Setting up a business in the UAE is a straightforward process that spans all seven emirates. You have the option to apply in person at the Department of Economic Development in your chosen emirate or take advantage of digital platforms for a quick and convenient online application. With the necessary documents, you can secure a license in a matter of minutes. Alternatively, you can seek assistance from legal offices or specialized business establishment service providers. The typical company establishment process entails selecting a location, defining the business’s nature, and fulfilling the required fee payments for obtaining a commercial license.
Key Considerations Prior to Setting Up Your Business in Dubai
Here’s what you may need to look out for before setting up a business in Dubai:
Free Zones vs. Offshore
Suppose you intend to maintain full ownership of your company; in that case, you should consider obtaining a license and establishing your presence within one of Dubai’s thriving free zones. A free zone company, introduced by the Dubai government, is designed to attract foreign businesses by providing a special economic environment. Within these zones, business proprietors can enjoy exclusive ownership rights, benefit from a corporate tax rate of 9% (applicable to UAE businesses with profits exceeding AED 375,000), and experience a 0% personal income tax rate.
However, it’s important to note that operating within a free zone restricts your ability to engage in direct trade with the local UAE market.
Dubai currently boasts over 30 distinct free zones, each tailored to specific industry categories and offering licenses to companies within those domains. A few noteworthy examples include the Dubai Multi Commodities Centre (DMCC), the Dubai International Financial Centre (DIFC), and the Dubai Airport Freezone.
Offshore companies registered in a free zone are exclusively authorized for activities without a minimum capital deposit requirement when conducting business outside of the UAE.
However, unlike free zone businesses, offshore entities can have 100% foreign ownership, while mainland companies under certain licenses in the commercial segment still require 51% ownership by a UAE citizen.
Types of Licenses
In addition to selecting a zone, you’ll need to determine the type of license that suits your business. The Department of Economic Development (DED) is responsible for issuing business licenses, and there are three primary types to consider:
1. Commercial License
A Commercial License enables you to establish a business in Dubai engaged in trading activities, including the buying and selling of goods. This license encompasses various businesses such as import and export, sales, logistics, travel and tourism, general stores, and real estate.
2. Industrial License
The Industrial License is specifically issued to businesses involved in manufacturing activities that transform natural materials and resources into finished products, either manually or mechanically. This license category encompasses various manufacturing businesses, including textile manufacturing, metal manufacturing, and paper manufacturing.
3. Professional License
The Professional License is designed for businesses that provide various services or are involved in artisan and craftsmanship activities. Examples of businesses that typically apply for this type of license include medical services, beauty salons, and repair services.
Sponsorship
A local sponsor is not required when setting up a free zone such as the DMCC. One of the primary advantages of incorporating in a free zone is the ability to establish an entity with 100% foreign ownership without the need for a UAE national as a partner or sponsor. This makes the process of setting up a business in Dubai much more accessible and appealing to foreign investors.
What Are the Perks of Setting Up a Business in Dubai?
Starting a business in Dubai as a foreigner offers several advantages, making it an appealing choice for international entrepreneurs and investors. Some of the key benefits include:
100% Foreign Ownership: In Dubai’s free zones, foreigners can have full ownership of their companies without the need for a local partner or sponsor. This gives investors greater control over their businesses.
Tax Advantages: Dubai is recognized for its beneficial tax environment. Free zones typically offer tax exemptions on corporate and personal income, import and export duties, and more. Even outside of free zones, corporate taxes are generally low, at only 9%.
Strategic Location: Dubai’s geographical location serves as a bridge between Europe, Asia, and Africa, providing easy access to global markets and trade routes.
World-Class Infrastructure: Dubai boasts modern infrastructure, including state-of-the-art office spaces, transportation networks, and telecommunications, making it conducive for business operations.
Business-Friendly Regulations: The Dubai government has implemented business-friendly regulations that simplify the process of starting and running a business. The regulatory environment is straightforward and structured.
Diverse Economy: Dubai’s economy is diversified, offering opportunities in various sectors such as tourism, real estate, finance, logistics, technology, and more.
Strong Legal Framework: Dubai has a robust legal system that protects the rights of foreign investors and ensures contracts are enforceable.
Access to a Skilled Workforce: Dubai attracts a talented and multicultural workforce from around the world, providing businesses with access to a diverse pool of talent.
Quality of Life: Dubai offers a high quality of life with world-class amenities, healthcare, education, and a safe and cosmopolitan environment for residents and their families.
Supportive Government Initiatives: The Dubai government has launched several initiatives to support entrepreneurship, innovation, and the growth of small and medium-sized enterprises (SMEs).
International Trade Hub: Dubai serves as a major international trade hub, connecting businesses to a wide range of global markets.
Networking Opportunities: Dubai offers ample opportunities for networking and collaboration, with a thriving business community and numerous industry events and exhibitions.
These benefits make Dubai an attractive destination for foreign entrepreneurs looking to establish and expand their businesses in the Middle East and beyond.
How setting up a business in Dubai unfolds
1. Determine your business activity.
The first step in establishing a business in Dubai is to identify the nature of your venture. With over 2,100 available business activities, you’ll need to categorize your business within the industrial, commercial, professional, or tourism sectors. The complete list can be found on the DED website.
2. Select a free zone.
Dubai boasts more than 30 free zones, each catering to specific industries. Your business’s nature will influence your choice of free zone, as proximity to similar businesses can offer advantages. One prominent choice is DMCC, a globally recognized free zone specializing in commodities trade and enterprise.
3. Choose a company name.
Selecting an appropriate business name is crucial. Ensure it complies with the UAE’s naming conventions, avoiding offensive language or references to sensitive topics. If naming the business after a person, be prepared to prove their ownership or partnership in the company.
4. Apply for initial approval.
To start a business, you’ll need initial approval from Dubai DED. This process can be completed online, in person, or with the assistance of a third party like a law firm. The required documents may vary based on your business’s nature but generally include:
Business registration and licensing form
- Copy of passport or ID
- Copy of residence permit or visa
- Company’s articles of association
- Feasibility study for the project
5. Open a corporate bank account.
Upon receiving approval and the necessary documents, you can proceed to open a corporate bank account. Dubai offers a variety of local and international banks for your choice, such as HSBC, Citibank, Barclays, Abu Dhabi Commercial Bank, and Commercial Bank of Dubai.
6. Decide on your office location.
Every Dubai business must have a physical address. Free zones make finding office space easier. DMCC, for instance, provides a range of office buildings, commercial properties, and business center accommodations to suit diverse business needs.
7. Apply for final approval.
Ensure that all your documents, location addresses, and legal information are prepared for final approval. Depending on your business, you may need to seek licensing approval from other relevant authorities. When ready, submit:
- Initial approval receipt and the documents submitted earlier on.
- Lease contract, which is issued by the Real Estate Regulatory Agency (RERA)
- Duly certified service agent contract (for non-GCC nationals)
- Approvals from other relevant government entities
Finally, make the required license payment through approved channels, and your business in the UAE is up and running.
How We Can Help?
Navigating the world of business licenses in the UAE can be complex, given the diverse range of industries and activities. If you have questions about specific license requirements, application procedures, or need assistance with any aspect of setting up your business, Premia TNC is here to help.
If you’re seeking clarity on regulatory compliance or just expert advice to ensure a trouble-free licensing process, we’re just a message away.
Remember, staying informed and prepared is key to ensuring your business operates within legal frameworks and thrives in the dynamic UAE business landscape.
Feel free to reach out for expert assistance and support.
FAQs about How to Set Up a Business in Dubai
Q: What are the different types of business activities I can choose from when setting up in Dubai?
Dubai offers over 2,100 business activities across various sectors, including industrial, commercial, professional, and tourism. You can find the full list on the Department of Economic Development (DED) website.
Q: Is it mandatory to have a physical office address for my business in Dubai?
Yes, all businesses in Dubai are required to have a physical address. Setting up in a free zone can make finding office space easier.
Q: What is the process for opening a corporate bank account in Dubai?
Once you've obtained initial approval and all necessary documents, you can choose from several local and international banks in the UAE to open your corporate bank account. It's advisable to check with your chosen bank for specific requirements and procedures.
Q: Can I choose any name for my business, or are there naming restrictions in Dubai?
Dubai follows specific naming conventions. Names with offensive language or references to political groups or the mafia are not allowed. If you choose to name the business after a person, you must prove their ownership or partnership in the company.
Q: What are the benefits of setting up in a Dubai-free zone?
Free zones in Dubai offer 100% foreign ownership, 0% personal income tax, and 9% corporate taxation on profits above AED 375,000. However, businesses in free zones are restricted from engaging in direct trade with the local UAE market.
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