How to Start a Business in Dubai

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By Sagheer Abbas

Dubai is the ideal place to establish a business if you’re wanting to do it overseas. Dubai, a well-known trade center of the Middle East and North Africa (MENA) region, offers a plethora of advantages to enterprises and companies hoping to prosper, grow, and establish connections with the global market.

The real GDP growth rate of Dubai was 7.6% in 2022. The real GDP is expected to expand by 3% in 2023. However, the United Arab Emirates (UAE), ranking 10th out of 153 nations in the GlobalData Country Risk Index, is seen to be a low-risk business destination. It offers a basically stable environment for launching a venture. The procedure of starting a business in Dubai is not too difficult, especially with the UAE’s free zones available.

Things to Know Before Setting Up Your Business

Generally speaking, there are a few things you should know before beginning the process of establishing your company in Dubai. Let us examine each one of them.

Economic Zone: Free Zones vs Offshore

Before you start up, you have to decide if you want to operate in a free zone or offshore. Each choice offers advantages and features relevant to your needs.

Free Zone 

If you want complete control over your business, you might think about requesting a license and setting up shop in one of Dubai’s free zones. The Dubai administration created the idea of a free zone to entice international companies to establish operations in the city. Business owners can benefit from complete ownership, 9% corporation taxation (applying to UAE enterprises on earnings over AED 375,000), and 0% personal income tax in this special economic area.

However, the inability to do direct business with the UAE local market is one of the main drawbacks of running a business in a free zone.

At present, Dubai has more than thirty free zones in operation. Every free zone is typically created around an industrial sector and grants licenses to businesses operating inside its boundaries.

Offshore Companies

Offshore businesses may take advantage of many of the same advantages by registering in a free zone. However, it cannot take the place of a free zone firm. The main area of distinction between an offshore corporation and a free zone firm is how they do business. Outside of the United Arab Emirates, offshore companies can conduct business, but not within. Additionally, there are no minimum capital deposits needed to be made before incorporation.

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Nevertheless, in contrast to conducting business in a free zone, you will need a sponsor, limiting your foreign ownership to just 49%.

Types of Licences

In addition to selecting a zone, you must determine the kind of license that is necessary. Business licenses are issued by the Department of Economic Development (DED), and there are three primary categories for which you can apply:

1. Commercial Licence

A Commercial License enables the establishment of a business in Dubai that involves trading or the buying and selling of goods. Businesses engaged in import and export, sales, logistics, travel and tourism, general retail, and real estate are covered by this license.

2. Industrial Licence

Businesses involved in manufacturing operations that convert raw materials and resources into finished goods, either manually or automatically, are granted an industrial license. Paper, metal, and textile manufacture are among the industries covered by this license.

3. Professional Licence

A professional license is given to businesses that offer services or are artisans or craftspeople. Repair, beauty, and medical service providers are the ones who apply for this type of license the most.

Sponsorship

If you want to establish up in a free zone, no local sponsor is needed. Establishing a corporation with 100% foreign ownership without requiring a UAE person as a partner or sponsor is one of the key advantages of establishing in a free zone.

Dubai Free-Zone Company Setup Process

Free zones are favored by international business owners when establishing a company since they provide:

  • 0% personal tax
  • Low corporate tax rates
  • 100% company ownership
  • 100% repatriation of capital and profits
  • No currency restrictions. 

The following are the seven steps you must complete in order to establish your company in the free zone:

1. Find Your Business Activity 

The first step in starting a business is to choose what kind of business you want to run. There are over 2,100 business activities available to pick from, all falling into different areas within the industrial, commercial, professional, and tourism arena. This makes it easy to establish a small business in Dubai or a cryptocurrency business in the United Arab Emirates. The DED website has the whole list.

2. Decide On a Free Zone

Locating your business next to other businesses in the same industry typically makes sense, especially in Dubai, where there are over thirty free zones to choose from. Your choice of free zone for establishment may vary depending on the nature of your company.

The Government of Dubai Authority on commodities trade and entrepreneurship is the world’s premier free zone. For the past eight years, Financial Times’ fDi Magazine has named it the Global Free Zone of the Year.

3. Choose a Company Name

When choosing a name, it’s imperative that your business name confirms with UAE naming regulations. Religious individuals may see names that incorporate disparaging terms unfavorably. Allusions to political parties or the Mafia are strictly forbidden. If you decide to christen your company after a specific person, you will need to substantiate that person as an owner or partner (you are not permitted to use initials or acronyms).

It might be challenging to choose a name for your business. You may avoid wasting time and energy by getting help from an expert to help you follow the regulations and have your name approved.

4. Apply for Initial Approval

Getting the Dubai DED’s initial permission is necessary to ensure that launching a business is accepted. There are three ways you can apply: online, in person, or through a third party (legal firm). Depending on the type of your firm, you may need to produce different papers, but they normally include:

  • Business registration and licensing form
  • A copy of your passport or ID
  • A copy of your residence permit/ visa
  • The company’s articles of association
  • Feasibility study of the project

Please get in touch with one of our specialists if you need assistance applying; they can walk you through the steps and make sure your paperwork is ready and filed appropriately.

5. Open a Corporate Bank Account 

You can now open a corporate bank account after being accepted and receiving all required paperwork returned. There are several local and foreign banks available in the United Arab Emirates. These consist of, but are not restricted to:

  • HSBC
  • Citibank
  • Barclays
  • Abu Dhabi Commercial Bank
  • Commercial Bank of Dubai

6. Set Up Your Office Location

All firms in Dubai are required to have a physical address. Luckily, finding your new office space will be simple if you establish yourself in a free zone.

Any size or kind of business can rent, hire, or lease a variety of commercial property, office buildings, and business center accommodations. Every one of our offices has excellent wi-fi, conference room access, support services, and all utilities included. There are 68 skyscrapers in the vicinity, so you’re sure to locate the ideal office space.

7. Apply For Final Approval 

To submit for final approval, you must have all of your paperwork together, location addresses, and legal information. You might occasionally need to apply to other authorities for license permission. When prepared, you must submit:

  • receipt for each document that was previously provided, as well as for the first approval
  • The Real Estate Regulatory Agency’s (RERA) leasing agreement
  • a properly documented service agent contract involving a local service agent in the UAE (for civil enterprises and businesses controlled 100% by non-GCC citizens)
  • approval by other relevant governmental bodies

After paying for the license using one of the several authorized payment methods, your company is prepared to operate.

Ready to Set Up Your Business in Dubai? 

Even though it could seem like a drawn-out procedure, setting up a business can be finished in a few weeks if done properly.

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