Dubai, being the global business hub, attracts lots of entrepreneurs and companies across the world. Company Registration In Dubai, UAE is becoming the most required process for those who wish to have a strong existence in the Middle East. The location, tax-friendly environment, and modern infrastructure make Dubai an ideal destination for a business setup. This has resulted in increased interest in Dubai company registration among international investors and local entrepreneurs.
Registration of a company in Dubai can be slightly complicated and thus requires an understanding of the available options and steps one has to take. This paper is therefore aimed at guiding readers through the types of company registration in Dubai, the benefits of setting up a business in the UAE, and how one can choose the right business structure. It will also mention the procedure of registering a company in Dubai, required documents, costs associated, and opening a corporate bank account. By the end, he will have an in-depth knowledge of how to set up a business in Dubai and, therefore, to be able to deal with the UAE company registration process successfully.
Types of Company Registration in Dubai
Dubai has three major registration options for companies looking to establish their business in the UAE. Each kind of company has its features, advantages, and limitations.
Free Zone Companies
Free zone companies are established in special economic zones with preferential tax and customs treatment. The primary purpose of free zones is to provide the perfect environment that attracts foreign investment and stimulates economic growth by doing so. Some of the characteristics of free zone companies are:
- 100 percent foreign ownership
- 0% corporate tax
- 100% repatriation of profit and capital funds
- No local sponsor or a service agent is required
Not allowed to conduct business in free zones and internationally only
However, free zone companies are, upon certain extent, under limitations. For example;
A direct operation of a company cannot happen in the UAE mainland
Visas are limited depending on the free zone and office space rented. It ranges from 3 to 6 visas.
Some free zones require compulsory auditing accounts.
Mainland Companies
The mainland companies, otherwise known as onshore companies, get registered with the DED of the respective emirate. The type of company has the benefit of exemption to operate freely in the whole UAE. The key features include:
Access to local and international markets; there are no restrictions on business activities within UAE; a capability to participate in government tenders; flexible visa allocation depending on office space—generally one visa per 80 square feet.
Recent changes in UAE law have brought about some significant developments onshore companies :
The most recent change in the Law, effective 1 December 2020, more than 1,000 commercial and industrial sectors are now permitted 100% foreign ownership. Furthermore, it eliminates the requirement that 51% of the ownership must be national.
But there are some limitations regarding mainland companies. These are as follows:
There needs to be at least a minimum office space of 200 sq. ft.
The accounts should be subject to annual audit
Much more significant capital is needed compared to free zone companies.
Offshore Companies
The ideal vehicle for international investors who aim at global corporate control is the offshore company. A company incorporated outside the UAE may have relations with the local market. The main features are as follows:
100% foreign ownership
The company’s physical presence is not required in the UAE.
It offers a high level of privacy and confidentiality
No minimum capital requirement
No visa quota
Limitations of an Offshore Company:
An offshore company cannot directly operate any business activities in the UAE.
The Offshore companies cannot issue resident visas.
The office has to necessarily be located outside UAE.
An offshore company may be formed for a variety of purposes, such as:
Holding shares of UAE mainland or free zone companies
International trading
Intellectual property or asset holding
Comprehending the above-mentioned different modes of company registration option can enable the investors to structure their business in Dubai and the UAE accordingly to suit their business objectives and operational requirements.
Benefits of Company Registration in Dubai
Tax Benefits
The large number of tax benefits attached to company registration in Dubai has been the driving force behind entrepreneurs and investors who flock from all over the world. This enabled the adoption of zero taxation under which businesses enjoy:
No corporate tax for 15 years that can be renewed for another 15 years
No personal income tax
100% tax exemption on imports and exports
100% repatriation of capital and profit.
These tax benefits enable firms to gain high profits and reinvest them in the growth of their business. This feature makes Dubai an attractive destination for any kind of business setup.
Strategic Location
Dubai’s geographical location provides an ideal gateway to a world full of opportunities. It bridges the gaps between different markets and allows easy trade and commerce among them. Some of the main benefits that Dubai’s strategic location offers are:
The crossroads between Europe, Asia, and Africa
Less than 8 hours of air travel away from two-thirds of humanity
Easy access to the rapidly growing economies of the Middle East, Africa, and Asia
Central node in the global trade network
Ideal hub for businesses looking to tap into emerging markets
This location eases a company’s expansion to increase coverage and seek new markets. Therefore, Dubai is a better way for international business operations.
World-class infrastructure
Such is Dubai’s commitment to world-class infrastructure that it has built facilities second to none in any sector to support businesses. Notable among them are:
Dubai International Airport: Among the busiest in the world, serving over 240 destinations across six continents
Jebel Ali Port: The biggest manmade harbor in the world and the biggest port in the Middle East
State-of-the-art transportation networks
Excellent logistics facilities
Modern telecommunications systems
This magnificent infrastructure allows for high operational efficiency of businesses, hence smoothly running global trade and increasing the attractiveness of Dubai for business.
Among others, Dubai offers a range of incentives to attract and retain investors and entrepreneurs. Some of these are:
100% foreign ownership of onshore companies in most sectors
No currency restriction
Easy to do business
Ready availability of diverse educated workforce with global experience
No requirements for share capital
No physical office requirements in some cases
Lower set-up costs than many other onshore jurisdictions
The combination of tax advantages, location, world class infrastructure and business friendly policy make Dubai the ideal location to register a company. Together, they work towards offering an enabling business environment that will positively contribute to growth and success for companies of all sizes and industrial sectors.
Selecting the Appropriate Business Structure
While establishing a presence in Dubai, UAE, there are a number of choices entrepreneurs can make when registering their company. Each has its benefits and considerations, thus providing three common forms of business structures:
Limited Liability Company (LLC)
An LLC is one of the most popular business entities that entrepreneurs usually opt to establish a presence in Dubai.
The principal features of an LLC are:
Ownership structure: An LLC can be owned by 1 to 50 shareholders.
Liability, therefore, is limited in terms of financial risk to only their percentage shareholding in the company. Capital requirements The minimum share capital required will be AED 300,000, with a requirement to pay at least 30% as an upfront. Compliance In relation to compliance, there are recurring requirements for LLCs in terms of yearly audits and activity reports. Business activities Under this license, companies will be able to carry out trading, sales, marketing, and other various types of approved commercial activities.
To establish an LLC in Dubai, the founders must adhere to a few requirements:
Have 1 to 50 shareholders
Ensure that 51 percent of business shares are owned by UAE nationals or companies that are entirely Emirati
Pursue approved activities which are included in the license by the relevant regulatory authority
Free Zone Establishment (FZE)
A Free Zone Establishment or FZE is a business entity established in the free zones of UAE. Some of the main features of an FZE are as follows:
Ownership: It allows 100 percent foreign ownership.
Tax benefits: FZEs are exempt from corporate tax on operations within the free zone jurisdiction
Capital requirements: Minimum share capital requirements vary across free zones
Physical presence: FZEs require physical office space within the free zone premises
Shareholder structure: FZEs have a single shareholder, either an individual or a company
Some of the key advantages of free zones include the following:
Complete foreign ownership
No currency control
No import and export duties
100% tax exemption
Full repatriation of profits and financial assets
Smooth labor recruitment procedures
Easily available workspaces
Branch Office
A branch office is an extension of an already existing overseas company willing to operate in the UAE. Main characteristics of a branch office are as follows:
Legal Status: It is not considered to be a separate legal entity from its parent company.
Liability: The foreign parent company is subject to full legal and financial liability for all actions conducted and debts incurred by the branch
Activities: No direct dealing with clients and sales activities are permitted and
Attention: Marketing, display of product/ service, understanding of the market, and after-sale service are the primary concerns
Procedure of formation: Almost the same as that of an LLC, but on occasions, more time-consuming and compliant
To open a branch office in Dubai, the Parent Company should:
Shall have minimum two consecutive years of actual performance with good financial standing
Shall appoint a UAE National or Company as local Service Agent
Ownership, financial statements and activities of the parent company
Details of ownership, the preferred form of business structure will be based on ownership, preference, capital requirements, activities, and long-term goals. Each form has its advantages and limitations, thus it shall be essential to make an appropriate choice by striking a balance of all the aspects that best suit your purpose of business in Dubai and UAE.
How to Register a Company in Dubai
The process of registration for a company in Dubai is quite straightforward and, therefore, can be turned around within a relatively short period. With the following steps, entrepreneurs will indeed be quite far down the path of having a presence in this thriving economic hub.
Choose Business Activity
The first step in the process of registering a company in Dubai is to identify and select the primary business activity. This is an important decision because this will determine the license that must be applied for and under what regulatory framework the company will be registered. To identify the right business activity:
Make a close review of the list of business activities maintained by the registration authority
Identify activities that match the operations that are intended to be carried out by the company.
Note that each activity has a code allocated to it in its own right.
Be aware that some activities may require external approvals or No Objection Certificates from relevant government authorities.
Importantly, some registration authorities have varying policies on the number of activities one is allowed to conduct under one license. Some charge an enhanced fee for an increased number of activities; others allow activities from one group without extra fees.
Select Company Name
The selection of an appropriate name for the company is a vital component of the registration process. A company name should indicate a memorable and permitted name in accordance with UAE rules and regulations. While selecting a company name, one needs to bear in mind that:
The chosen name is not previously registered or copyrighted.
There shall be an absolute avoidance of names with any religious undertones, political affiliations, or those of deities.
Full names need to be used instead of abbreviations.
Continents, countries, regions, and UAE districts are not to be used as names.
The name should suggest the type of business that will be carried on.
A name suggesting that the company is a government organisation should be avoided.
It is advisable to consult the business consultancy firms or the legal consultants conversant with the business laws of Dubai to help in naming the company in accordance with the naming criteria of Dubai.
Get Preliminary Approval
Preliminary approval is the other essential requirement when one seeks to register a company in Dubai. It is simply an approval by the government, permitting a person to carry on the business venture. To acquire preliminary approval:
An initial approval application shall be submitted with the requirement of all necessary documents. The application can be filed online via Invest in Dubai, or through any of the authorized service centers. It takes approximately 7-10 minutes to complete the process. This initial approval document shall be valid for a period of 6 months. The initial approval fee is AED 120. This approval is needed to acquire other important documents required for the trade license.
Following these steps and staying within the regulatory framework established by Dubai authorities will be very helpful for entrepreneurs in easily completing the company registration process and establishing a business in this vibrant market.
Required Documents for Company Registration
There are a lot of documents that entrepreneurs should prepare and submit to complete the process of company registration in Dubai, UAE. Specific requirements no doubt differ based on the type of company to be registered and the jurisdiction where the company will be located. However, listed below are some of the common documents required across company structures.
Passport Copies
Copies of the passport of all shareholders and directors are prerequisites to setting up a company in Dubai. Copies will be proof of identity and nationality. While submitting passport copies, it should be made sure that—
Copies are clear and readable
All pages of the passport are attached, not only the principal page
The passport should have a minimum of six months’ validity from the date of issue.
Copies attested or notarised based on the requirement of the particular free zone or mainland authority
For non-UAE Residents, it may further be required to:
Get the attestation from UAE embassy in their home country
Get the documents authenticated from UAE’s Ministry of Foreign Affairs
Business Plan
In most cases, forming a company in Dubai needs an inclusive business plan. It should include the goals of the company, strategies, and financial estimates. A good business plan would include the following components:
Summary or executive summary
Description of the company
Market analysis
Organization and management structure
The products or services to be offered
Marketing and sales strategies
Financial Projections for at least three years
A business plan serves several purposes:
It demonstrates to the authorities registering the business that it is viable.
It assists in getting necessary approvals from concerned government departments
It comes handy during applying for business loans or while chasing potential investors
Memorandum of Association
The Memorandum of Association is an important legal document that defines the constitution of the company and its relationship with its external environment. The main content of the MOA consists of the following:
Company name and address of the registered office
Objects clause indicating the main business activities of the company
Share capital and shareholding structure details
Names and addresses of shareholders and directors
Rules governing the company’s internal management
While preparing the MOA, the following matters should be kept in consideration:
All information should be correct and current
The document should be notarized and attested according to the local requirement
The MOA should be translated into Arabic if it is drafted in any other language
Other core requirements in addition to these basic documents may include the following:
No Objection Certificates (NOCs) from current sponsors or employers
Bank reference letters
Proof of address for shareholders and directors
Educational certificates and professional qualifications, if any
It is advisable to consult a local business set up consultant or legal advisor to ensure that all documents are prepared correctly and comply with the latest regulations in Dubai and UAE.
Cost for Company Registration in Dubai
The overall cost of company registration in Dubai will depend upon so many factors, including the type of business structure, location, and special needs. There are several expenses that entrepreneurs can expect when establishing a business in Dubai.
License Fees
This license is among the most critical and one of the yearly recurring expenditures of any company in Dubai. Licensing fee varies by the type of business activities, and it costs more in some specialized sectors with extra approvals. The license fees can vary from AED 10,000 to AED 15,000 in the case of a trade license, while for a free zone company, the cost can range from AED 15,000 to AED 50,000.
The four kinds of company licenses that are mostly required are:
- Commercial License: For general trading businesses
- Industrial License: For manufacturing goods
- Tourism License: For travel and tours
- Professional License: For service-related businesses
Office Space Rent
Office space is one of the major expenses associated with opening an office in Dubai. The price varies depending on the location, size, and facilities provided. Any type of mainland company setup will require a physical office space. Free zones are more lenient and offer shared spaces or even flexi-desks at significantly lower prices.
This cost has a very broad range:
- For setting up an LLC in Dubai’s Mainland: AED 30,000 to AED 50,000 per annum
- For a free zone company: AED 20,000 to AED 40,000 per annum
Some of the priciest office rents belong to DIFC, averaging about 216 United Arab Emirate dirhams per square foot per annum as of Q3 2020.
Visa Costs
Visa costs are mandatory for both owners, employees and their dependents. These include processing fees, medical tests, and Emirates ID registration. Here is the cost of a visa, which varies according to the type of company or the location of the firm or business establishment or operation :
- An LLC in mainland Dubai: AED 3,000 – AED 5,000 per person
- Free zone company: AED 5,000 – AED 7,000 per person
- Extra costs for a visa might be around : Quota Inspection: AED 553
- Labor card payment: AED 2,400 approximately (depending on the designation and the category of the company)
- Medical Insurance (Basic): AED 700
- Visa Stamping: AED 493
The overall cost for company registration in Dubai can lie anywhere between AED 20,000 and AED 30,000, approximately USD 5,445 and USD 8,167. However, on the higher side, it may also go manifold according to the criteria of business and jurisdiction opted for. On that account, the best way is to approach a well-reputed Company Formation Specialist who can guide about rules and regulations of the country in order to get a reasonable price estimate.
Opening a Corporate Bank Account
Opening a corporate bank account in Dubai, United Arab Emirates, is an essential step of doing business. This requires the submission of certain documents and the selection of the appropriate bank that best serves the requirements of the company.
Required Documents
Companies must open a business bank account in Dubai with a set of documents validating the existence and operation of their business. The list of documents may vary from bank to bank, but generally includes the following:
Trade license
- Memorandum of Association, or AoA, to Articles of Association
- Passport copies with visas and Emirates ID all partners: a copy (in case of a partnership)
- Office tenancy contract or Ejari to prove a physical office.
- Bank statements for the last six months of personal or company bank from UAE or the home country
- Business model, company profile, or website
- Description of applicant profile of the signatory
- Details of existing or prospective clients suppliers/buyers
Debit and credit invoices
Other documents For free zone companies:
Share certificate
Certificate of Incorporation – Offshore companies
Parent company’s legal documents – Foreign entities
Please note that depending on the banks, some additional supporting documents may be needed:
Utility bills as address proof. Only for some nationalities
VAT Certificate. If Applicable
Certificate of Good standing. In case of Offshore Companies
Certificate of Incumbency. If Applicable
Popular Banks in Dubai
Dubai is pretty extensive with numerous options in the banking sector when it comes to opening corporate accounts. Some of the popular banks for opening business accounts in Dubai are as follows:
Emirates NBD: Offers business accounts that come with a minimum required balance of AED 50,000, a dedicated relationship manager, very competitive foreign exchange rates, and special deposit and investment rates.
Abu Dhabi Commercial Bank (ADCB): Offers five choices of accounts having requirements for minimum balances that range from AED 25 000 to AED 1 000 000. Multi-currency flexibility and preferential pricing on transactions are part of the benefits provided in this category.
First Abu Dhabi Bank, FAB: The accounts have a minimum average balance of AED 10,000. The account offers free inward local and international remittances. It is fit for any size of business, including start-ups.
Commercial Bank of Dubai: Opens business accounts with a minimum balance of AED 20,000. Offers checkbooks absolutely free, secure monthly e-statements, and unlimited teller transactions.
Mashreq Bank: Offers two types of business accounts that come at a minimum balance of AED 25,000 and AED 150,000. Provides discounted remittances and preferential tariffs on business financing products.
In bank selection, a business must consider the requirements for minimum balance, transaction fees, the quality of online banking, and other services provided. Comparison of banks and their packages should be considered in order to get the best match for the company’s needs and financial goals.
Conclusion
Company registration in Dubai opens the gateway to doing business in a booming global hub. It considers a number of company structures very carefully, each having its benefits and requirements that best meet the different needs of the business. From choosing a business activity to picking a company name, gathering all documents required, and using the costs, entrepreneurs know what to do in this vibrant city.
An investment-friendly environment and strategic geographical location, with infrastructure of world class, make a huge impact on the attraction of international investors to the UAE. Seeking professional help in realizing the complexity of the registration procedure will make them much better prepared to take advantage of such opportunities. With all the above steps duly followed by businesses and with consideration for major factors, grand opportunities open up in Dubai’s competitive market, apart from the immense potential of the Middle East region and countries spanning the globe.
FAQs
1. How much money will I need to incorporate a company in Dubai?
The amount of money needed to successfully register a company in Dubai varies based on the purpose of the business, jurisdiction chosen, and its licensing requirements. It would be best if one contacted a local expert for an exact costing of the registration process.
2. How do I incorporate a company in Dubai?
The steps to be followed to register a company in Dubai are as follows:
Step 1: Determine the nature of your Business Activity
Step 2: Choose the appropriate Business Structure
Step 3: Select a Company or Trade Name
Step 4: Apply for relevant Business License
Step 5: Decide about the Business Location or Jurisdiction
Step 6: Open Corporate Bank Account
3. Can a non-resident register a company in Dubai?
Yes, it is quite possible for a non-resident to set up a company in Dubai and operate it from anywhere in the world with the right guidance.
4. Can I set up a Company in Dubai without residence visa?
Yes, one can open a company in Dubai without holding a residence visa. This flexibility makes Dubai an attractive location for many entrepreneurs.
