Business Setup in Dubai

Business Setup in Dubai

Business Setup in Dubai
GET FREE CONSULTATION

Do You have Any Questions? We would love to help you with our services

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

  1. Prepare the Memorandum of Association (MoA) for the company. 
  2. Apply for initial approval at the Department of Economic Development (D.E.D.) Dubai.
  3. Register a tradename for business.
  4. Lease/Rent a office
  5. Apply for trade license .
The business can be established in Dubai within one week after receiving its trading license.

Where to Set up a Business in Dubai?

The location is another crucial decision to be made when someone is setting up a business in Dubai. You should consider these aspects:
  • 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

The business locations in Dubai are categorized in two major zones:
  • 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.

Cons

  • 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.

  • Academics
  • Aviation
  • Invest
  • Media
  • Information technology (I.C.T.)
  • Information and logistics
  • Automotive
  • Technology
  • Energy

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
  • Hospitality
  • Education
  • Retail

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
  • Jumeirah
  • Al Qusais
  • Al Quoz
  • Deira
  • 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:

  • Convenience
  • Cost-Effectiveness
  • Sustainability
  • Profitability

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

Before you set up your company in Dubai, it is essential to understand the types of Dubai business incorporations. There are specific requirements for each type of company. I.T. will allow you to make informed decisions by having a thorough understanding of the conditions.

Main types of business establishment in Dubai

General Partnership

Two or more partners are required to set up a general partnership business. Emirati nationals must be the partners, and they will share in the company’s debts. Only the names of the partners can be included in the entity’s name, conditionally. The partnership agreement can include each partner’s interests. In the following cases, the partnership is dissolved:
  • One member dies
  • The bankruptcy of a Partner
  • Resignation of a Partner
  • The insaneness of a partner
There are three types of partnership businesses in Dubai:
  • General partnership
  • Limited partnership
  • Partnerships-en-comandante

Public Shareholding Company

The public also knows these businesses as joint-stock companies. The capital is divided into equal shares. To open a Public Shareholding Company, it is necessary to have at least ten founders in most cases. P.S.C.s requires a minimum capital of AED 10,000,000. A minimum of three directors must be on the company’s board. The Chairman of the board and the majority of directors must be Emirati nationals. The founders will only hold 35% of the share capital, while the remainder must be made available to the public. A PSC member is only responsible for the share value that he owns.

Private Shareholding Company

The private shareholding company in Dubai is very similar to the public. To open a P.C., you must have at least three shareholders. These shares cannot offer shares to the general public. It is obligatory to indicate in the paperwork whether any claims will become available to the public.
Dubai’s most popular type of business incorporation is the L.L.C. These companies are available in the Dubai mainland. An L.L.C. license gives you full operating rights in the U.A.E. These entities must have a minimum capital requirement, which is dependent on the type and nature of their business. You must have physical offices within the country to establish an L.L.C. An L.L.C. can only allow foreign owners to hold 49% of its shares.

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.

Branch Office

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

Dubai’s Mainland Companies are exempt from corporate and personal taxes. There are custom and municipal taxes that must be considered.

There is no minimum capital requirement

The minimum share capital requirement is not subject to restriction. The majority of free zones have a minimum capital requirement that every establishment in the area must declare.

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

Many free zones have restrictions on businesses that do not operate in the same sector. For instance, you’re allowed to open up a financial management business in a free zone, but you may not be allowed to open up a company of a different nature. Even in these cases, you will need to go through the legal process to obtain the necessary permissions. There will be no room for business diversity within the free zones. It will not be an issue for mainland companies. It is possible to offer multiple business activities in Dubai mainland without any hassle.

Opportunities to Take up Government Projects

Dubai-based businesses that aren’t in the free zone are not permitted to undertake any government work. They are allowed only to do private business. However, Mainland Companies in Dubai can accept government contracts. They are allowed to bid for government projects. If selected, these projects can yield substantial profits and open the door to other business opportunities.

Multiple Offices Available to Rent

Mainland Companies have the chance to diversify and expand their business. They can also rent multiple offices in the area, allowing them to penetrate and capture the market quickly.

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

Foreign business owners can keep 100% ownership in free zones. You don’t have to rely on any national to sponsor or partner with your business. You have complete control of your business decisions as a sole proprietor. A minimum capital requirement is not a restriction for single-owner companies.

Exemption from Tax

Many free zones provide exemptions from import and export taxes as well as minimal custom duties. You can enjoy maximum profits by using these zones. These exemptions are also possible to be renewed after a specified period.

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

It is very advantageous to set up a business in Dubai. However, you will need a business license to reap the incredible benefits.

Dubai Business Licenses

Dubai offers three types of business licenses:

  • Commercial License
  • Industrial License
  • Professional

Commercial 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.

Industrial License

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:

  • Production
  • Segregation
  • Accumulation
  • Packaging

Professional License

Individuals are granted the third and final type of business license based on their expertise and skills. A professional license has the most significant advantage in that it allows 100% foreign ownership. The only condition that will arise is that you must have a local agent to provide service.

Cost of setting up a Business in Dubai

Entrepreneurs must consider the cost of setting up a business in Dubai. To plan effectively, you need to make a realistic calculation. Clear cost breakdowns will help you avoid many unwanted overheads and expenses. There are two locations in Dubai where you can set up a business, as we have already discussed. Both these areas have very different costs. The following factors can also impact costs:
  • What type of business license do you need?
  • Type of business/company you start (L.L.C., F.Z.E.).
Additional charges may apply for L.L.C. formation in Dubai.
  • 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
Other fees will vary depending on the type of company. L.L.C. companies may also be subject to investor visa fees and employer visa fees.

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.

 

  1. File Company Name.
  2. Submit Documents at D.E.D.
  3. Attest Memorandum of Association at D.E.D.
  4. Apply for a Trade License.
  5. Apply for an establishment card.
  6. Register in the Ministry of Labour.
  7. Rent or Lease an Office.
  8. Apply for Owner / Employee Visas.

Table of Contents