How to start a business in Dubai

UAE nationals, residents, and foreign investors can establish companies in Dubai. The emirate provides a welcoming and inclusive ecosystem, accommodating enterprises worldwide. Numerous free zones are designed specifically for foreign investors and offer full ownership and a range of benefits. Companies of all sizes and sectors can set up and expand easily in this dynamic market with minimal restrictions and supportive regulations.

As a globally renowned destination and rapidly growing commercial hub, the city offers extensive benefits for new companies.

— Pro-business governmental policies and a liberal regulatory environment create diverse corporate opportunities, making the city one of the world’s most desirable venues for new setups.
— A trade-friendly ecosystem allows foreign investors to enjoy huge tax benefits. Foreign investors are not liable to pay taxes on personal or capital gains. Moreover, the small 5% VAT implemented is significantly lower than most commercial capitals globally.
— Excellent infrastructure facilitates seamless interconnectivity and aviation connectivity concerning flight frequency and airport accessibility, with over 8,000 weekly flights to every corner of the world.
— Straightforward regulatory measures and legal procedures
— Accessibility to international markets
— State-of-the-art commercial spaces, including a range of creative, adaptable, and inexpensive options

Companies can select from various legal structures when establishing an enterprise in the UAE.

— Economic Zones: Free Zones vs. Offshore
Before establishing an enterprise, deciding whether to operate in a free zone or offshore is essential, as each offers distinct benefits.

— Free Zone Companies
For those seeking 100% ownership, setting up in one of Dubai’s free zones is a lucrative option. These zones provide full ownership, a 9% corporate tax rate (applied to UAE companies on profits above AED 375,000), and 0% personal income tax. However, companies in free zones are not permitted to trade directly with the UAE local market.

— Offshore Companies
These can also be registered within a free zone and enjoy many similar benefits. Unlike free-zone companies, offshore entities conduct corporate activities outside the UAE and do not have minimum capital requirements. Offshore companies require a local sponsor, limiting foreign ownership to 49%.

Selecting the appropriate license is crucial for operating companies in the UAE. The Department of Economic Development (DED) issues three main types of business licenses:

— Commercial License
Covers trading activities, including import/export, sales, logistics, travel and tourism, general stores, and real estate.

— Industrial License
For manufacturing companies that transform natural materials into final products, including textiles, metal, and paper manufacturing.

— Professional License
For service providers, artisans, or craftsmen, such as medical experts, beauty salons, and repair services.

— Sponsorship
One of the key advantages of free zones like DMCC is that they do not require a local sponsor, allowing for 100% foreign ownership.

Before commencing operations, approvals are required from the Department of Economy. The standard documents required are as follows:

— Stakeholder passport copies with a minimum six-month validity
— Memorandum of Association (MOA)
— Tenancy contract of office (Ejari)
— Approval of trade name approval or initial approval

Along with these documents, the authorities would require additional approvals based on the organization’s activity.

Starting a company in Dubai is straightforward if the established guidelines are followed accurately. Outlined below is a guide to the several steps involved in the process:

1.Selection of business activity: When choosing a corporate activity, the practicality of the activity in the UAE market must be considered. A feasibility and profitability study is ideal before deciding when to start.

2.Selection of Jurisdiction: Decide between the UAE’s various economic zones, including the Mainland, Free Zone, or Offshore. Each jurisdiction has its own laws and caters to different industry needs.

3.Finalization of company structure: The choice of the legal structure impacts the management of profits, losses, and resources. Some legal structures include limited liability companies (LLCs), civil companies, sole establishments, local branches, GCC branches, foreign branches, free zone branches, and holding companies.

4.Approval of trade name and activity: Approval of trade name and activity by the Department of Economic Development (DED) is crucial for a seamless process. Once approval is granted, documents must be submitted to apply for a trade license.

5.Licence Application: The UAE offers a choice of several main types of licences, including commercial, professional, tourist or industrial, when operating on the mainland. The licensing structure in free zones is different and depends on the type of activity.

6. Registration of establishment: Registration and licensing are simultaneous processes that involve obtaining necessary approvals and submitting required documents as per the DED.

7.Identification of a local agent: A local partner may be required, depending on the legal structure of the company and its activities.

8.Provision of external approvals: Provide additional documentation and approvals from other government or non-government agencies as requested by DED.

9.Preparation of a Memorandum of Association: To overcome the complexities involved in the preparation of the MOA, it is advisable to seek expert advice to ensure the MOA is drafted following the UAE government’s mandates.

10.Office rental: An office unit can be rented or shared in a center, depending on the trade activities and requirements. However, the choice of office space is important as it determines the number of visas that can be requested from the DED.

11.Procurement of a tenancy contract: Tenancy contracts are agreements between the business owner and the real estate agency whose office or workspace is rented. Ejari is the online system established and governed by the Real Estate Regulatory Agency, ensuring fairness and transparency between both parties. The tenancy contract is required to activate this account, which is critical in facilitating visa issuance for family members and employees.

12.Acquisition of initial approval: The initial approval from DED is mandatory to commence business. It confirms that the UAE government has no objection to the setup and that the application process can continue successfully.

13.Collection of trade license: Once the initial approval is complete, the trade license can be collected after the submission of a series of documents, including the MOA, trade license application, government forms, trade name reservation certificate, approvals, tenancy contract, Ejari, passport copies, No Objection Certificate (NOC), and any additional requirements by the DED, if necessary, along with the relevant fees.