Are you considering setting up a company in Dubai? The UAE is a global business hub offering many opportunities for business owners and entrepreneurs. Dubai provides a seamless business setup process with numerous benefits.
Every year, many foreigners start a business in Dubai. As per the latest report of the Dubai Chamber of Commerce, there are around 11,631 foreign companies registered in the first quarter of 2024. This indicates that a majority of foreign entrepreneurs and investors choose Dubai to establish their businesses. Business-friendly laws and tax benefits of the UAE can be the primary factors that attract the most foreign audiences.
To top it off, the UAE has been ranked first by the Global Entrepreneurship Monitoring (GEM) report for the third consecutive year. The country is also recognised as the best global destination for starting and running a business. The UAE has surpassed many advanced economies in terms of starting and growing a business, making it one of the most attractive destinations in the world for entrepreneurship.
If you want to start a company in Dubai, this guide will walk you through the essential steps and provide valuable insights. It has everything you need to understand the thriving business environment of Dubai and how to launch your business successfully in this Emirate.
Pre-Registration Considerations
Before you register a company in Dubai, you must understand the following.
Company Registration in Dubai – Locations
Mainland Dubai
Setting up a company in Dubai Mainland allows you to conduct business in the onshore area regulated by the Department of Economic Development (DED). It allows you to conduct business in the local markets and internationally.
Free Zones
These are special economic zones outside the Mainland. Free Zones have their own regulations, often offering 100% foreign ownership and tax benefits.
Offshore
Offshore companies do not fall under the jurisdiction of both Mainland and Free Zones. Usually, the offshore model is ideal for holding companies or businesses that don’t operate within the UAE.
Opening a Business in Dubai – Types
There are many types of business structures you can choose from in the UAE. Some of the most popular ones are:
Limited Liability Company (LLC)
The most common business structure in the Dubai Mainland is a limited liability company (LLC) that requires a local sponsor for certain activities.
Free Zone Company (FZC)
A Free Zone company is an LLC established in one of the designated Free Zones that allows 100% foreign ownership with many other benefits
Branch of a Foreign Company
International businesses who want to establish a company in Dubai for the local presence can benefit from this business model
Representative Office
Foreign companies who want to research the market and network can set up a limited presence in Dubai with this business structure
Licence Types
Commercial Licence
This licence is mandatory for trading activities and retail businesses.
Professional Licence
Service-based businesses and professional consultancies must obtain this licence.
Industrial Licence
For manufacturing and industrial activities, this licence is a requirement.
The Process to Register a Company in Dubai
To launch a business in Dubai, you need to follow multiple steps. They may seem overwhelming for first-time entrepreneurs. Therefore, it is recommended that you take professional assistance to avoid any mistakes. As a beginner, go through these steps carefully to grasp the concept of company registration in Dubai.
Step 1. Refine Your Business Idea
Before you take the plunge to start a business in Dubai, you must have a clear understanding of your business idea and your target audience. Ask yourself:
- What product or service do I want to provide?
- Where is my audience – inside or outside of UAE?
- Am I dealing with Business or directly with consumers?
There can be many similar questions. A vague business idea will not assist you in establishing your business goals. Try the below steps to get a better understanding and clarity of your business idea with a unique selling proposition.
a. Do Market Research
This step helps you identify the winning strategy. This is where business owners get to identify their target market. Once you research your industry, it will be easier for you to penetrate the market and come up with appropriate tactics and marketing strategies.
Always ensure you research your market first and sort out your market’s hobbies, interests, likes, and dislikes before setting up a business. Also, with this study, you can identify and fill the gap with the most appropriate products and strategies. Now you have your product/service and your target market with you, so let’s go onto the next question, i.e.,
How and to whom will you sell your product or services?
b. Create a Business Plan
After you have done the market analysis, it is time to prepare your business plan. A business plan will help you know:
- How you will earn
- What your business model is
- Whom you will sell your products or services
Preparing a business model canvas is the best way to answer these questions. It will help you find a working model of your business but on paper. From business operations to business transactions, everything is measured while drafting this business model canvas (visual representation of your business plan).
Ensure that your business plan includes
- The idea in detail
- The problem the business is trying to resolve
- The pitch for the investors
- The benefits for them
- Target audiences
- Marketing strategies
- SWOT analysis
- Environmental analysis and
- Complete financial projections
Once you prepare this plan, you are good to go ahead and register a business in the UAE smoothly.
Step 2. Determine Your Business Activity and Jurisdictions
An important step to setting up a business in Dubai is determining your business activity. As you finish market research, you get a good idea of what kind of problem you are solving and for whom.
Therefore, you must determine a business activity that is relevant to your research. There is a list of business activities you can pick from while registering your company in the UAE drafted by the respective authority of the Mainland or Free Zone. You can obtain a trade licence for more than 2,000 business activities.
However, you must understand that several business activities have specific trade licence requirements. Therefore, you must choose your business activity carefully for both compliance and strategic requirements in the future. To avoid any confusion or wrong decisions, engage a business consultant to set up a business in Dubai.
In the next step, you must choose the jurisdiction in which you want to run your business operations, such as selling your products or offering services. Mainland and Free Zone Company Formation both have their unique advantages and compliance requirements.
For instance, Free Zones allow you to trade in international markets or outside of the UAE. Free Zone businesses cannot operate on the Mainland or sell any products or services there.
On the other hand, Mainland companies do not have many Free Zone benefits, such as no corporate taxes for qualifying activities. However, setting up a business in Dubai Mainland provides you access to the local markets, enabling you to trade within or outside the UAE.
Both these options are unique and have their pros and cons. Therefore, you must consult with a specialist to understand which option will suit you best. Foreign nationals can now 100% of their business in Dubai after the recent amendment law no 2 of 2015. Hence, think about your target audience, your products/services before choosing the location.
All the things mentioned above will help you determine your business activity and jurisdiction to set up a company in Dubai.
Step 3. Find a Business Name: Naming Rules and Requirements in Dubai
One of the most challenging steps to set up a company in Dubai is creating or finding a brand name for your company. The brand name or business name is how your customers remember your business. It assists customers in remembering your business entity and is considered as your brand identity.
Before choosing a company name, you must consider the following factors:
- No contradictory name or activity
- Unreserved or non-copyrighted name
- No obscene or indecent word
- No God’s name or his divine attributes
Step 4. Finalise the Legal Structure of Your Business
In the next step of your business journey, you have to finalise the legal form or company structure. The legal structure of your business allows you to deal with profits and losses. It also helps you organise your company’s assets and resources.
Entrepreneurs must choose the company’s legal structure in the beginning. They can take help from a legal consultant to find a suitable legal structure for their business. As discussed above, some of the most common business structures include limited liability company (LLC), local company branch, free zone company, holding company, a branch of a foreign company, and civil company.
Step 5. Select a Physical or Virtual Office: [Ejari: Tenancy agreement]
Nowadays, businesses have two options for a business address, either a physical space or a virtual one. If you need a store to sell products, you must operate with a physical location. However, if you offer services, such as consultancy, you can opt for a virtual office as well. The virtual options are usually more budget-friendly as compared to physical offices.
Once you decide on the location and office, you must sign the Ejari contract. Ejari means “my rent” in Arabic. Ejari is mandatory for both the landlord and the tenant in Dubai. It defines the variety of services agreed between both parties, including registration, transfers, cancellations, and termination of rental contracts.
Step 6. Get Your Trade License
After finalising everything, you must submit your Dubai company registration application to the concerned jurisdiction, either the Mainland or the Free Zone. Pay the licence fee, and complete the process to obtain your trade licence.
The process of obtaining a business trade licence in Dubai includes the following:
- Initial Approval
- Trade Name Reservation
- Get external Approvals (If required)
- MOA Signing
- Ejari Issuance (Virtual and Physical Office)
- Acquire your trade license.
You will receive your legal documentation as soon as you have paid for the legal services. With them in your hand, you will be good to proceed further with other aspects of your business, such as the recruiting team and choosing the right talent for the job. Getting a trade licence in Dubai will allow you to work legally in the UAE.
Once you get your trade licence, the process of launching a company in Dubai is completed.
Step 7. Get Your Visa
After obtaining the trade licence, you can start your business operations. However, to legally stay and work in Dubai, you must get a visa. If you want to bring your family members and sponsor foreign employees, you must obtain visas for them as well. To quickly obtain visas for everyone, you must register your company in the Immigration Labour Department of the UAE.
Step 8. Open a Corporate Bank Account
The UAE’s strict money laundering rules make it very hard for entrepreneurs to access corporate banking facilities. However, the process can be smooth if you contact a seasoned expert like Rubab. Customers are required to provide all the required documentation and fulfil any formalities requested by the bank to open a business bank account in Dubai, UAE. In case of rejection, Rubab can help you reapply by reviewing your documents and application to enhance your chances of success.
Important Considerations While Starting a Business in Dubai
Cultural sensitivity
Dubai has a rich culture and heritage, with multicultural people from around the world living together in harmony. Hence, you must respect local customs and traditions. You must also be aware of Islamic holidays and business practices to ensure there are no violations or offences against anyone.
Dress modestly in business settings and learn basic Arabic greetings and customs to ensure a smooth working and living environment.
Employment laws
Employment laws are quite strict in the UAE. You must familiarise yourself with the concept of Emiratisation, which involves hiring UAE nationals in your company for up to a certain percentage of your workforce. Familiarise yourself with working hours, leave entitlements, and end-of-service benefits.
Also, be aware of visa and work permit requirements for expatriate employees. Ensure there are no violations of any rules or laws in your company.
Visa regulations
The UAE offers different types of visas for different purposes. As a business owner, you can get an investor or employment visa. You can sponsor a resident visa for your workers. For family members, you can apply for a family residency visa. Remember that visa quotas apply depending on your company’s size and activity. As an employer, you must understand your sponsorship responsibilities toward your employees.
How Do You Run Your Business in Compliance with Dubai Rules and Regulations?
Corporate tax in the UAE is already effective, and UAE business transactions are no longer tax-free. Also, you must comply with Dubai’s financial compliance requirements to avoid penalties. The below steps will give you an in-depth insight into everything you need to follow to run your business smoothly and avoid any unnecessary fines or penalties.
Follow these steps to grow your business without any hassle or obstructions.
a. Check Dubai Financial Compliance Regulations
As a foreigner, you need to be fully aware of Dubai or Middle East rules and regulations. You must ensure that you hire a consultant who has years of experience to provide the right guidance. For instance, Rubab is a business development consultancy that can assist you in understanding corporate laws and how to comply with them. You must also conduct occasional financial compliance checks and audits to ensure that everything is fine. In case of non-compliance, you may face penalties, so try to maintain compliance with local rules and regulations in your company.
a.1. VAT Registration
A value-added tax is levied on the consumption of goods and services. The UAE offers several tax-free business zones, making it an attractive region for local and foreign business owners. Under the VAT Law in the UAE, the rate is between 0% and 5% for business owners.
If your business exceeds AED 375,000 per year in taxable income, VAT registration is mandatory for you. If your turnover is between AED 187,500 and AED 375,000, registration for VAT becomes optional.
To apply, you can register through the Federal Tax Authority website. In case you have any doubts or require assistance, you can appoint a tax agent for a seamless VAT application.
a.2. Corporate Tax Registration
With effect from 1st June 2023, corporate tax in the UAE is introduced, and all businesses must comply with corporate tax rules and regulations. The corporate tax applies to businesses with a taxable income above the threshold of AED 375,000. However, it is mandatory for all new businesses to register for federal CT within 90 days from the date of trade licence issuance. The current corporate tax rate is fixed at 9% for businesses registered in the UAE. For MNCs with significantly high turnover, the tax rate will be different.
If you are eligible for corporate tax, you must register with the Federal Tax Authority. It is recommended to engage with corporate tax specialists who can help you properly structure your company for tax optimisation and save tax legally.
b. Find a Good Accounting and Bookkeeping System
In addition to the above-mentioned steps, all business owners require assistance with financial management and review. Someone who can oversee the complete financial aspects such as income statements, balance sheets, and other taxation matters.
Business owners must maintain records according to the IFRS standards, which can easily be done by hiring a good accounting firm in Dubai. Take the help of experts who are certified by authentic institutes and have years of experience in handling financial matters with ease. Therefore, business owners who plan to start a business in Dubai must connect with accountants and bookkeepers immediately after setting up a company in Dubai.
c. Promote your Business
Always choose the right strategies to promote your business and its services. If you cannot do so, consult a team of marketing experts who can assist you in devising and executing strategies to help you achieve your goals and better results.
Make sure that you promote your business using all the platforms and the right tactics. If you cannot handle marketing on your own and are looking for quick growth, you must engage marketing experts. Rubab marketing team can assist you in promoting your business and to get the early traction so you can focus on operations and scaling instead of promotion.
c.1. Create a Website
Once you finish the legalities, you need to focus on your business. Develop a suitable website that will be your online identity. You must have a site that distinguishes you from others and assists your audience in finding you.
These days, websites are made to generate online sales. If your business model generates online sales, find the best developers with relevant industry expertise to create a good, user-friendly site.
c.2. Secure Social Media Accounts
A business that is not on social media will always be left behind in this age. Therefore, whether you have an industrial, manufacturing, marketing, financial, or any other sector business, you must have well-maintained social media accounts.
With social media, you must maintain all the platforms, such as Facebook, Instagram, and LinkedIn, to ensure you get maximum exposure to your target audience. You can use organic methods like posting content and also run ads to attract customers on social media and build a brand identity.
d. Improve your Sales Skills
You should always work on improving your sales skills and business operations. If you have achieved a milestone before, make sure that you seek a better and more lucrative one. If you need to improve your sales skills, hire an expert and enthusiast who can do the job for your business.
e. Find Great Partners and Vendors
Vendors and partners are the backbone of your business. In the long run, they help you reach new heights, and you might not be able to deliver excellent service or products in time without their assistance.
Such partners and vendors profit the company in many ways. So, always find credible vendors and partner with people who have a good reputation in the market. It is always recommended to research partners even before you decide to open a business in Dubai because they can be the reason for your success or failure in Dubai.
Benefits of Setting Up a Company in UAE
The UAE offers numerous advantages for businesses:
Strategic location
Dubai is strategically located between East and West. It offers excellent connectivity with major global markets. You also enjoy world-class ports and airports that are good for trade.
Tax-friendly environment
There is no personal income tax in Dubai. Free Zones enjoy no corporate tax as well on qualifying activities. Dubai also has avoidance of double taxation agreements with many countries so you do not need to pay tax twice on goods. VAT tax rate is also quite low capped at 5%.
Modern infrastructure
Dubai is the epitome of advanced modern infrastructure. The city offers state-of-the-art office spaces and industrial zones. You enjoy advanced telecommunications networks and efficient transportation systems.
Access to a skilled workforce
Dubai is home to a large expatriate population that provides a very diverse set of skills. There are also several government initiatives to develop local talent. Also, there are simple labour laws and a relatively easy process for hiring international talent.
Robust legal framework
The regulation system is robust and straightforward for businesses. The UAE also has strong intellectual property protection. In case of dispute, there is an independent judicial system with specialised courts.
Starting a Business in Dubai – Costs
The cost of setting up a company in the UAE ranges between AED 12,500 and AED 25,000. Yet, it is essential to understand the cost of registering a company in Dubai for budgeting. Here is a breakdown of the various costs you will have to consider.
Licence fees
The cost of a licence depends on the type of licence and location. Here is a general idea of the costs you will have to incur for company registration in Dubai:
- Mainland licences: AED 14,500 – AED 50,000+
- Free zone licence: AED 20,000 – AED 100,000+
Renewal fees are usually similar to the initial licensing cost.
Office rent
A physical office space in the Mainland can cost you anywhere from AED 50 – AED 200+ per sq ft per year, depending on the location. Office costs in Free Zones are usually bundled with the licence packages provided by consultants. You can also opt for a virtual office in Free Zones as well.
Visa expenses
When starting a business in Dubai, visa expenses are also part of the investment. However, the cost depends on the visa type required and the number of visas needed.
You can opt for some common types of visa in the UAE depending on your business requirements and eligibility criteria:
- Investor visa
- Employee visa (For your company Employees)
- Partner Visa (If you have shareholders)
- Family Residency Visa (If you wish to settle in UAE with your family members)
- Dubai Golden Visa (If you want to enjoy exclusive Golden Visa Benefits)
Initial capital requirements
The initial capital required to start your company in Dubai varies greatly depending on many factors, including business type and location. If you sell goods/products, you might need a physical store. In that scenario, you will have to bear the cost of lease. If you provide services that can be provided remotely without any physical interaction, you can choose a virtual office as well.
In some Free Zones, there are no minimum capital requirements. However, you must still consider the investment required for the initial startup, such as workforce, licence, and marketing costs.
You can start a business in the UAE from as little as AED 20,000 to AED 300,000 for Mainland LLCs (based on the business activity).
Additional costs to consider
Here is a list of some additional factors to consider in the cost of opening a company in Dubai.
- Bank guarantee deposits
- Trade name reservation fees
- Document translation costs
- PRO services for visa processing
- Insurance
How Rubab Business Setup Can Help You Start a Company in Dubai, UAE?
Setting up a company in Dubai is a lengthy process. It may look quite straight forward yet some steps can be daunting for a foreigner or first-time entrepreneur. Hence, you are recommended to engage a business setup consultant, such as Rubab.
At Rubab, we specialise in helping entrepreneurs set up a company in Dubai in a hassle-free manner. We take care of all the overwhelming and complex tasks for you and ensure maximum chances of a successful company registration.
We offer the following services to make the entire Dubai business landscape accessible to our clients.
- Business setup consultancy
- Licence application assistance
- Visa processing
- Legal and compliance support
If you want to incorporate a company in Dubai, connect with us today. We provide professional assistance in your journey to help you become a successful business owner in Dubai.
Our team of experts is ready to support you at every step, ensuring a smooth and efficient business setup process.
You can contact us by calling us at +971 56 232 5033, via WhatsApp at +971 56 232 5033 or by sending an email to us at info@rubabcsp.com
Setting Up a Company in UAE – FAQs
Can a foreigner start a company in Dubai?
Yes, a foreigner can start a company in Dubai. In Dubai Mainland, you need a local partner. Free Zone allows 100% foreign ownership if you want to take full control of your business. On a good note, recent amendments allow 100% foreign ownership in many sectors in Dubai Mainland as well.
Read Also: More Details on Starting A Business in Dubai As A Foreigner
Do I need a local partner to start a business in Dubai?
No, you do not need a local partner to start a business in Dubai if you register in a Free Zone. However, it mainly depends on your business type and location. Even in Mainland Dubai, many businesses can now have 100% foreign ownership, but some sectors still require a local partner with 51% ownership.
How much money do you require to start a business in Dubai?
You can start a business for as low as AED 10,000 that can be the minimum money to start a company in Dubai. However, the initial capital requirement varies widely based on your business model, location, and many other factors. Many Free Zones do not even have a minimum capital requirement. However, for Mainland companies, it depends on the activity and can range from AED 50,000 to AED 500,000 or more.
Is it difficult to open a company in Dubai?
No, it is not difficult to open a company in Dubai with the right guidance. While the process involves several steps, it’s generally straightforward with the right assistance. An expert can streamline the process for you. However, understanding all requirements and steps can be complex, which is why many entrepreneurs choose to work with business setup consultants.
