhaps why U.A.E. ranked 16th in the World Bank’s Ease of Doing Business Rankings. Once the business owner has approved all necessary documents, it will take less than one week to set up a business. The number of U.A.E. Free zones in Dubai are another reason the U.A.E. ranks high in Ease of Doing Business rankings. Dubai’s free zones allow foreign ownership of 100%, repatriation of all profits, and substantial tax exemptions.
Dubai Allows an open market and low taxes
The government or regulatory bodies do not influence the activities of Dubai’s private sector. Dubai is a free-trade economy. Personal income is exempt from taxes. There are no import duties. Dubai allows employees to be hired from any country, regardless of nationality. Dubai has liberal labor policies. Dubai also has strict controls to prevent money laundering and fraud. Foreign investors can invest in Dubai with minimal worry.
Dubai has a World-Class Infrastructure
Dubai is a significant business city due to its modern infrastructure. Dubai has many free zones that meet international standards. Dubai has a reliable telecommunication infrastructure, an uninterrupted power supply, and many amenities that make it attractive to business owners from around the globe who want to set up a company. There is a world-class airport in Dubai and modern seaports that can handle thousands of passengers every day. Dubai also has an extensive network of highways that allows for easy travel.
Dubai is a highly accessible location in the world
Dubai is strategically located. It lies in the middle of Africa and the Commonwealth of Independent States (C.I.S.). Dubai is located in the center between the Far East and Europe. At the moment, Dubai is home to more than 85 airlines. These airlines fly passengers from Dubai to over 130 destinations worldwide. Dubai is also connected to more than 120 shipping lines. Simply you can say, Dubai is the most accessible place anywhere in the world.
Dubai has a High-class Standard of Living
Dubai is home to many international residents, making it one of the most diverse cities on the planet. Dubai is the leader in real estate, housing, educational institutions, recreational activities, and housing. Dubai is also one of the safest cities in the world due to its low crime rate. It is the reason you can consider Dubai a safe and comfortable place.
How to Set Up a Business in Dubai?
Dubai is the ideal place to establish a business in Dubai if you are looking for the above reasons. It is easy and relatively straightforward to set up a business in Dubai. Before a business owner can open a Business in Dubai, they must verify certain documents and get approvals from the government.
The process of setting up a business in Dubai is easy, but someone with limited knowledge about setting up a business in Dubai might have trouble understanding the requirements.
Steps to start a business in Dubai
- Prepare the Memorandum of Association (MoA) for the company.
- Apply for initial approval at the Department of Economic Development (D.E.D.) Dubai.
- Register a tradename for business.
- Lease/Rent a office
- Apply for trade license .
Where to Set up a Business in Dubai?
- You can get 100% Ownership of your company.
- Tax benefits are available.
- The location is convenient and economical.
- The location meets your business’s strategic goals.
Company Setup in Dubai Free Zone & Mainland
- Free Zone Company Setup
- Dubai Mainland Company Setup
Dubai has designated various free zones. These areas are ideal for foreign entrepreneurs to set up businesses. Based on their specific operation area, the free zones can be divided into different categories.
Pros and Cons to free zones
Taxation and ownership are the two main benefits of the free zone.
- Certain businesses, especially those in the service sector, do better in city markets. Examples: restaurants, retail shops, and others.
- You might end up paying more for some spaces in the trade zone than renting an area within the city market.
Dubai Free Zone Areas
There are approximately 45 free zones throughout the U.A.E. These zones are delineated based on their specific area or sector of operation.
- Information technology (I.C.T.)
- Information and logistics
This geographic jurisdiction is geared towards commercial businesses and provides exciting opportunities. These sectors are ideal for entrepreneurs who wish to rent a space on the mainland.
- Real Estate
Contrary to the free zones, foreign owners must own only 49% of the business’s equity. This exception applies to business activities that involve G.C.C. ownership or partnership of G.C.C. companies and Emiratis.
Popular Business Locations in Mainland Dubai
- Shaikh Zayed Road
- Business Bay
- Al Qusais
- Al Quoz
- Bur Dubai
- Al Karama
Selecting a Location Based on Strategic Goals
You must ensure that the location meets your business goals before you decide to move. The location strategy should be based on your business objectives. Once you have created a plan, it is time to find the best space. These objectives could include, but are not limited to:
If you work in the service industry, you need to ensure that your office is easily accessible. It will make it more profitable than moving to distant locations and saving money on rent. Retail chains and similar businesses need to be in the same market, requiring spaces within that area. A manufacturing company will consider labor costs, logistics, and taxes & regulations when making their final decision.
Analyze your business and product. After a thorough analysis, you will be able to decide if the free zones are beneficial.
After you have made your decision, you can start looking for properties. Once you have made your decision, it is time to get a contract for your tenant. The process for free zones is quite simple and takes less time.
Types of Companies in Dubai
Main types of business establishment in Dubai
- One member dies
- The bankruptcy of a Partner
- Resignation of a Partner
- The insaneness of a partner
- General partnership
- Limited partnership
Public Shareholding Company
Private Shareholding Company
Free Zone Companies (F.Z.C. and F.Z.E.)
Two main types of companies are found in Dubai’s free zones:
- Free Zone Company
- Free Zone Establishment
You can open both types of companies in any of the free zones. F.Z.C.s and F.Z.E.s are pretty similar to each other. Both allow 100% foreign ownership and qualify for a license to do business in the Emirates. The only difference is that F.Z.E.s can only have a single shareholder.
These establishments may include branches of foreign organizations with the same name in Dubai. The same category also includes branches of G.C.C. companies, free zone companies, and civil companies.
Benefits of setting up a business in Dubai
Now that we have discussed the two major business jurisdictions in Dubai. Let’s now take a closer look at each of the benefits that each offers.
Advantages of Setting Up a Company in Dubai Mainland
The mainland company located in Dubai can carry out the business all around the Emirates, but the permits to maximum foreign shareholder’s share to 49%.Establishing a company in the Mainland Dubai indeed turns out to be a most favorable option for you because of the following reasons:
- Zero taxation, nothing in the case of a corporate or personal tax.
- Get limited restrictions on the minimum capital requirements.
- There is no yearly auditing requirement.
- Low business setup or maintenance cost
- Ease of affordable office space with the flexible rent or lease for your dream office in Dubai.
Exemption from Personal and Corporate Taxes
There is no minimum capital requirement
Flexibility in Operation
Businesses that are based on the mainland enjoy greater flexibility and fewer restrictions. They can operate anywhere in the U.A.E. Free zone companies cannot work in the Mainland area.
The Dubai mainland has the authority to trade with any other company within Dubai or the U.A.E. You don’t need to worry about legal consequences if you want to trade with any other company except if you have a free zone company. Some conditions must be met. Most administrative procedures are straightforward and can be completed in a short time.
Flexibility in Business Activities
Opportunities to Take up Government Projects
Multiple Offices Available to Rent
Visas for employees
You can apply for visas for multiple employees as a company owner in the Dubai mainland. While the number of visas you can obtain will depend on your office space, there is much more flexibility than that available to owners in free zones.
The registration process is also much quicker. There are no restrictions regarding currency or recruitment, and there is no requirement for annual audits. All in all, a Dubai mainland company will allow for better business development and the ability to adapt to new markets.
Benefits of setting up a company in the free zones
Foreign Entrepreneurs: Sole Ownership
Exemption from Tax
Awareness of Market Trends
Most of the free zones are sector-specific. It allows you to keep up to date with the latest business trends in the market your business serves. Many free zones provide the infrastructure and logistics services your business requires to succeed. Companies in free zones can benefit from collaboration, learning, and the opportunity to save money.
Flexible lease terms, easy registration and renewal processes, as well as a free return on profits are all available to you.
Types of business licenses in Dubai
Dubai Business Licenses
Dubai offers three types of business licenses:
- Commercial License
- Industrial License
A commercial license is required for entrepreneurs who want to trade in Dubai. This license covers the following business activities in Dubai:
- Importing and exporting goods
- Electronic products for sale
- Real Estate
- Services in commercial brokerage
- Construction material for sale
- Retail shops
- Services for renting a car
Legal Liability Companies (L.L.C.s), the most popular type of organization set up under a commercial license, are the Legal Liability Companies. You can use a commercial license regardless of whether your organization is located onshore or in a non-regulated area.
This license is for industries that engage in manufacturing activities. These companies transform raw material or semi-formed materials into final products. These are the business activities that qualify for an industrial license:
Cost of setting up a Business in Dubai
- What type of business license do you need?
- Type of business/company you start (L.L.C., F.Z.E.).
- Set up an L.L.C. in Dubai: Rental fees
- The Department of Economic Development will be charged a fee
- The cost to obtain a mainland trade license
- Administrative fee
- A one-time contracting license fee
- Prices for real estate brokers
Frequently Asked Questions
- To apply for a commercial license in Dubai, the first step is to create a list of activities you plan to engage in. However, keep in mind that you cannot take on more than ten activities (primary or tertiary) with one license.
- Next, you will need to create an M.O.A. that lists the activities.
- The third step is to register your organization with the D.E.D.
- After registering, you will pay the fee and get a commercial license in the U.A.E.
The D.E.D provides Dubai’s industrial license. To be eligible for a License, there are some prerequisites:
- Local Sponsor
An Emirati must hold 51% of shares in the company.
- Office Space
A second requirement is that you have space to set up a physical office in Dubai. This license type does not allow virtual offices.
- Local Industrial License
It is also necessary to get a license in the area where the company operates.
- Minimum Capital Requirement
The minimum share capital requirement is AED 250,000
- The number of workers
The company must have at least ten employees.
- First, you’ll need to submit documents to D.E.D. for approval.
- Once you have received the approval, it is possible to apply for an industrial license in Dubai. This process can take up to 3 months.
- You will need to obtain permission from the Municipality or other authorities. Each Municipality will have its requirements regarding paperwork.
The Department of Economic Development (D.E.D.) provides the professional license for Dubai. You can use this license to conduct business in the service sector. It is easy to obtain a license.
- First, you need to create a list of all the business activities you intend to pursue with your professional license.
- Next, you will need to appoint a service agent to handle all legalities.
- For initial approval, the agent can submit the documents directly to the D.E.D.
- You will need to register and apply for a trading name.
- The final steps include renting office space and offering documents for approval.
The cost of an investor visa is approximately 3200 AED, which includes basic insurance, medical, and Emirates ID.
An average cost to hire an employee is between 7500 and 7500 AED, including insurance, medical, and residency cards.
Dubai is a great place to invest in a business. It’s easy to set up a business here. If you are having difficulty with the process, it is possible to hire a trusted consulting firm. You can also reach us if you require assistance with setting up a Dubai business.
- File Company Name.
- Submit Documents at D.E.D.
- Attest Memorandum of Association at D.E.D.
- Apply for a Trade License.
- Apply for an establishment card.
- Register in the Ministry of Labour.
- Rent or Lease an Office.
- Apply for Owner / Employee Visas.