Dubai is an important business hub that attracts investors and innovators around the globe. Before you start a business, it is important to know the legal, financial, and cultural aspects. This guide will walk you through the steps of setting up a business in Dubai. We’ll cover everything from choosing a legal structure and business model to licensing.
Why Dubai is the Top Destination for Businesses
It’s important to highlight why Dubai is consistently ranked as one of the most attractive places for entrepreneurs.
- Dubai is strategically located between Europe, Asia, and Africa. This allows it to reach over 2 billion customers within a five-hour flight radius.
- UAE Tax Benefits: The UAE has a 0% tax on personal income and a competitive rate of corporate tax.
- Business-Friendly Policy: Government initiatives and streamlined registration processes make it easier to start a business than ever before.
- Dubai has a world-class infrastructure, from advanced logistics to cutting-edge technologies.
- Global Talent Pool: The city attracts professionals with skills from all over the world. This makes it easier to hire and retain top talent.
Step 1: Identify Your Business Activity
To learn how to start a company in Dubai, you must first determine what your business is.
- Commercial Activities: trade, import, export, and general trading.
- Industrial Activities – Manufacturing, production, and related operations.
- Professional Activities: Consultancy, services, and skill-based businesses.
Selecting the right category is important because each business activity has its own licensing requirements.
Step 2: Select Mainland, Free Zone, or Offshore
Selecting the right jurisdiction for your business is one of the most crucial decisions when setting up shop in Dubai.
Mainland Company
- You can trade directly on the UAE market.
- There are no restrictions on the location of your office.
- Ideal for companies that wish to collaborate with government agencies.
Free Zone Company
- 100% foreign ownership.
- Tax exemptions (no import/export duties, no personal income tax).
- Ideal for companies that focus on international trade, services, and business.
Offshore Company
- Primarily used in asset holding and international operations.
- Direct trade between the UAE and other countries is not allowed.
- The privacy and flexibility of investors can be a great benefit.
Step 3: Choose a business structure
Dubai has a wide range of options to structure your business.
- Limited Liability Company: This is the type of foreign investment that is most commonly made.
- One-person business: owned and operated only by one person.
- Partnership: Two or more people owning a property together.
- Branch Office: An overseas company can open a branch office in Dubai.
- Single shareholders of free zones can establish a Free Zone Establishment.
- Free Zone Company (FZC), for multiple shareholders in free zones.
Step 4: Register your trade name
Your business name must comply with UAE naming regulations. Certain words, such as those that are offensive to religion and culture, are forbidden. Names should be original and unique, not infringing on trademarks. You will receive a certificate of trade name approval once the DED or the relevant free zone authority has approved your application. This is important for the following steps.
Step 5: Request Initial Approval
Initial approval from the authorities is an indication that you can proceed to set up your business. This shows that the UAE government does not object to your business choice. This step is required before obtaining a trade license.
Step 6: Draft a Memorandum of Association
You’ll need a Memorandum of Association if you are forming an LLC or a partnership. This document details the ownership structure, powers, and responsibilities of each partner. A public notary must notarize the MOA in Dubai.
Also Read: Why Dubai Businesses Need Expert IT Services Now More Than Ever
Step 7: Find a business location
Most businesses in Dubai require a physical office address. You can choose from the following options depending on your setup:
- Office space on the mainland in a commercial property.
- Flexi-desks or office units with a free zone.
- Virtual Offices (limited to certain Free Zones)
The authorities will need an Ejari (tenancy agreement) before they can issue you a license.
Step 8: Apply for your business license
The business activity you choose will determine the type of license you need.
- Commercial License for Trading Activities
- Industrial License for Manufacturing or Production
- Professional License for businesses that provide services or consultancies.
Send the necessary documents (copies of passports, MOA, tenancy contracts, initial approval, etc.). To the DED or to the relevant authority of a free zone.
Step 9: Opening a business account
A corporate account is essential for smooth financial transactions. Dubai has a wide range of local and international banks that offer services to various industries.
The top 10 banks in the United States are:
- Emirates NBD
- Mashreq Bank
- HSBC Middle East
- Standard Chartered
Step 10: How To Apply For a Visa
You can apply for a Visa as a Business Owner for you, your family, and your employees. You may be able to apply for up to a specific number of visas, depending on your business type and office size.
Step 11: Complying with all legal requirements
The UAE will implement a corporate tax of 9% in June 2023 for profits above AED 375,000. Free zone companies that meet certain criteria may still be eligible for tax exemptions.
Please also adhere to the following:
- VAT Regulations (5% on Goods and Services)
- Annual audits are mandatory in most cases.
- Renewal of licenses (every year).
The Costs to Start a Business In Dubai
The cost of a business depends on its location and structure. The following are typical expenses:
- Trade name registration costs AED 600 to 1,500
- Initial approval: AED 100-500
- Business license fee: AED 10000 – 15000
- Office rent varies by location (from AED 15000 annually in free zones up to AED 50000+ in mainland Dubai).
- Visa costs: AED 3,000 – 6,000 per visa
Start a Business in Dubai: Benefits
- Access to a booming economy.
- Stable and secure political climate
- Networking with global investors is an opportunity.
- Enjoy a world-class lifestyle with your family and friends.
- Initiatives by the government to encourage startups and SMEs.
Dubai Business Landscape: Tips for Success
- Before investing, do thorough research on the market.
- Select the best jurisdiction for your business.
- Consult a professional for financial and legal advice.
- Understanding cultural norms is key to building strong client relationships.
- Use networking events to expand your business.
Conclusion
Dubai is an international hub that offers unmatched opportunities for entrepreneurs looking to start or expand their businesses. You need to know the legal requirements to understand how to set up a business in Dubai. To ensure long-term business success, from choosing the best business structure to obtaining licenses and managing costs, every step is crucial.
Dubai is the perfect place to grow as a company, freelancer, or startup. With the right guidance, your dream of opening a business in Dubai is a possibility.
