Table of Contents

1. Introduction
2. Why Choose Dubai for a Production Unit?
3. Overview of a Production Unit License in Dubai
4. Types of Production Units
   • General Production Unit License
   • Specialized Production Unit License
5. Steps to Obtain a Production Unit License
   • Eligibility Criteria
   • Choosing the Right Jurisdiction
   • Trade Name Reservation
   • Documentation Requirements
   • Approvals and Final Licensing
6. Related Licenses for Production Units
   • Manufacturing License
   • Warehousing License
   • Import/Export License
7. Legal and Regulatory Compliance
   • Dubai Municipality Approval
   • Environmental and Safety Standards
8. Costs of Obtaining a Production Unit License
9. Benefits of Having a Production Unit License in Dubai
10. Conclusion

1. Introduction

Dubai has positioned itself as a global leader in industrial production, with businesses from various sectors taking advantage of its excellent infrastructure, strategic location, and government incentives. If you are considering setting up a production unit in Dubai, you will need a Production Unit License.

This guide will walk you through the steps, benefits, and costs of obtaining a production unit license, along with the compliance standards required for a smooth operation.

2. Why Choose Dubai for a Production Unit?

Dubai offers a wealth of advantages for businesses looking to establish production units:

• Strategic Access: Situated at the crossroads of Europe, Asia, and Africa, Dubai provides an ideal base for exporting products globally.
• Advanced Infrastructure: Dubai has state-of-the-art production facilities, transportation networks, and industrial zones, providing the perfect ecosystem for production units.
• Tax-Free Zones: Free zones in Dubai offer 0% corporate and personal income tax, and 100% repatriation of profits.
• Government Incentives: The Dubai government promotes industrial growth by offering easy access to land, financing options, and streamlined licensing processes.

3. Overview of a Production Unit License in Dubai

A Production Unit License allows a business to engage in the production, assembly, and packaging of goods in Dubai. Issued by the Dubai Department of Economic Development (DED) or specific free zone authorities, the license ensures businesses comply with local regulations regarding production processes, worker safety, and environmental protection.

Production units in Dubai vary widely in scope, from small-scale food processing facilities to large industrial operations manufacturing electronics, chemicals, or heavy equipment.

4. Types of Production Units

Dubai caters to a wide range of production activities. Below are the two primary categories of production unit licenses:

General Production Unit License

A General Production Unit License covers the production, processing, and packaging of goods across diverse sectors, including:

• Consumer products (e.g., food, textiles, cosmetics)
• Industrial products (e.g., metals, machinery, plastics)
• Construction materials and furniture

This is the most versatile type of license, applicable to many types of production businesses.

Specialized Production Unit License

A Specialized Production Unit License is required for businesses involved in the production of regulated or high-risk products, including:

• Pharmaceuticals
• Medical devices
• Chemicals
• Automotive components

Specialized licenses often come with stricter regulatory requirements due to the nature of the products being produced.

5. Steps to Obtain a Production Unit License in Dubai

Step 1: Eligibility Criteria

Before applying for a production unit license, businesses must meet specific eligibility criteria, including:

• Industry Expertise: Experience in the relevant production sector is often essential, particularly for specialized licenses.
• Capital Requirements: Production units typically involve significant upfront investment in facilities, equipment, and machinery.

Step 2: Choosing the Right Jurisdiction

Dubai has established itself as a global business hub, attracting entrepreneurs and companies from around the world looking to set up their operations. If you’re planning to launch a production or manufacturing unit in Dubai, securing a Production Unit License is a crucial step. This license permits companies to manufacture goods and engage in industrial activities. When deciding where to set up your production unit in Dubai, you have two main options: the mainland or freezone. Each option offers distinct benefits and requirements, depending on your business model, target market, and growth strategy.

Setting Up in Mainland Dubai

Setting up a Production Unit License in mainland Dubai is an excellent choice for companies that want to directly engage with the local UAE market and conduct business without any restrictions. Here’s why mainland Dubai could be the right option for your production unit:

Key Benefits of Setting Up in Mainland Dubai:

1. Local Market Access: Businesses established in mainland Dubai can trade freely within the UAE market without needing an intermediary. This is especially beneficial if your production unit plans to sell goods within the local market.
2. Unlimited Scope of Business: Mainland companies have no limitations when it comes to working with other mainland companies. They can also bid on government projects and expand their operations across the country.
3. Flexibility in Business Activities: A mainland license offers greater flexibility in the range of business activities permitted. This means you can diversify your operations without major restrictions.
4. No Minimum Capital Requirements: For most mainland business setups, there is no minimum capital requirement, which allows companies to allocate their financial resources effectively.

Process of Acquiring a Production Unit License in Mainland Dubai:

1. Identify a Local Sponsor: Traditionally, a local Emirati sponsor or service agent is required to own 51% of the business. However, recent changes in UAE regulations now allow 100% foreign ownership for certain sectors, including manufacturing, which makes mainland setup more attractive.
2. Trade Name Registration: Choose a unique trade name for your company and register it with the Department of Economic Development (DED).
3. Submit License Application: Apply for the Production Unit License through the DED, providing necessary documents such as a business plan, financial details, and an outline of your intended production activities.
4. Approvals from Relevant Authorities: Depending on the type of production, approvals from additional authorities (such as the Dubai Municipality or Ministry of Industry) may be required to ensure compliance with health, safety, and environmental regulations.
5. Find a Suitable Location: For manufacturing businesses, you’ll need to secure an industrial space that meets regulatory standards.

Setting Up in Dubai Freezones

Dubai’s freezones are specialized economic zones that offer a host of benefits for companies focused on export or international trade. Setting up a Production Unit License in a Dubai freezone can be the right choice if your business primarily deals with exports or operates globally.

Key Benefits of Setting Up in a Freezone:

1. 100% Foreign Ownership: Unlike mainland companies that often require a local sponsor, businesses in freezones can enjoy 100% foreign ownership, providing complete control over business decisions.
2. Tax Benefits: Freezone companies benefit from various tax advantages, including zero corporate tax and zero personal income tax, making it a cost-effective option for production units.
3. Customs Exemptions: If your production unit imports raw materials and exports finished goods, freezones provide customs exemptions, reducing the cost of manufacturing.
4. Easy Repatriation of Profits: Freezone companies are allowed to repatriate 100% of their profits, which is an attractive feature for international businesses.
5. Industry-Specific Zones: Some freezones in Dubai are designed for specific industries such as Dubai Industrial City or Jebel Ali Free Zone (JAFZA), which offer specialized infrastructure, logistics, and support for manufacturing and production units.

Process of Acquiring a Production Unit License in Dubai Freezones:

1. Choose a Relevant Freezone: Select the freezone that aligns with your business needs. For example, JAFZA is ideal for heavy industries, while Dubai Silicon Oasis focuses on technology and electronics manufacturing.
2. Submit License Application: Apply directly to the relevant freezone authority for a Production Unit License. Required documents include a business plan, identification of shareholders, and details on production activities.
3. Leasing Space: Freezones offer industrial facilities, warehouses, and plots of land for lease. Your production unit will need to lease or build a facility within the freezone area.
4. Approvals from Freezone Authorities: You’ll need approvals from the freezone authority, and in some cases, from additional entities like the Ministry of Industry or Dubai Municipality.
5. Start Operations: Once your license is approved, you can begin operations, benefiting from the streamlined setup process, dedicated infrastructure, and government support freezones offer.

Mainland vs. Freezone: Which is Right for You?

The choice between setting up your production unit in mainland Dubai or a freezone depends on your business goals:

• Mainland Dubai is ideal if you aim to sell within the UAE market and want more freedom to operate in diverse business areas.
• Freezone Dubai is best for companies focusing on exports, international trade, and industries that benefit from tax exemptions and specialized infrastructure.

Both options offer great potential for growth, but it’s essential to weigh the pros and cons based on your business’s needs. Mainland setups offer the advantage of market reach and business flexibility, while freezones offer attractive tax incentives and complete ownership rights.

Step 3: Trade Name Reservation

Choosing a business name is one of the first steps in setting up your production unit. The name must reflect the nature of your business and comply with Dubai’s naming conventions.

Step 4: Documentation Requirements

To apply for a production unit license, businesses must submit the following documents:

• Business plan: Detailing your production processes, investment, and projected growth.
• Proof of capital: Financial documents to demonstrate the required capital investment.
• Trade name reservation certificate: Proof of reserved business name.
• Shareholders’ passports: Copies of passports for all stakeholders.
• Lease agreement: A lease contract for the premises where production will take place.

Step 5: Approvals and Final Licensing

• Dubai Municipality Approvals: Production units involved in food, beverages, or chemical production will need additional approvals from the Dubai Municipality.
• Environmental and Health Approvals: Depending on the industry, businesses may need approvals from the Ministry of Climate Change and Environment to ensure compliance with environmental regulations.
• Final License Issuance: Once all approvals are in place, the business can pay the necessary fees and receive its license.

6. Related Licenses for Production Units

Certain related licenses can enhance the operations of a production unit:

Manufacturing License

If your business also involves the manufacturing of raw materials or components, you may require a Manufacturing License alongside your production unit license.

Warehousing License

A Warehousing License allows your production business to store raw materials and finished products. This is particularly important for businesses that need extensive storage facilities for large-scale production.

Import/Export License

If you plan to import raw materials or export finished goods, you will need an Import/Export License to facilitate international trade activities.

7. Legal and Regulatory Compliance

Dubai Municipality Approval

For certain production sectors, especially those involving food, beverages, or chemicals, you must obtain Dubai Municipality approval to ensure your facilities meet health and safety standards.

Environmental and Safety Standards

Production units must comply with Dubai’s stringent environmental regulations, including waste management, emissions control, and pollution prevention. Non-compliance can lead to heavy fines or the revocation of your license.

8. Costs of Obtaining a Production Unit License

The cost of a Production Unit License in Dubai varies based on factors like the size of the facility, the nature of production, and the location of the business.

• License Fees: AED 10,000 – AED 30,000 depending on the size of the production unit.
• Facility Rent: AED 100,000 – AED 500,000 annually for production units in industrial areas.
• Equipment Costs: Varies based on the machinery and technology required for production.
• Visa Costs: AED 3,000 – AED 5,000 per employee.
• Dubai Municipality and Environmental Approvals: Fees vary based on the nature of the production business.

9. Benefits of Having a Production Unit License in Dubai

• Global Trade Access: Dubai’s strategic location offers easy access to international markets, allowing businesses to export goods with minimal logistical challenges.
• Government Incentives: Free zones offer tax benefits, 100% foreign ownership, and simplified import/export processes.
• State-of-the-Art Infrastructure: Dubai’s industrial zones provide world-class infrastructure, ensuring efficient production processes.
• Business Growth Potential: Dubai’s dynamic economy supports the expansion of production businesses, providing access to both local and international consumers.

10. Conclusion

A Production Unit License in Dubai allows businesses to capitalize on the emirate’s robust industrial infrastructure and global trade opportunities. By obtaining the necessary regulatory approvals and maintaining compliance with Dubai’s legal standards, businesses can enjoy a highly supportive environment for growth and innovation.

If you are ready to start your production business in Dubai, our team of experts is here to assist with every step of the licensing process.