Dubai, known for its opulence and luxury, is a dream destination for many worldwide. Its status as a tax-free, dynamic city and a melting pot of cultures makes it attractive for both job seekers and aspiring entrepreneurs. If you are planning to start a business in the emirate, Connector is here to help you understand the basics of setting up a business in Dubai.
The first and most essential step is to decide where to establish your business and what form it will take. You can set up a company either in mainland Dubai or in one of its 20-plus free zones, depending on your needs and requirements.
Setting Up Business In Mainland Dubai
Companies established on the mainland, outside of free zones, can operate across various sectors and trade with entities within Dubai, the UAE, and internationally. Benefits include the ability to conduct business anywhere in the UAE, access to diverse business visas, and a broader choice of commercial activities. Most mainland companies can retain 100% foreign ownership, though some sectors like oil exploration, security, banking, insurance, and medical retail may require an Emirati partner. In terms of areas, mainland areas include Business Bay, Sheikh Zayed Road, Bur Dubai, and Deira, among others.
Mainland Business Licence And Service Centres
Every mainland company requires a license to operate, with five main types available: Industrial, Commercial, Professional, E-Trader, and Dual Licences. Once you choose your licence, you can apply online or through service centres across Dubai. Next, select a legal form that aligns with your business activities, such as General Partnership, Limited Partnership, Limited Liability Company, Private Joint Stock Company, Public Joint Stock Company, Civil Company, or Sole Proprietorship.
Some business activities or company types require additional approvals from other government departments. Ensure you can obtain these approvals and meet any conditions they require before setting up your company. You can visit the Department of Dubai Economic Development's website to find out more about this.
Capital Required
Setting up a business involves significant upfront investment for office space, licence fees, employee visas, and so on. The capital required varies depending on the business type and legal formation, with the initial capital amount mentioned in the memorandum of association.
Documents Needed
To register your company, you need to gather essential documents, including copies of the licensee’s passport or Emirates ID and residence permit/visa. Other documents you need include:
- The company’s articles of association (not applicable for a one-person limited liability company)
- For public shareholding companies and private joint-stock companies, you also need a feasibility study of the project.
- For branches of companies based in other emirates, you also need the parent company’s board resolution to open a branch in Dubai, a letter of authorisation from the managing director, a copy of the parent company’s commercial registration certificate and a copy of the parent company’s memorandum of association.
Registration Process
Obtaining a business licence in Dubai involves three key steps. First is the initial approval, where the Dubai Department of Economy and Tourism (DET) reviews your trade licence application and documents, giving initial approval for your business to be established. This approval allows you to proceed with securing business premises.
The second step is to reserve your trade name, business activity, and company structure, following Dubai's specific rules for selecting a trade name. You can reserve your trade name before or after receiving initial approval.
After initial approval, submit the initial approval receipt and a duly attested memorandum of association. The DET will issue the memorandum of association for Limited Liability Companies (LLC), one-person companies, or civil companies; for other legal forms, a Notary issues the memorandum of association.
Setting Up Business In Free Zones
Dubai's free zones provide businesses with significant opportunities, including 100% foreign ownership, and dedicated support for specific industries. However, companies established in these free zones cannot trade within the UAE without obtaining a specific mainland licence. Other benefits also include various tax advantages and streamlined licencing procedures.
Free Zone Areas
When selecting a free zone in Dubai, it's essential to align with your business objectives and operational requirements. Many of Dubai's free zones cater to various trading enterprises across different sectors, while others specialise in specific industries, offering tailored support and expertise. Popular choices include Jebel Ali Free Zone (JAFZA), Dubai International Financial Centre (DIFC), Dubai Internet City, and DMCC. Before making a decision, it's beneficial to familiarise yourself with the offerings of each free zone to determine the best fit for your company. Check out the free zone areas here.
Choose Your Company Structure
In Dubai's free zones, businesses can choose from various legal forms tailored to their needs:
- Free Zone Establishment (FZE): A single shareholder, who can be an individual or a corporate entity, establishes this legal entity.
- Free Zone Company (FZCO): Requires a minimum of two shareholders, who can be individuals or corporate entities, to form this legal entity.
- Public Limited Liability Company (PJSC): Multiple shareholders can trade shares on the stock exchange with this corporate entity.
- Private Limited Liability Company (LLC): Between 2 to 50 shareholders can form this corporate entity, with limited liability and no public trading.
- Branch of a Local or International Company: This extension allows existing local or international companies to operate in Dubai under their parent company's legal umbrella. For detailed information on specific free zone company structures, visit their respective websites or contact their support teams directly.
Costing
The expenses can fluctuate based on your needs, encompassing factors like office space and visa quotas. Costs vary depending on the business type and ownership configuration.
Set-Up Process
Establishing a free zone company is largely enabled online due to streamlined procedures. While free zones ensure a smooth setup process, ensure you have all necessary documents, business plans, and any other requirements specific to the chosen zone. Each free zone operates differently, so it's crucial to verify their specific prerequisites and timelines before commencing.
Typical steps include registering the company, providing a passport copy for the owner, and submitting original company documents if establishing a branch in Dubai.
Other steps involve leasing business premises, obtaining a business licence (typically processed in 3 to 5 working days), and arranging additional business services like bank accounts and visas for foreign employees. Get all the information about applying and documents here.