Dubai

📈

Business Setup

Sections

A. Mainland Company

  • Ownership: As of 2021, foreign investors can own 100% of certain business activities in mainland companies (previously required a local Emirati sponsor holding 51% ownership).
  • Scope: Can operate anywhere in the UAE and take on government contracts.
  • Examples: Retail shops, restaurants, consulting firms.

B. Free Zone Company

  • Ownership: 100% foreign ownership allowed.
  • Scope: Limited to operating within the free zone or internationally; requires a local distributor to trade in the UAE mainland.
  • Examples: E-commerce, logistics, IT services.
  • Popular Free Zones: Dubai Multi Commodities Centre (DMCC), Dubai Internet City (DIC), Jebel Ali Free Zone (JAFZA), Dubai Silicon Oasis (DSO).

C. Offshore Company

  • Ownership: 100% foreign ownership allowed.
  • Scope: Cannot conduct business within the UAE; used for international trade, holding assets, or tax optimization.
  • Examples: Holding companies, investment firms.

D. Sole Proprietorship

  • Ownership: 100% foreign ownership allowed for professional services; requires a local service agent for administrative purposes.
  • Scope: Suitable for freelancers and consultants.
  • Examples: Legal consultancy, IT consultancy.

E. Branch Office

  • Ownership: Fully owned by the parent company.
  • Scope: Can conduct business similar to the parent company but must align with UAE regulations.
  • Examples: International companies expanding into Dubai.

2. Costs Involved in Setting Up a Business in Dubai

The costs of setting up a business in Dubai vary depending on the business structure, location, and type of activity. Below is a breakdown of typical costs:

A. Mainland Company

  • Trade License Fee: AED 10,000–15,000 annually.
  • Initial Approval Fee: AED 100–500.
  • Local Sponsor Fee (if applicable): AED 10,000–25,000 annually (not required for 100% foreign-owned businesses).
  • Office Space Rent: AED 20,000–50,000 annually (varies by location and size).
  • Visa Costs: AED 4,000–6,000 per visa.
  • Total Estimated Cost: AED 30,000–50,000+.

B. Free Zone Company

  • Trade License Fee: AED 10,000–25,000 annually (varies by free zone).
  • Office Space Rent: AED 15,000–50,000 annually (flexi-desk options available in some free zones).
  • Visa Costs: AED 3,000–5,000 per visa.
  • Total Estimated Cost: AED 20,000–50,000+.

C. Offshore Company

  • Registration Fee: AED 10,000–15,000.
  • Annual Renewal Fee: AED 5,000–10,000.
  • Total Estimated Cost: AED 15,000–25,000.

D. Additional Costs

  • Notarization and Legal Translation: AED 500–2,000.
  • Bank Account Setup: AED 1,000–5,000 (minimum deposit requirements vary by bank).
  • Marketing and Branding: AED 5,000–20,000 (optional but recommended).

3. Step-by-Step Procedures for Setting Up a Business in Dubai

The process of setting up a business in Dubai involves several steps. Here’s a detailed guide:

Step 1: Determine Business Activity

  • Choose the type of business activity (e.g., trading, consulting, manufacturing).
  • Ensure the activity is permitted under UAE regulations.

Step 2: Choose a Business Structure

  • Decide between mainland, free zone, or offshore based on your business goals.

Step 3: Select a Trade Name

  • Choose a unique trade name that complies with UAE naming conventions (e.g., no offensive language, no religious references).
  • Reserve the name with the Department of Economic Development (DED) or the relevant free zone authority.

Step 4: Obtain Initial Approval

  • Submit an application to the DED or free zone authority for initial approval.
  • Documents required: Passport copies, business plan, and trade name reservation certificate.

Step 5: Draft and Notarize Legal Documents

  • Prepare the Memorandum of Association (MOA) and Articles of Association (AOA).
  • Notarize the documents at a UAE court or authorized notary.

Step 6: Secure Office Space

  • Rent an office in the mainland or free zone (flexi-desk options are available in some free zones).
  • Obtain a tenancy contract and Ejari certificate (for mainland businesses).

Step 7: Apply for a Trade License

  • Submit the required documents to the DED or free zone authority.
  • Pay the trade license fee.

Step 8: Open a Corporate Bank Account

  • Choose a UAE-based bank and provide the necessary documents (e.g., trade license, MOA, passport copies).

Step 9: Apply for Visas

  • Apply for investor, employee, or dependent visas through the General Directorate of Residency and Foreigners Affairs (GDRFA).

Step 10: Register for VAT (if applicable)

  • Businesses with an annual turnover exceeding AED 375,000 must register for VAT with the Federal Tax Authority (FTA).

4. Legal and Financial Requirements

A. Legal Requirements

  1. Trade License: Mandatory for all businesses.
  2. Local Sponsor/Service Agent: Required for certain mainland businesses.
  3. Compliance with UAE Laws: Adhere to labor laws, commercial laws, and free zone regulations.
  4. Approvals: Additional approvals may be required for specific industries (e.g., healthcare, education).

B. Financial Requirements

  1. Capital Requirements: Some free zones have minimum capital requirements (e.g., AED 50,000).
  2. Bank Account: A corporate bank account is mandatory for business operations.
  3. VAT Registration: Required for businesses exceeding the turnover threshold.

5. Local Considerations Specific to Dubai

A. Cultural Sensitivity

  • Respect local customs and traditions, especially during Ramadan.
  • Avoid using offensive language or gestures in business dealings.

B. Networking

  • Building relationships is key to success in Dubai’s business environment.
  • Attend industry events and trade shows to expand your network.

C. Language

  • While English is widely spoken, having Arabic translations for legal documents can be beneficial.

D. Economic Zones

  • Choose the right free zone based on your industry (e.g., Dubai Internet City for tech companies, DMCC for trading).

E. Tax Benefits

  • Dubai offers 0% corporate tax (except for certain industries like oil and gas) and no personal income tax.

6. Key Resources

By following this guide, you can successfully set up a business in Dubai while navigating its unique legal, financial, and cultural landscape. If you need further assistance, consider consulting a local business setup consultant or legal advisor.