Why Set up a Business in Dubai
Dubai has grown at high speed and shifted from an oil exporting economy and business economy. Dubai has become the first choice of all business owners and foreign investors. There are multiple reasons of business choice.
Dubai attracts foreign investment due to its location and business-friendly government policies. Open economy and sector -oriented free zones compel entrepreneurs to invest and set up a company in Dubai. These are the two biggest forces behind business.
1. Ease of Doing Business
Dubai's ease of doing business has helped the UAE achieve a commendable 16th position in the Ease of Doing Business rankings by the World Bank. With all necessary documents approved, establishing a business in Dubai can be completed within a week, thanks to its simple and straightforward procedures. Furthermore, the UAE's high ranking is attributed to the establishment of numerous free zones in Dubai, offering enticing benefits such as 100% foreign ownership, complete repatriation of profits earned, and substantial tax exemptions.
2. The Open Market and Low Taxes
The private sector in Dubai operates with minimal government and regulatory intervention. Additionally, Dubai has a tax-free environment for personal income, and its economy is built around free trade with low import duties. The liberal labor policies in Dubai allow companies to recruit talent from any part of the world, regardless of nationality. Furthermore, the government has implemented stringent measures to combat fraud and money laundering, creating a clean and safe investment environment for foreign investors.
3. World-Class Infrastructure
Dubai's infrastructure is one of the most advanced and modernized in the world, with several international standard free zones. The city boasts world-class airports and seaports that handle thousands of passengers daily, and a vast network of highways for seamless travel. In addition, Dubai offers a reliable telecommunication infrastructure, uninterrupted power supply, and a plethora of amenities that make it an attractive destination for business owners worldwide to establish their companies.
4. Highly Accessible Location
Dubai's strategic location places it at the center of Africa and the Commonwealth of Independent States (CIS), as well as between the Far East and Europe. Currently, over 85 airlines operate in Dubai, serving over 130 destinations globally, while more than 120 shipping lines connect Dubai to various parts of the world. This makes Dubai the most accessible location globally, offering easy connectivity from anywhere in the world.
5. High Standard of Living
Dubai is a comfortable city, with a high number of foreign residents that make it one of the most diverse cities globally. The city is a leader in real estate, offering top-notch housing facilities, educational institutions, and recreational activities. Furthermore, Dubai boasts low crime rates, making it one of the safest cities worldwide.
Where to Set up a Business in Dubai?
- Tax benefits are available for you to take advantage of.
- The location is both cost-effective and well-situated.
- The location aligns with your business's strategic objectives.
- Your organization can enjoy full ownership rights.
How to Set Up a Business in Dubai?
Dubai is an ideal location for those seeking to establish a business for the reasons outlined above. While the process of setting up a business in Dubai is straightforward, it requires the completion of specific requirements and obtaining approvals from government authorities. Those unfamiliar with the procedures may find it challenging to navigate. The following are the steps required to establish a business in Dubai:
A local sponsor, who must be a UAE national, must be obtained to establish a business in mainland Dubai.
A No Objection Certificate (NOC) letter from the local sponsor must be obtained.
A Memorandum of Association (MoA) that includes details such as the company's primary purpose, capital investment, and issuance of shares must be prepared.
The Department of Economic Development (DED) in Dubai must grant initial approval.
The business must be registered under a unique trade name after obtaining initial approval from DED.
A physical office space for the business must be arranged.
An application for a trade license must be submitted.
The business will be established within a week in Dubai after obtaining a trading license.
Where to Set up a Business in Dubai?
- Tax benefits are available for you to take advantage of.
- The location is both cost-effective and well-situated.
- The location aligns with your business's strategic objectives.
- Your organization can enjoy full ownership rights.
Company Setup in Dubai Free Zone & Mainland
The business locations in Dubai are categorized into two major zones:
- Free Zone Company Setup
- Dubai Mainland Company Setup.
Setting up a Company in Dubai Free Zones& Mainland
Dubai has allocated certain regions as free zones, providing foreign entrepreneurs with optimal locations to establish their businesses. These zones are categorized according to the specific industry of operation.
- Free zones provide two primary advantages: ownership and taxation benefits.
- Dubai Mainland Company Setup.
Dubai Free Zone Areas:
There are about 45 free zones spread throughout the U.A.E. The demarcation of these is based the particular area/sector of operation:
- Academics
- Aviation
- Investment
- Media
- Information technology(ICT)
- Information and Logistics
- Automotive
- Technology
Setting up a Company in Mainland Dubai & Location:
Mainland Dubai is a geographical jurisdiction that presents lucrative opportunities for commercial businesses operating in various sectors, such as
- Real estate
- Hospitality
- Education
- Retail.
- Shaikh Zayed Road
- Business Bay
- Jumeirah
- Al Qusais
- Al Quoz
- Deira
- Bur Dubai
- Al Karama.
- Academics
- Aviation
- Investment
- Media
- Information technology(ICT)
- Information and Logistics
- Automotive
- Technology
Types of Companies in Dubai:
To establish a company in Dubai, it is essential to understand the various categories of business incorporations in the Emirates and the associated requirements. Having comprehensive knowledge of these types of conditions will help entrepreneurs make informed decisions. The following are the primary categories of business establishments in Dubai:
1. General Partnership:
In Dubai, a general partnership business can only be established by two or more Emirati national partners, who will share equal liability for the company's debts. The entity's name can only include the partners' names, subject to certain conditions. Each partner's interest can be documented in the partnership agreement. The partnership dissolves in case
- The death
- Bankruptcy
- Withdrawal
- Insanity of a partner.
- General partnership
- Simple limited partnership
- Partnerships-en-comandante.
2. Public /Private Shareholding Company:
Public Joint Stock Companies, also known as PSCs, are business establishments where the capital is divided into equal shares. To establish a PSC in Dubai, it is typically required to have at least 10 founders, and the minimum capital requirement is AED 10 million. The board of directors must have a minimum of 3 directors, with the Chairman and the majority of directors being Emirati nationals. Only 35% of the share capital can be held by the founders, with the remainder being offered to the public. Each member of a PSC is liable only for the value of the shares they hold.
Private Shareholding Companies, or PrSCs, are similar to PSCs, but the shares are not offered to the public. To establish a PrSC in Dubai, at least 3 shareholders are required, and it is mandatory to specify in the paperwork whether any shares will be made available to the public.
3. Limited Liability Company:
LLC is the most prevalent form of business establishment in Dubai, which can be formed in the mainland area of Dubai. The LLC license gives you complete operational rights throughout the UAE. The minimum capital requirement for these entities varies depending on the nature of the business. To establish an LLC, a physical office presence in the country is mandatory. Foreign owners are allowed to hold a maximum of 49% of the LLC's shares.
4. Free Zone Companies (FZC and FZE):
In Dubai free zones, there are two primary types of companies that can be established: Free Zone Companies (FZCs) and Free Zone Establishments (FZEs). These entities can be formed in any of the designated free zones and offer similar benefits, such as 100% foreign ownership and a license to conduct business in the UAE. However, the key distinction between FZCs and FZEs is that FZEs can only have one shareholder.
6. Branch Office:
These establishments can include branches of foreign organizations operating with the
same name in Dubai. Branches of free zone companies, GCC companies, and civil
companies also fall under the same category.
Benefits of setting up a business in Dubai:
Now that we have discussed the two major business jurisdictions in Dubai, let’s have
a detailed look at the advantages that each has to offer.
- Exemption for Personal and Corporate Taxes
- No Minimum Capital Requirement.
- Flexibility of Operation
- Flexibility of Business Activities
- Opportunity to take up Government Projects
- Rent Multiple Offices
- Employee Visas
Advantages of Setting Up a Company in the Free Zones:
1. Sole Ownership for Foreign Entrepreneur
2. Tax Exemption
3. Awareness of Market Trends
Types of business licenses in Dubai:
To conduct business in Dubai, obtaining a business license is a crucial requirement to avail of the numerous benefits. The license is an official document issued by the Department of Economic Development (DED) that allows a business to operate legally in the region and showcases the expertise and credibility of the business. Obtaining a business license in Dubai is a relatively fast and easy process, thanks to the DED's efforts to promote business growth in the region. Dubai offers three types of business licenses, which are:
• Commercial License
• Industrial License
• Professional License
1. Commercial License:
To engage in trading operations in Dubai, entrepreneurs are required to acquire a commercial license. This license permits businesses to carry out various activities such as the import and export of goods, retail stores, rent-a-car services, selling construction material, and providing commercial brokerage services, among others. Additionally, LLCs are the most prevalent types of businesses that are established under this license. This license is applicable to both onshore and free zone companies.
How to Obtain a Commercial License in Dubai?
- The first step in applying for a commercial license in Dubai is to make a list of
activities that you will undertake. However, keep in mind that you can’t take up
more than 10 activities (main and tertiary combined) on one license. - The next step is to draft an MOA listing the activities.
- The third step is to register the organization with the DED.
- Once the registration is done, you can then pay the fee and obtain a commercial
license in U.A.E.
2. Industrial License:
The industrial license is issued to companies that engage in manufacturing activities, converting raw materials or semi-finished goods into finished products. Business activities that require an industrial license include:
- Production
- Segregation
- Accumulation
- Packaging
How to Obtain an Industrial License in Dubai?
To conduct manufacturing activities in Dubai, an industrial license must be obtained from the Department of Economic Development (DED). To be eligible for this license, several prerequisites must be met, including having an Emirati holding 51% of the shares in the company, physical office space in Dubai, a local industrial license, a minimum share capital of AED 250,000, and more than 10 workers.
The process for obtaining an industrial license in Dubai involves submitting documents for initial approval, applying for the license from the DED, and obtaining permission from other authorities such as the Municipality, each with its own requirements for paperwork. The entire process can take up to 3 months.
3. Professional License:
The third and final type of license is granted to individuals based on their skills and expertise. The biggest advantage of a professional license is that it allows 100% foreign ownership. The only condition is that you need a local as your service agent.
How to Obtain a Professional License in Dubai?
Entrepreneurs in Dubai who engage in service-oriented activities can obtain a professional license from the Department of Economic Development (DED). This license allows them to conduct business in the service sector. The process of obtaining the license is straightforward and involves several steps. First, the entrepreneur needs to determine the business activities they will undertake with the license. Then, they need to appoint a service agent who will handle all the legalities and submit the required documents to the DED for initial approval. The entrepreneur must also register a trade name before renting office space and submitting the final documents for approval.
Cost of Setting up a Business in Dubai:
Entrepreneurs should take into account the total expenses of establishing their business in Dubai as a crucial factor. It is important to have a realistic calculation of the costs to enable effective planning and to avoid undesirable overheads and expenses. The costs for setting up a business in the two areas in Dubai differ significantly, as discussed earlier. Additionally, there are several other factors that impact the costs, including:
- The type of business license you obtain
- The type of business you set up/ company you form (LLC, FZE)
• Rental charges for setting up an LLC in Dubai
• The fee paid to the Department of Economic Development
• The fee to acquire a mainland trade license
• Administrative fee
• One-time Contracting license fee
• Fee for a real estate broke
How much does it cost for Investor Visa?
The investor visa costs approximately 3200 AED including basic insurance, medical,
and Emirates ID.
How much does it cost for Employee Visa?
The average cost for hiring an employee is between 7000 to 7500 AED approximately
including insurance, medical, and residency card.
To sum it up, Dubai is a business hub with exciting investment opportunities. Setting
up a business in Dubai has never been easier. However, if you feel difficulty in
performing the process, you have the option of hiring a reliable consulting firm. In
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