How to Open a Business in Dubai: Dubai Business Setup 2023
As you are here, you would want to know everything about how to open a business in Dubai: Dubai business setup is a straightforward process when the right information is provided.
For that reason, Business Setup HQ brings this complete guide.
There are several attractive benefits for setting up a business in the UAE, such as:
- Access to the international market
- Tax benefits
- 100% capital and profit repatriation
- A business-friendly ecosystem
We guide you through the process, conditions, documentation, and Do’s and Don’ts. We also tell you how we, as a Dubai business setup partner, can help you get your company up and running.
So, fasten your seat belts and ride through the guide on how to start your own business in Dubai.
How to Start Your Own Business in Dubai: An Overview
Dubai is continuously expanding and diversifying its economy. One of the reasons is its smart infrastructure development. The investments in infrastructure and modern facilities led to a growth in tourism and trade. Foreign investors started investing in the city, contributing to economic diversification and development. The development of free zones with 100% FDI, tax benefits, exemptions from duties and charges, and other perks enhanced its economy further.
Even in the future, Dubai aims to use the latest technologies and strategic mindset to achieve glory. It wants to continue its development plans in education, infrastructure, healthcare, and community. Innovative initiatives in all these aspects will lead to the sustainable development of the country and its people.
With such bright future prospects, it would be a wise decision to invest in Dubai. You can take advantage of these developed sectors and contribute to further economic growth.
To start your business in Dubai, you must apply for a license. Before applying, you must prepare your documentation and meet the eligibility conditions. Once you are eligible, you need to submit the application form and pay the fee amount. Within a few days of your application, the DED gives you the relevant license.
Let’s look at the key things you must know before starting a business in Dubai.
Things You Need to Know Before Starting a Business in Dubai
Before you find the answer to how to start your own business in Dubai, you must ensure certain things. You must know whether you want to start a company in mainland Dubai, a free zone, or offshore. You must also have information about the possible legal structures and license types in Dubai. Let’s look at these things you must know before opening a business in Dubai.
Should You Start a Company in the Dubai Free Zone, Offshore, or Mainland?
Dubai offers three types of company formations:
- Mainland company formation
- Free zone company formation
- Offshore company formation
Each company formation type has its own benefits and use cases. So, before starting a business in the UAE, ensure you know which company formation type aligns with your business requirements. Let’s explore them in detail:
Mainland Company is an onshore entity in Dubai. Once you set up a company in mainland Dubai, you can do business with anyone in Dubai and UAE. You have a variety of options in business activities. You can also operate multiple branches in the country.
You can take up government work, have unlimited visas, and keep any amount of capital. But you need to have a UAE national as a sponsor for some of the activities who will own 51% of the company.
Free zone company
A free zone company is registered in any of the free zones of Dubai. If you want to enjoy 100% foreign ownership, tax benefits, and complete repatriation of capital and profits, go for a free zone company. You get all these benefits plus a straightforward process of company formation. [PB1]
Also, there is no need for a local sponsor. Moreover, you can form your company in the free zone catering to your specific business sector. You can do business within the free zone and outside the UAE. You can also do business with mainland UAE companies if you start a branch office there or appoint a local distributor.
An offshore company is an international business with no physical presence in Dubai. These are registered in Dubai with a certificate of incorporation. Since they cannot operate within UAE, they cannot have a trade license in Dubai. Such companies can hold shares in a mainland or free zone company. [PB2] An offshore business setup provides you anonymity, asset protection, and freedom from taxes.
There are only two locations in the UAE where you can start an offshore company, and one of them is in Dubai: Jebel Ali Free Zone. So, if you want to start an offshore company in Dubai, this is the only location.
Different Types of Company Legal Structures Allowed in Dubai
The possible legal structures in Dubai are:
- Sole proprietorship – It is a firm with one owner. It is a simple structure, easy to form, and requires little paperwork. In this structure, your personal assets have no protection from legal cases or creditors.
- General partnership – It has two or more owners holding assets in the firm. The partners enjoy complete operational control but are liable in proportion to their assets in the company. It is easy to form a general partnership firm, but only UAE nationals can be partners.
- Limited partnership – It has two or more owners with at least one limited partner and one general partner. The limited partner holds a limited share in the company and is responsible for a proportional amount in the company’s liabilities. Such a company is easy to form.
- Public joint stock company – A company with a division of capital into equal value negotiable shares. The liability of each member is per their share in the capital.
- Private joint stock company – It is like a public joint stock company with differences in share capital requirement and the need for two founding members.
- Limited liability company – It is a complex structure with a minimum of two and a maximum of 50 shareholders. They are liable for the company’s liabilities based on each of their share in the capital. Thus, the personal assets of owners have high protection from liabilities. Such a company has more paperwork requirements.
- Branch office – A branch office can be the branch of a local, GCC, foreign, or free zone company.
- Civil company – A civil company is formed under the Civil Code and can be one of the service/professional companies, speculative venture partnerships, and Mudaraba companies.
Types of Licenses in Dubai
Before starting your operations, you need to obtain a license in Dubai. There are many options available in license types. You must handle the documentation and submit your application to the Department of Economic Development (DED). The types of licenses you can choose from in Dubai are:
- Commercial license – If you engage in retail or trading activities, you must obtain a commercial license.
- Professional license – If you operate in teaching, repair works, training, arts and crafts, consultancy, and similar services business, you must obtain a professional license.
- Industrial license – Only manufacturing companies and industrial entities can get an industrial license in Dubai. To obtain this license, you must own a physical warehouse and manufacturing facilities in the country. You can also have a leased warehouse if you don’t own one.
- Tourism license – If you engage in travel and tourism activities like hospitality business or tour operator, you can obtain a tourism business license in Dubai.
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How to Open a Business in Dubai: Dubai Business Setup Complete Process
Now, we will discuss the factors that influence your decision regarding opening a business in Dubai. We will first explain the choices you need to make before starting the actual process. Then, we will go through the step-by-step process based on your business requirements.
Step 1: Deciding Where You Would Like to Start Your Company in Dubai? (Free zone, mainland, or offshore?
Dubai offers you three locations to start a company. You can set up a company in mainland Dubai, any of the free zones, or offshore. You must check that which of the company types aligns with your business requirements, and based on that, you’ll need to make the selection.
Step 2: What would be the company's legal structure?
Once you have the answer for ‘company type’ in Dubai, you need to decide on the ‘legal structure type.’ We have provided the possible legal structures. You must select one based on the number of owners, liability percentage, operational control, ownership, and other essential factors.
Step 3: Choose the Company Name and Contact us for the Application
The time is right for you to select a name for your company. While selecting a name, follow these three rules:
- The company name must follow the rules for naming as mentioned by the DED.
- The company name must not match any existing company with a similar business in the UAE.
- It must reflect your business activity, must not contain obscene words, and have no indications of God’s name.
Along with deciding the company name, you must also define your office location. You must add it to the license application. You must register your trade name.
Step 4: Get an Office Location
Getting an appropriate office location is critical to “How to open a business in Dubai: Dubai business setup.” While deciding on the office space, do consider the future expansion plans and easy access to local and foreign clients. You need to select between renting or owning an office.
Step 5: Prepare documents
Now, you must prepare the documents needed to register your company. The documentation requirements are slightly different for mainland and free zone companies. But most commonly, you must submit the following documents to obtain a license:
- Application form
- A copy of the passports of all shareholders or management
- A copy of proof of address or rental agreement
- Business plan
- A letter of intent or No objection certificate from a local sponsor (only for a mainland company)
- Document showing your financial capacity
- A memorandum of association (MoA)
- A certificate of good conduct
Step 6: Initial approval
You must get initial approval from the respective authority for the chosen name, legal structure, and business activity.
Step 7: Make payment and obtain a license.
After you get the initial approval, you must pay the relevant fee amount to the respective authority of the mainland or free zone. The authority processes the applications and approves or rejects the application. After all approvals and payments, the authority issues the license.
Sometimes, you need to get more approvals from other governing authorities. Also, you must apply to open a local bank account and visas for your employees.
These are the stages where the right agent, like Business Setup HQ, can help you. We help you complete every step accurately and on time to avoid application rejection. Our business analysts know the documentation requirements for each free zone and the mainland, resulting in successful applications.
Benefits of Starting Your Own Business in Dubai
Dubai is an attractive destination for foreigners and expatriates. It is a popular business hub with businesses and entrepreneurs worldwide. Also, it is a growing economy, and you can find substantial global diversity here.
If you are still doubtful about starting your own business in Dubai, consider the following benefits:
- You can enjoy low corporate taxes and 0% personal income tax in Dubai. Also, 100% repatriation of capital and profits.
- It has liberal labor policies, trivial import duties, and strict anti-money laundering regulations.
- Dubai has flights from and to every strategic international location. Thus, you can get easy access to emerging markets in all continents.
- You can find many skilled, talented, and certified individuals to hire.
- You also have access to all the modern facilities and world-class infrastructure to use and enjoy. These ensure a good quality of lifestyle for you and your employees.
- With many global businesses having offices in Dubai, you have good networking opportunities and more chances to build business relationships.
- It is a safe and secure country owing to strict laws and their execution.
- Dubai provides ease of doing business with lesser hassles and smoother administrative compliance before forming a company.
- Non-residents need not follow local sponsorship requirements if they intend to start healthcare, technology, or media business.
- It has flexible immigration policies, comfortable business laws, and ease of settling in.
- The new visa schemes of 10-year Golden Visa, 5-year Green Residence Visa, new business entry visa, new job exploration visa, and many others allow foreigners to sponsor their residency permit in UAE. This attracts potential employers who want to set up a base in Dubai.
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Do's for Starting a Business in Dubai
Now you know everything about how to open a business in Dubai. Dubai business setup support by a company formation expert can make the process hassle-free. But before embarking on this journey, you must also manage some Do’s and Don’ts. Some of these are:
- You must conduct some basic research on Dubai, its customs, types of commercial activities, business practices, and many more.
- Identify the business area where you want to form a company based on your interest, passion, and target market.
- Network with some businesses and entrepreneurs in Dubai to get a first-hand experience of how things are in Dubai.
- Hire an expert in company setup and procedures to ensure you comply with every requirement.
- Prepare for the process ahead with the time used, expenses to spend, and efforts.
Start Your Business in Dubai With Business Setup HQ's Support
We all understand how easy it is to open a business in Dubai. But having a reliable partner like Business Setup HQ makes the process smoother, faster, and more manageable.
We are an expert and a popular name in the company formation process in the UAE. We help you select the best options per your needs, interests, and expertise. We help you prepare your documents, decide the legal structure and office location, and apply to the authorities. After obtaining the license, you can get our support in obtaining visas and opening bank accounts.
We ensure compliance with the applicable regulations and procedures based on where you want to set your base in Dubai. Thus, you do not have to worry about how to start your own business in Dubai. We manage it all to make your life easier.
How to Start Your Own Business in Dubai: Frequently Asked Questions
As a foreigner, you can start a business in Dubai. You can set up a business only in mainland Dubai or a free zone. You get the benefits of tax efficiency, world-class facilities, access to the global business center, strategic location benefits, and a business-friendly environment.
You can even set up an offshore company, but you cannot conduct business within the country. Another option is forming a joint venture with a local UAE partner or other companies.
Yes, as a foreign investor, you can own 100% of a business in a free zone.
You can have 100% foreign ownership in a Dubai mainland business for most commercial and industrial activities. The activities in which 100% ownership is not allowed are oil and gas, transport, and telecommunication.
A sole proprietorship firm can have 100% foreign ownership in a few professional activities. However, if the sole proprietorship firm is engaged in industrial or commercial business activities, only UAE or GCC nationals can own it. An LLC can have 100% foreign ownership if it converts to a sole proprietorship firm. Branch and representative offices can have 100% foreign ownership.
Yes, you can start your business in Dubai without having a physical office space for your operations. This is possible through the virtual company license in the free zones of Dubai. So, if you are confused about starting your own business in Dubai, consider this option.
Without a residence visa, it is possible to start your own business in Dubai. But you need a UAE business visa for company operations. Without a business visa, you cannot conduct business activities in Dubai.