6 minutes A Roadmap for Setting Up a Business in Dubai
Setting up a business in the UAE is a straightforward process that applies across all seven emirates. You may choose to apply in person at the Department of Economic Development in your desired emirate or utilize digital platforms for a swift and convenient online application. With the required documents, you can secure your license in no time at all. Alternatively, you may opt for assistance from legal offices or business establishment service providers specializing in that area. The usual company establishment process includes selecting a location, stating the business’s nature and fulfilling the fee payments required for acquiring a commercial license.
Essential factors before setting up a business in Dubai
You may need to look out for the following before setting up a business in Dubai:
Free Zones vs. Offshore
If you intend to maintain full ownership of your company, you should consider acquiring a license and establishing your business in one of Dubai’s thriving free zones. Free zone companies were introduced by the Dubai government to attract foreign businesses by providing a special economic environment. Within these zones, business owners are eligible to 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 is important to note that operating within a free zone will restrict your ability to engage in direct trade with the UAE market available locally.
Dubai boasts over 30 distinct free zones at the moment, each tailored to distinct industry categories and offering licenses to companies in those domains. To list a few noteworthy examples, consider the Dubai Multi Commodities Centre (DMCC), the Dubai International Financial Centre (DIFC), and the Dubai Airport Freezone.
Offshore companies that are registered in a free zone are authorized for activities without a minimum capital deposit requirement when conducting business exclusively outside of the UAE.
However, in comparison to free zone businesses, offshore entities can have 100% foreign ownership while mainland companies under certain licenses in the commercial segment would still require 51% ownership by a citizen of the UAE.
Types of Licenses
In addition to selecting a zone, you will be required to determine the type of license that best suits your business. The Department of Economic Development (DED) is responsible for issuing these business licenses, and there are three primary types up for consideration:
1. Commercial License
A commercial license allows you to establish a business in Dubai engaged in trading, which includes the buying and selling of goods. This license ties into a variety of businesses, such as import and export, sales, logistics, travel and tourism, general stores and real estate.
2. Industrial License
The industrial license is issued to businesses specifically involved in manufacturing activities that transform natural materials into finished products, either manually or even mechanically. This license category includes a number of manufacturing businesses, including textile manufacturing, metal manufacturing, and paper manufacturing.
3. Professional License
The professional license is meant for businesses that provide a variety of services or are involved in artisan and craftsmanship activities. The businesses that typically apply for this license include medical services, beauty salons, and repair services.
Sponsorship
A local sponsor is not needed when setting up a free zone, such as the DMCC. One of the key advantages of incorporating in a free zone is the capacity to establish an entity with 100% foreign ownership while eliminating the need for a UAE national as a partner or sponsor. This, in turn makes the process of setting up a business in Dubai a lot more appealing to foreign investors.
The perks of setting up a business in Dubai
Starting a business in Dubai as a foreigner has several upside which presents it as an appealing choice for international entrepreneurs and investors. Some of the key upsides include:
100% Foreign Ownership
Foreigners can have full ownership of their companies without the need for a local partner or sponsor in Dubai’s free zones. This provides investors with greater control over their businesses.
Tax Advantages
Free zones typically offer tax exemptions on corporate and personal income, import and export duties and more, which is why Dubai is recognized for its tax environment. Even outside of free zones, corporate taxes are rather low, coming in at only 9%.
Strategic Location
Dubai’s geographical location serves as a gateway between Europe, Asia, and Africa, making access to global markets and trade routes easier.
World-Class Infrastructure
Dubai boasts modern infrastructure which includes state-of-the-art office spaces, telecommunications, and transportation networks making it conducive to business operations.
Business-Friendly Regulations
Dubai’s government has implemented business-friendly regulations that make the process of starting and running a business much simpler due to the fact that the regulatory environment is straightforward and structured.
Diverse Economy
Dubai’s diverse economy offers opportunities in various sectors such as finance, real estate, tourism, technology, logistics and more.
Strong Legal Framework
Dubai’s robust legal system protects the rights of foreign investors and makes sure that contracts are enforceable.
Access to a Skilled Workforce
In recent times, Dubai has attracted a talented and multicultural workforce from around the globe providing access to a diverse pool of talent for numerous businesses.
Quality of Life
Dubai offers a higher quality of life through world-class amenities, education, healthcare and a safe environment for residents and their families.
Supportive Government Initiatives
The Dubai government launched several initiatives to support entrepreneurship, innovation and the continuous growth of small and medium-sized enterprises (SMEs).
International Trade Hub
Serving as a major international trade hub, Dubai connects businesses to a wide range of global markets.
Networking Opportunities
Dubai offers abundant opportunities for networking and collaboration through its thriving business community and numerous industry events and exhibitions.
These benefits are what make Dubai an attractive destination for foreign business people looking to establish and grow their businesses in the Middle East.
How a business is set up in Dubai
1. Determine your business activity
The initial step in establishing a business in Dubai is to identify the nature of your business. With over 2,100 available business activities, you will be required to categorize your business within the industrial, professional, commercial, or tourism sectors. The complete list is available on DED’s website.
2. Select a free zone
Dubai has more than 30 free zones to offer with each catering to specific industries. The nature of your business will influence your choice of free zone as proximity to similar businesses could potentially offer advantages. One prominent choice is also a globally recognized free zone specializing in commodity trade and enterprise, DMCC.
3. Choose a company name
Selecting a business name while ensuring it complies with the UAE’s naming conventions and avoiding offensive language or references to sensitive topics is indeed crucial. When naming the business after a person be prepared to provide evidence of their ownership or partnership within the company.
4. Apply for initial approval
You will require initial approval from the Dubai DED to start a business. This process can be completed online, in person or with third-party assistance, such as from a law firm. The required documents could differ based on your business’s nature, but they generally include:
- The business registration and licensing form
- Passport or ID (1 copy)
- Residence permit or visa (1 copy)
- The company’s articles of association
- A feasibility study for the project
5. Open a corporate bank account
Upon obtaining approval with the necessary documents, you can proceed to open a corporate bank account. Dubai offers a plethora of local and international banks to choose from, such as HSBC, Citibank, Barclays, Abu Dhabi Commercial Bank, and Commercial Bank of Dubai.
6. Decide on your office location
Every business in Dubai is required to have a physical address. Finding office space is easier in free zones. DMC for instance provides office buildings, commercial properties and a business center to cater to various business needs.
7. Apply for final approval
Ensure that your documents, location addresses and legal information are in place for final approval. Depending on your business, you are required to seek licensing approval from relevant authorities. When ready, submit:
- Initial approval receipt and documents submitted
- A lease contract, which is issued by the Real Estate Regulatory Agency (RERA)
- Contract of duly certified service agent (non-GCC nationals)
- Approvals from other relevant government entities
Upon final approval and making the required license payment, your business is up and running.
Where does our assistance come in?
Navigating business licenses can be complex, given the diverse range of industries and activities in the UAE. If you require detailed answers about specific license requirements, application procedures for assistance with aspects of setting up your business, Premia TNC is here for you.
Or, if you are seeking clarity on regulatory compliance or expert advice to ensure a trouble-free licensing process, we are just a message away.
Keep in mind that staying informed and prepared is the best way to ensure your business operates within legal frameworks and thrives in the UAE business landscape.
Reach out for expert assistance today.
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