The ultimate guide to business set up in Dubai
How to business set up in Dubai. Dubai, recognized as the business center of the Middle East, has drawn entrepreneurs and investors globally. With its strategic location, favorable economic policies, and a thriving business community, Dubai offers abundant opportunities for individuals looking to establish their own ventures. This article serves as a comprehensive guide to setting up a business in Dubai, outlining the key steps, legal requirements, and benefits associated with starting a business in this dynamic city.
Understanding Dubai’s Business Landscape:
Dubai’s business landscape is characterized by a diversified economy, with key sectors including real estate, tourism, finance, logistics, and retail. Before starting a business, it is essential to conduct market research to identify potential opportunities and competition in your chosen industry. Understanding the local culture, business practices, and legal framework will give you a head start in establishing a successful venture.
Legal Structures for Business Setup:
Dubai offers several legal structures for business setup, each with its own requirements and benefits. The most common options include (1)free zone company, (2)offshore company and (3)mainland company.
DUBAI – The Desert Dream | Ultimate Business Setup Guide
1) Free Zone Company
Free zones are designated areas that offer 100% foreign ownership and provide various incentives such as tax exemptions, full repatriation of profits, and simplified company registration processes. Each free zone is specialized in certain industries, catering to specific business activities.
Key Steps to Start a Business in a Dubai Free Zone
Starting a business in a free zone in Dubai is a relatively straightforward process with minimal paperwork and a shorter duration compared to other setups. Here are the key steps to establish a business in a Dubai free zone:
Determine the Type of Legal Entity:
Decide on the type of legal entity your business will take in the free zone. There are two common types:
a) Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZ Co.): This type of business structure includes multiple shareholders, who can be either individuals or even legal entities. Note that not all free zones allow both types of companies, so it is essential to check with the free zone authority you will be using.
b) Free Zone Establishment (FZE): This setup consists of a sole shareholder, who can be an individual or a legal entity.
Choose a Trade Name:
Select a trade name for your business. Check with the free zone authority or the Department of Economic Development to ensure the name is available and complies with the guidelines. Some restrictions apply, such as avoiding the use of religious names or external body names.
Apply for a Business License:
Apply for the appropriate business license based on your primary business activity. Free zones offer a wide range of permitted activities across various sectors. Ensure that your desired activity aligns with the available options in your chosen free zone.
Choose an Office Space:
Decide whether to buy or lease office space in the free zone. The office requirements depend on the number of employees and the nature of your business. Different free zones offer various office options, such as flexi desks, flexi offices, or executive office packages.
Secure Pre-Approvals, Register Your Company, and Acquire Your License:
Submit the required documents for approval according to the free zone’s regulations. The specific documents may vary depending on the type of business activity, company type, and free zone requirements. Generally, the steps are as follows:
a) Initial Approval: Provide the completed application form, a business plan, passport copies of shareholders and appointed managers/directors, financial reports (for corporate entities), and other relevant documents.
b) Registration: Pay the registration and license fees, and submit the application for registration, board resolution, memorandum and articles of association, and other necessary documents.
c) Licensing and Visa Process: Once the registration is completed, lease agreements will be prepared, followed by the issuance of the trade license. Visa processing for employees can begin concurrently.
Note: Some activities may require additional approvals from external authorities, so be aware of any special cases related to your business activity.
Conclusion:
Setting up a business in a Dubai free zone offers a streamlined process and favorable conditions for entrepreneurs. By following these key steps, you can establish your business efficiently and take advantage of the benefits offered by Dubai’s free zone environment, such as 100% foreign ownership, tax exemptions, and simplified procedures. Remember to research and comply with the specific requirements of your chosen free zone to ensure a successful business setup.
2) Offshore Company
Offshore companies are ideal for businesses focusing on international operations. They offer complete tax exemption, confidentiality, and limited liability.
However, offshore companies are usually prohibited from engaging in business activities within the UAE.
Starting an offshore company in the UAE offers numerous advantages, especially in terms of tax exemptions. Many business investors are drawn to offshore jurisdictions to capitalize on these benefits. The United Arab Emirates (UAE) is a popular choice for offshore business ventures due to its stable economy and favorable business environment. This guide provides essential information for starting an offshore company in the UAE.
The UAE as a Preferred Offshore Jurisdiction
The UAE has gained recognition as a stable and tax-haven jurisdiction. It adheres to international anti-money laundering regulations, ensuring compliance and preventing blacklisting. Moreover, the UAE has not signed the directive and agreement with the OCED (Organization for Economic Co-operation and Development), making offshore companies in the UAE effective instruments for confidentiality and investor protection. The UAE also boasts a reliable and stable banking system, further supporting offshore businesses.
Prominent Offshore Jurisdictions in the UAE
Several free zones in the UAE serve as favorable offshore jurisdictions, including Jebel Ali Free Zone Authority (JAFZA), Ras-Al-Khaimah Free Trade Zone (RAK), and Ajman Free Zone. These zones offer attractive benefits for offshore company formation.
What are the Advantages of Creating an Offshore Company in UAE?
When establishing an offshore company in the UAE, you can enjoy the following benefits:
Tax and customs duty exemptions
Full repatriation of profits
100% foreign ownership
Minimum requirement of one shareholder and director
Flexibility to use any currency as capital
No mandatory offshore bank account deposit
Enhanced privacy for shareholders
Cost-effective and straightforward corporate bank account opening
Process for Setting Up an Offshore Company in the UAE
Starting an offshore company in the UAE involves the following steps:
Select a Company Name: Ensure that the proposed company name complies with the Registrar’s guidelines and includes “Ltd.” or “Incorporated” at the end.
Fill an Application: Complete the application form and provide relevant documents such as identity and address proof, CVs of shareholders and directors, and a well-drafted business plan.
Submission of Documents: Submit the required documents to the relevant authorities for review and approval.
Draft the MOA and AOA: Once approved, prepare the Memorandum of Association (MOA) and Articles of Association (AOA) in English, suitable for international business.
Open an Offshore Bank Account: Establish an offshore bank account to facilitate business transactions. Refer to the guide on How to Start an Offshore Bank Account for detailed information.
Note: An offshore company in the UAE is limited to opening an offshore bank account in Dubai and purchasing real estate. It does not provide eligibility for a residency visa, unlike an onshore company in a Free Trade Zone.
Necessary Documents for Establishing an Offshore Company in the UAE
For individual shareholders:
Attested passport copy
Residential proof
Original bank reference document
Shareholder details
Preferred company name
Proposed activities of the offshore company
Hierarchy of beneficiaries
For corporate shareholders:
Board resolution
Memorandum of Association
Certificate of the parent company with attested shareholder and director names
Hierarchy of beneficiaries
To simplify the process and ensure compliance with legal regulations, it is recommended to seek guidance from business experts experienced in offshore company incorporation.
Embark on your offshore business journey in the UAE with the assistance of certified professionals, guaranteeing a smooth and error-free process.
Offshore Banking in UAE
3) Mainland Company
This type of company allows you to operate anywhere in Dubai and beyond. You are legally required to have a local partner (UAE national) who will hold a majority ownership (51%) in the business. This structure provides access to the local market and government contracts.
How to Establish a Business on the Mainland in the UAE
Starting a business on the UAE mainland can be done quickly and conveniently through online application processes. However, traditional methods involve several steps, procedures, and approvals from various government entities. This guide outlines the necessary steps and the investor’s journey to start a business on the UAE mainland.
Starting a Business Online:
The UAE government has introduced the Bashr service, an integrated eService that allows investors to establish their businesses within 15 minutes through a unified online platform. Bashr is connected with federal and local government entities, providing commercial license services. Abu Dhabi Business Centre offers an instant license service, allowing investors to start their businesses online without visiting the service center. Additionally, the Dubai Virtual Commercial City program (VCC) enables entrepreneurs and freelancers worldwide to establish virtual companies in the UAE, regardless of their residency.
Starting a Regular Business:
Starting a business through traditional means involves the following steps:
Identify the Business Activity:
Select the appropriate business activity, which determines the legal form and type of license required. The UAE offers six types of licenses: industrial, commercial, professional, tourism, agricultural, and occupational.
In the UAE there are more than 2,000 different types of business activities to select from.
Select the Legal Form:
Choose the legal form that suits your business requirements. The legal form determines applicable laws and regulations. Choose from general partnership, limited partnership, limited liability company (LLC), public joint stock company (PJSC), private joint stock company (PrJSC), civil company, local company branch, GCC company branch, foreign company branch, free zone company branch, sole establishment, and holding companies. Ensure the legal form aligns with your chosen business activity.
Register the Trade Name:
Register a unique trade name that distinguishes your business from others. The trade name should comply with specific provisions, such as including the business structure acronym (e.g., LLC, EST, PJSC, PrJSC) and adhering to moral and legal requirements. The trade name application can be submitted online through the economic department’s website or mobile application.
Obtain Initial Approval:
Obtain initial approval, indicating that the UAE government has no objection to establishing the business in the country. However, this approval does not grant permission to conduct business activities. Foreign investors may need additional approval from the General Directorate of Residency and Foreigners’ Affairs. Some activities require approvals from government entities related to specific business areas.
Prepare MOA and LSA:
Depending on the legal form, a completed and signed Memorandum of Association (MoA) or a Local Service Agent agreement (LSA) is required. UAE-based law firms, courts, and notary publics can assist in preparing and attesting these documents. Non-GCC residents owning businesses in the UAE must appoint a local service agent under an agreement attested by a notary public or court.
Select a Business Location:
Choose a physical address that complies with the requirements of the Department of Economic Development and local municipalities. Office and warehouse rental agreements may need attestation in some emirates. In Dubai, agreements must be registered with Ejari.
Obtain Additional Approvals:
Certain business activities may require additional approvals from government entities. Examples include transport-related activities, legal consultancy, architectural and engineering affairs, telecommunication activities, travel and tourism, insurance activities, health-related activities, and petroleum-related services.
Collect the Business License:
After completing the previous steps, visit the service centers of the economic departments or their websites to collect the business license.
Required Documents for License Application:
To obtain a license for all legal forms, the following documents are needed:
- Initial approval receipt and previously submitted documents
- Copy of the lease attested by the Real Estate Regulatory Agency (RERA) in Dubai
- Notarized memorandum of association (relevant for all company types)
- Authorisation from other applicable government authorities.
- Attested service agent contract (for civil establishments and companies 100% owned by non-GCC nationals) involving a local service agent
Ensure the payment for the trade license is made within 30 days of receiving the payment voucher to avoid cancellation.
By completing these steps and meeting the necessary requirements, you can establish a business on the UAE mainland. It’s advisable to seek professional advice and guidance throughout the process to ensure compliance with regulations and a smooth setup.
DUBAI – The Desert Dream | Ultimate Business Setup Guide
Conclusion:
Establishing a business in Dubai offers exciting opportunities for entrepreneurs looking to thrive in a vibrant global market. By familiarizing yourself with the legal structures, registration procedures, and available support systems, you can confidently navigate the business setup process. Dubai’s advantageous business climate, strategic location, diverse culture, and strong infrastructure make it an excellent choice for aspiring business owners. With thorough planning and careful execution, you can transform your entrepreneurial aspirations into reality in the dynamic city of Dubai.