Guide to Setting Up a Business in Dubai, UAE

The United Arab Emirates economy is fast transforming. From an emerging market to a more established one, this paradigm shift is crucial for international organizations considering setting up business in Dubai. The government’s decision of economic diversification has helped in creating a lot of opportunities outside of the conventional oil industry.

Even though there is still much to be developed, the UAE has already made significant efforts to diversify its economy. Thus, many international businesses are eager to establish their business in Dubai .

Selecting the Appropriate Commercial Jurisdiction

Selecting a location for a business is the first important choice an entrepreneur wishing to have a Business setup in Dubai must make.

In the United Arab Emirates, three main configurations are possible: Mainland, Free Zone, and Offshore.

Mainland Company setup

Mainland businesses are commercial establishments those registered in any of the seven “Emirates” with the Department of Economic Development (DED) of the United Arab Emirates. These businesses are allowed to operate in any of the free zones or emirates in the United Arab Emirates. But, the business must abide by the laws and ordinances of that particular zone.

Benefits of setting up a business in Dubai

No Cap on Visas: Generally speaking, a mainland business can apply for as many visas as it wants, but the amount of office space required must increase in proportion to the number of visas granted.

Regulations:

• Local Sponsorship: Except in specific professional or service areas where 100% foreign ownership is permitted, mainland businesses must have a local sponsor, a UAE national, who controls 51% of the shares. Nevertheless, with the appropriate legal arrangements, complete foreign control over the business is always feasible.

• Office Space: Companies based on the continent are obliged to have a physical location in the United Arab Emirates.

• Audit: Financial audits are required.

Free Zone Company setup

Free zones are designated economic zones that provide advantages such as reduced taxes, waived customs duties, and laxer rules. Businesses falling under one or more of the designated business industry groups are granted licenses in each free zone.

A popular choice for those wishing to establish shops in Dubai, Free Zone companies offer distinct benefits like 100% foreign ownership and tax breaks. This appeals to foreign enterprises hoping to take advantage of the UAE’s advantageous position.

Benefits

• 100% Foreign Ownership: Foreign nationals may own whole shares in enterprises located in free zones.
• Tax Exemptions: No corporation taxes, personal income taxes, or import or export levies.
• Simplified Setup Process: Generally, establishing a company in a free zone takes less time.

Regulations:

• Business Operations: Enterprises operating in free zones are permitted to conduct business inside and outside the United Arab Emirates.
• Visas: There may occasionally be a seven-visa cap.
• Audits: It is not required to conduct financial audits.

Procedure for Business Registration

You can start registering your business in the United Arab Emirates once a Business setup consultant in Dubai, such as A&A Associates has helped you to decide on your jurisdiction.

• Select the Type of Business: Select the business activity you want to carry out. Next, choose from the following six license categories: Commercial, Agricultural, Professional, Tourist, Industrial, or Occupational.

• Decide on Your Legal Framework: Choose the legal form appropriate for the business activity you have decided on. A Limited liability company (LLC), general partnership, and limited partnership are among the options.

• Decide on the Trade Name for Your Company: Make sure the trade name complies with UAE regulations and titling practices. It must, for instance, not be offensive and not include the names of any religions or governing bodies.

• Request Government Authorities’ Initial Approval: Get the Department of Economic Development’s or the relevant Free Zone authority’s initial approval.

• Choose Your Place of Business: Make sure your company has a physical address that satisfies the specifications set forth by the Department of Economic Development of the emirate and regional authorities.

• Further governmental approvals: Obtain supplementary approvals from pertinent government agencies, such as the Executive Council, Ministry of Economy, Ministry of Justice, and the Ministry of Interior, depending on your business operations.

You should be able to pick up your business license at a Department of Economic Development center or obtain an electronic copy online after completing these procedures.

Taxes

The corporate tax rate is 9%, although it may be 0% if your business is registered in a 0% tax zone in the Free Zones or if your income is less than AED 375,000. Financial audits are essential for enterprises operating on the mainland; however, they are not necessarily required in the free zones.

Employment Emiratization

The United Arab Emirates is dedicated to expanding the number of its citizens working in the private sector. According to recent measures, businesses employing fifty people or more must grow the proportion of UAE nationals by two percent per year until the aim of ten percent Emiratization is reached by 2026. Penalties and fines may result from noncompliance.

Even though free zones often provide more freedom to visa allocations, many free zones only allow a maximum of 6-7 visas for foreign workers per company, often with restrictions based on the office space the company rents.

Opening a Business Bank Account 

Selecting the appropriate bank is an essential first step not just for setting up a business in Dubai, but for all the regions and areas.

Setting up infrastructure and Office Space

Assess your needs first. There are seven emirates and over forty free economic zones to select from. So, you may have to determine if your company would be better off on the mainland or in one of the free zones.

Residency and Visa Requirements

Navigating the residence and visa requirements are integral part to setting up your business in Dubai. It guarantees that your employees would adhere to the existing UAE immigration laws and support the efficient running of your company. Probably one of the world’s most expat-friendly countries in the current data is the United Arab Emirates. The fraction of ethnic Emirati citizens in the Emirates is only around 10 percent of the total population.

Conclusion

From ideation to operationalization, starting a business in Dubai requires careful preparation and well-considered strategic decision-making. Some crucial milestones in this business set-up journey include deciding between mainland and free zones, comprehending the legal and regulatory environment, navigating the banking industry, acquiring the best (foreign) talent, and making sure the local regulations are followed.