Business Setup In Dubai: How To Start A Business

Written By Akshaya Ashok, Reviewed By Retheesh R S

Published on 21/08/2024

Dubai has emerged as a global business hub, characterized by its strategic location, modern infrastructure, and a robust economy. The city is known for its dynamic market environment, attracting entrepreneurs and investors from around the world. With ongoing government initiatives aimed at improving the business landscape, Dubai's future as a center for commerce and innovation looks promising. The emirate's effort to expand its economy beyond oil and fostering industries like technology, tourism, and finance positions it as a desirable location for new business initiatives. This blog aims to guide you through the process of Business Setup in Dubai, helping you manage the opportunities and regulations that make Dubai an ideal destination for your venture.

Benefits of Company Formation in Dubai

• Tax Advantages: Dubai offers a tax-friendly environment with no personal income tax and low corporate tax rates, especially in free zones.
• 100% Foreign Ownership: Foreign investors can fully own their businesses in designated free zones and certain sectors in the mainland.
• Strategic Location: Dubai's geographical position provides easy access to markets in the Middle East, Africa, and Asia, making it an ideal logistics hub.
• Robust Infrastructure: The city boasts world-class infrastructure, including transport, telecommunications, and utilities, facilitating smooth business operations.
• Diverse Economy: The economy of Dubai is diverse, with opportunities in various sectors such as tourism, trade, logistics, and technology.

Time to Business Setup in Dubai

The time required to set up a business in Dubai can vary based on the type of business and the chosen jurisdiction. Generally, it can take anywhere from a few days to several weeks to complete the registration process, depending on the complexity of the business structure and the efficiency of document preparation.

Three Zones to Set Up Your Business in Dubai

1. Mainland:

• Ownership: Requires a local sponsor for certain activities, but 100% foreign ownership is allowed in many sectors.
• Business Scope: Can operate anywhere in Dubai and the UAE.
• Regulations: Subject to the Department of Economic Development (DED) regulations.

2. Free Zones:

• Ownership: 100% foreign ownership is permitted.
• Business Scope: Mostly for export; without a local distributor, it is not possible to conduct direct business in the UAE market.
• Regulations: Governed by specific free zone authorities, offering streamlined processes and tax benefits.

3. Offshore:

• Ownership: 100% foreign ownership.
• Business Scope: Ideal for holding assets and conducting international business without local trade.
• Regulations: Limited to activities outside the UAE; cannot conduct business within the UAE.
  

Major Steps to Establish Your Company in the UAE Mainland

1. Choose Your Business Activity

The nature of your business can be classified under various categories, such as:

• Commercial
• Professional
• Industrial
• Tourism
• Agricultural

This classification determines the type of license you will need.

2. Decide on Your Company Structure

Select a business legal structure that works for you, such as:

• Sole Establishment
• Limited Liability Company (LLC)
• Civil Company
• Branch of a foreign company
• Joint Venture

3. Register Your Trade Name

Apply for a unique trade name through the Department of Economic Development (DED) in your chosen emirate. Ensure the name complies with local naming conventions and is not already in use.

4. Obtain Initial Approval

Secure initial approval from the DED, which indicates no objection to your business setup. This approval allows you to proceed with the next steps but does not permit you to start operations yet.

5. Prepare Legal Documents

Depending on your chosen structure, prepare necessary legal documents, including a Memorandum of Association (MOA) for LLCs or a Local Service Agent (LSA) agreement for sole establishments. The MOA outlines the company’s governing principles and shareholder rights.

6. Choose a Business Location

Choose a physical address that satisfies DED standards for your company. Register your tenancy contract through the Dubai Land Department’s Ejari portal to confirm your business location.

7. Obtain Additional Government Approvals

Depending on the business model of your firm, you might require extra government approvals. Ensure compliance with all regulations applicable to your industry.

8. Submit Required Documents

Compile and submit your documents, including the initial approval receipt, lease contract, and any additional approvals, to the DED for final processing.

9. Pay Fees and Obtain Your License

Once your application is approved, pay the required fees to receive your trade license. This license officially allows you to operate your business in the UAE mainland.

10. Fulfill Post-Registration Requirements

After obtaining your trade license, open a corporate bank account and register for VAT if applicable. Ensure you meet any ongoing compliance requirements, such as annual audits or renewals.

Types of Business Licenses in Dubai

In the United Arab Emirates (UAE), there are several types of business licenses that cater to different types of commercial activities. Here are the main categories:

• Commercial License: For trading activities.
• Professional License: For service providers, professionals, and artisans.
• Industrial License: For manufacturing and industrial activities.
• Tourism License: For travel and tourism-related businesses.

Commercial License

A Commercial License is required for trading activities, such as:

• Retail stores
• Wholesale businesses
• Import and export companies
• Trading companies

Professional License

A Professional License is necessary for service providers, professionals, and artisans, such as:

• Consultancy firms
• Law firms
• Accounting firms
• Medical clinics
• Beauty salons
• Repair shops

Industrial License

An Industrial License is required for manufacturing and industrial activities, such as:

• Factories
• Workshops
• Warehouses
• Logistics companies

Tourism License

A Tourism License is required for travel and tourism-related businesses, such as:

• Travel agencies
• Tour operators
• Hotels
• Restaurants
• Recreational facilities

 Businesses You Can Invest Confidently in Dubai

• E-commerce: With a growing online market, e-commerce businesses are thriving.
• Tourism and Hospitality: Dubai's tourism sector continues to expand, offering opportunities in hotels, travel agencies, and entertainment.
• Real Estate: The real estate market remains robust, attracting investors for residential and commercial properties.
• Technology and Innovation: Startups in tech, especially those focusing on AI and fintech, are in high demand.
  

Documents Required for Business Setup in Dubai

For Mainland:

• Business registration and licensing form
• Copy of passport and residence visa of the owner(s)
• The local sponsor, if applicable, must provide a No Objection Certificate (NOC).
• Articles of Association
• Feasibility study (if required)

For Offshore:

• Application form
• Copy of passport of the shareholders and directors
• Proof of address (It can be your bank statement or utility bill)
• Business plan (if required)

Process for Business Setup in Dubai

For Mainland:

• Choose a business activity and legal structure.
• Reserve a trade name.
• Obtain initial approval from the DED.
• Prepare and submit the required documents.
• Obtain the business license.
• Register with the Chamber of Commerce.
• Open a corporate bank account.

For Offshore:

• Choose the offshore jurisdiction.
• Prepare the required documents and application.
• Submit the application to the offshore authority.
• Obtain the offshore license.
• Open a bank account in the chosen jurisdiction.

 Regulations to Be Followed

• Compliance with local laws and regulations set by the DED and relevant free zone authorities.
• Adherence to labor laws, including employee contracts and rights.
• Following financial regulations, including tax compliance and accounting standards.

Cost for Company Formation in Dubai

The cost of setting up a business in Dubai varies based on the type of business, location, and licensing fees. On average, costs can range from AED 10,000 to AED 50,000 or more, depending on the complexity of the business structure and the chosen jurisdiction.

Reyson Badger - Why Choose Us?

At Reyson Badger, we specialize in helping entrepreneurs manage the complexities of Business Setup in Dubai. Our experienced consultants provide personalized support throughout the process, ensuring a smooth and efficient setup. We support you in reaching your business objectives in Dubai by providing you with in-depth knowledge of local regulations and market dynamics. Contact us right now to begin your journey to success.

Written By

Akshaya Ashok

Akshaya Ashok is a content writer specializing in creating content focused on accounting and auditing. With over two years of experience, she has developed expertise in crafting professional content for the financial sector.