Dubai, a global business hub, offers entrepreneurs and investors an environment rich in opportunities, world-class infrastructure, and a strategic location that bridges the East and the West. Setting up a business in Dubai requires careful planning and adherence to local regulations, but the process is streamlined to attract global talent and investments. This article provides an in-depth guide to establishing your business in Dubai.

Before delving more into the topic, it is important to ask, why to start a business in Dubai or rather UAE? The first thing is that Dubai and UAE are welcoming entrepreneurs from all over the globe to come and do business in their country. If you take the data of last year, then you will find that more than 20,000 new businesses have launched in Dubai last year. Nearly 80% to 90% of UAE workforce are from foreign countries. There are many reasons for starting a business in Dubai or UAE. Some of them are listed as below:

Low Tax

This is one of the greatest advantages of doing work in UAE. UAE has 0% tax on income. The only tax in UAE is 5% VAT.

Good Economy

UAE is the second largest economy in the Arab world, next to Saudi Arabia. It’s obvious that startups thrive on strong economy.

Nice Startup Ecosystem

In UAE, there are many businesses incubator and investors. So, the startups may get easy funding in UAE and Dubai.

Great Quality of Life

The UAE placed 23rd in the Best Countries Index, only slightly behind Spain and Ireland and ahead of Portugal and Greece.

The above reasons motivate entrepreneurs to set up their businesses in Dubai and UAE.  

Steps to Set-up the Business in Dubai

1. Understand Your Business Activity

The first and most critical step is deciding the type of business activity you want to engage in. Dubai offers opportunities in various sectors, including trading, manufacturing, consultancy, real estate, hospitality, and more. The choice of activity will determine the type of license required—commercial, professional, industrial, or others. Some activities, such as financial services or healthcare, may require special approvals from regulatory authorities.

For instance:

(i) A trading business would require a commercial license.

(ii) A consultancy firm would require a professional license.

(iii) A manufacturing unit would need an industrial license.

2. Choose the Right Jurisdiction

Dubai offers three main jurisdictions for setting up a business:

Mainland

Mainland companies allow you to operate anywhere in the UAE and internationally without restrictions.

This option is ideal for businesses requiring local market access, such as retail stores, restaurants, and service providers.

Historically, mainland businesses required a local sponsor (UAE national) who held 51% ownership. However, recent reforms allow 100% foreign ownership for many activities.

Free Zone

Free zones offer 100% foreign ownership, zero import/export duties, and tax exemptions.

Businesses in free zones are restricted from direct trading in the UAE market unless they work with a local distributor.

Popular free zones include Dubai Multi Commodities Centre (DMCC), Dubai Internet City (DIC), and Jebel Ali Free Zone (JAFZA).

Offshore

Offshore companies are designed for international business activities without a physical presence in the UAE.

They cannot conduct business within the UAE but benefit from tax exemptions and confidentiality.

Common offshore jurisdictions include JAFZA Offshore and RAK International Corporate Centre (RAK ICC).

3. Decide on the Legal Structure

Choosing the right legal structure is crucial, as it determines ownership, liability, and operational rules. Common legal structures include:

Sole Proprietorship: Owned and operated by a single individual. Best for small businesses and professionals.

Limited Liability Company (LLC): Suitable for businesses with multiple shareholders. Offers limited liability protection.

Branch of a Foreign Company: Allows international companies to establish a presence in Dubai without incorporating a separate entity.

Free Zone Company: For businesses operating within a free zone. Variants include Free Zone Establishment (FZE) and Free Zone Company (FZC).

4. Register Your Trade Name

Your trade name is a critical element of your business identity. Dubai’s Department of Economic Development (DED) or the relevant free zone authority oversees the trade name registration process. Ensure your chosen name:

(a) Reflects your business activity.

(b) Is unique and not already registered.

(c) Complies with UAE naming conventions (e.g., no offensive or religious terms).

5. Obtain Initial Approval

Initial approval confirms that the UAE government has no objection to your proposed business activity. This step is mandatory before proceeding with other formalities. Submit the application to the DED (for mainland businesses) or the relevant free zone authority. The required documents typically include:

(i) Passport copies of the shareholders.

(ii) Proposed trade name and business activity details.

(iii) Initial business plan (if applicable).

6. Draft a Memorandum of Association (MOA)

For mainland businesses, drafting an MOA is essential. This document outlines the company’s structure, ownership distribution, and operational guidelines. It must be notarized and signed by all shareholders. Free zone businesses may have a simpler incorporation document.

7. Secure a Physical Business Location

Having a physical business address is mandatory in Dubai. Requirements differ based on the jurisdiction:

Mainland: Rent or lease an office or retail space and obtain a tenancy contract. You will also need an Ejari certificate, which serves as proof of tenancy.

Free Zone: Many free zones offer flexible office solutions, such as virtual offices, coworking spaces, or fully equipped offices.

8. Apply for a Business License

The business license is the official document that allows you to operate legally. Submit the required documents to the DED (mainland) or the free zone authority. Documents generally include:

(i) Initial approval certificate.

(ii) Trade name certificate.

(iii) MOA (if applicable).

(iv) Tenancy contract or proof of office space.

9. Register for Taxes

While the UAE is known for its tax-friendly environment, businesses may need to register for Value Added Tax (VAT) if their annual revenue exceeds AED 375,000. Ensure compliance with:

(a) VAT registration and returns.

(b) Customs duties (if applicable).

(c) Corporate tax, which is being introduced for businesses with significant earnings.

10. Open a Corporate Bank Account

A corporate bank account is essential for business operations. Research and choose a bank that aligns with your needs. Free zones often have partnerships with banks to facilitate account opening. Requirements include:

(a) Trade license.

(b) MOA and shareholding details.

(c) Passport and visa copies of the company’s authorized signatories.

11. Apply for Visas

Once your business is established, you can apply for visas for yourself, your employees, and their dependents. Each jurisdiction has its visa quota, which depends on the size of your office and business activity. Free zones usually simplify the visa application process.

12. Ensure Compliance with Ongoing Requirements

After setting up your business, staying compliant with local regulations is critical. This includes:

Renewing your trade license: Licenses are valid for one year and must be renewed annually.

Bookkeeping and auditing: Maintain accurate financial records and undergo annual audits if required.

Updating permits: Obtain approvals for changes in business activities or locations.

Key Considerations When Setting Up a Business in Dubai

Legal Assistance

Consulting a business setup advisor or legal consultant can streamline the process and help you navigate complex regulations.

Cost Structure

Business setup costs vary depending on the jurisdiction, business activity, and office space. These may include:

(a) License fees.

(b) Office rent.

(c) Visa fees.

Additional government fees (e.g., attestation, approvals).

Timeframe

The setup process typically takes 1-4 weeks, depending on the complexity of your business structure and activity.

Conclusion

Dubai’s dynamic economy, strategic location, and business-friendly policies make it an ideal destination for entrepreneurs and investors. By understanding the requirements and following the outlined steps, you can establish your business with confidence. Whether you choose the mainland, a free zone, or an offshore jurisdiction, careful planning and professional guidance can ensure a smooth setup process. Dubai offers unparalleled opportunities, and the right approach can help you tap into its vast potential.

Also read: coaching business in India