Business Setup in Dubai: Comprehensive Guide
Are you considering to setup business in Dubai? With its strategic location, business-friendly environment, and tax benefits, Dubai is an attractive destination for entrepreneurs looking to set up shop in the Middle East. In this blog, we’ll cover everything you need to know about business setup in Dubai, from the types of companies you can form to the steps you need to take to get your business up and running.
Table of Contents
Types of Business Setup in Dubai
The first thing you need to consider when setting up a business in Dubai is what type of company you want to form. There are three main types of companies you can set up in Dubai: mainland companies, free zone companies, and offshore companies.
Mainland Company
A mainland company, also known as an LLC, is a company that is registered with the Dubai Department of Economic Development (DED) and can conduct business in the local market. One of the advantages of setting up a mainland company is that you can do business anywhere in the UAE, not just in Dubai.
Traditionally, setting up a mainland company required a local partner, who must own at least 51% of the company. This means, that as an expat owner, you have to share control of your business with a local partner.
Since 2021, the UAE has allowed expats to own 100% of some mainland companies. This means that you are no longer required to cede control or ownership of your mainland company. In some cases, you may still need a local service agent to comply with the licensing requirements.
Free Zone Company
A free zone company is a company that is registered with one of the many free zones in Dubai. Free zone companies are 100% foreign-owned, which means you don’t need a local partner to set up your business.
One of the advantages of setting up a free zone company is that you can enjoy 100% repatriation of profits and capital. As a business owner, you can take your profits out of the country without any restrictions.
Offshore Company
An offshore company is a company that is registered with one of the offshore jurisdictions in UAE. Offshore companies are primarily used for asset protection and tax planning.
One of the advantages of setting up an offshore company is that you can enjoy 100% ownership and control of your business. However, offshore companies are not allowed to do business in the local market, which means you can’t sell your products or services to local customers. As an investor in an Offshore company, you are not eligible to apply for a residency visa of the UAE.
In summary, if you are looking to live in the UAE to run your business, then you can consider either Mainland Company or a Free zone Company setup.
Cost of Business Setup in Dubai
Business setup costs in Dubai starts from AED 12,500 onwards, while it can be much lower in other Emirates of UAE.
Business setup costs mainly depends on the key activities you wish to undertake. Regulated activities usually have a higher cost associated with it compared to non-regulated activities.
Other major cost component for business setup is the real estate cost. This depends on the type, size and location of the office. Usually, freezone locations provide cost efficient office solutions, such as flexi desks and serviced private offices which could be cheaper compared to renting on the mainland. Size of the office is proportionate to the number of visas that your business intends to sponsor for its employees.
This brings us to the next major factor of Dubai business setup costs – visa quota. Depending on your staffing requirements, your company can opt for a suitable visa quota to sponsor work visa for employees.
Steps to Setup a Business in Dubai
Once you’ve decided on the type of company you want to form, the next step is to go through the process of setting up your business. Here are the steps you need to take to get your business up and running in Dubai:
- Decide on the type of business setup.
The first step in setting up a business in Dubai is to decide on the type of business setup that is right for you. You also need to choose the type of business activity you will be engaged in, such as trading or consulting. Consider the advantages and disadvantages of each type of company and choose the one that best fits your business needs. - Choose a business name and activity.
Once you’ve decided on the type of business setup, you need to choose a business name and activity. Your business name should be unique and reflect the nature of your business. - Obtain necessary licenses and permits
To do business in Dubai, you need to obtain the necessary licenses and permits. This includes a trade license, which allows you to carry out your business activity, and a commercial license, which allows you to import and export goods. - Rent an office space or get a virtual office.
To set up a business in Dubai, you need to have a physical presence in the country. This means you need to rent an office space or get a virtual office, which will provide you with a business address and other necessary facilities. - Open a bank account and deposit capital
To start doing business in Dubai, you need to open a bank account and deposit the required capital. The amount of capital required depends on the type of company you are setting up and the business activity you will be engaged in. - Register for VAT (Value Added Tax)
If your business is required to pay VAT, you need to register for VAT with the Federal Tax Authority (FTA). VAT is currently set at 5% in Dubai. - Hire employees (if necessary)
If your business requires employees, you need to hire them and provide them with the necessary visas and permits. Dubai has strict labor laws that you need to comply with when hiring employees.
Documents required for Starting Business in Dubai
Following documents for necessary to start your business in Dubai
Personal documents
- Passport copy of all shareholders, and UAE visa (if any)
- Visa photo for all shareholders
- Proof of current address
- Source of income & funds information for all shareholders
Business documents
- Proposed business activities
- Memorandum of Association (MOA) and Articles of Association (AOA). My Golden Pass can assist with the MOA and AOA.
- Trade License and Certificate of Formation. These documents will be issued by the Licensing authority.
- Lease agreement or title documents for the business premises.
Benefits of Business Setup in Dubai
Dubai offers a range of benefits for entrepreneurs looking to start a business in the region. Here are some of the top benefits of business setup in Dubai:
Strategic Location
Dubai’s strategic location makes it an ideal location for businesses looking to access markets in the Middle East, Asia, and Europe. Dubai is located at the crossroads of major trade routes, which makes it a hub for international trade.
Tax Benefits
Dubai offers a range of tax benefits for businesses, including no personal income tax, and no withholding tax. Although the UAE has introduced a new Corporate Tax Law in 2023, small business with revenue less than AED 3 million, and certain free zone companies continue to benefit from zero taxation, underpinning the government’s efforts and commitment to support small or micro businesses in the country. This means that businesses operating in Dubai can enjoy significant cost savings.
Business-Friendly Environment
Dubai is known for its business-friendly environment, which makes it easy for entrepreneurs to set up and run their businesses. The government has implemented a range of initiatives to support entrepreneurship and innovation.
High Standard of Living
Dubai offers a high standard of living, with world-class infrastructure, healthcare, and education systems. This makes it an attractive location for entrepreneurs looking to relocate to the region.
Access to a Large Market
Dubai offers access to a large market of over 2 billion people within a 4-hour flight radius. This makes it an ideal location for businesses looking to expand their reach in the Middle East, Asia, and Europe.
Request a Business Setup quotation
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