From vision to venture: A guide to starting a business in Dubai
Do you think longingly about being your own boss, about really contributing to the economy? Is there an innovative idea in your head that can help alleviate a gap in the market? It might be time to start your own business in Dubai! Setting up a business in any country can be a daunting task as rules, regulations and requirements will most likely differ from your home country. So for all the budding entrepreneurs, here is all the information you need to know for a successful new business setup in Dubai.
Business Setup in Dubai: Mainland vs. Freezone
Business owners have the option of setting up a business in Dubai in either the mainland or a free zone.
To start a business in the mainland areas of Dubai, before June 2021, foreign nationals needed to have a UAE national to act as sponsor, owning a 51% share of the business. This rule has since changed after the introduction of the 100% foreign ownership law. Now, foreign nationals can consider a new business setup in Dubai without having a UAE national act as a sponsor. You can read our guide to find out more about foreigner’s business ownership rule change.
There are more than 20 free zones in Dubai where you can setup operations. Free zones are generally tailored for one particular sector and have their own rules and regulations.
Free zone companies can only conduct business and trade with companies outside the UAE and other free zones. Companies operating in free zones are exempt from the 5% VAT and 9% Corporate Tax.
To know more about free zones in Dubai, check out our feature on the difference between free zones and freehold areas in Dubai.
Steps to Setting up a business in mainland Dubai
Here is a complete guide to starting a business in Dubai’s mainland areas.
Benefits of a company setup in Dubai’s Mainland
- You have the option of conducting business anywhere in the UAE
- You can have different types of business visas available to you
- You have a greater choice of commercial activities to license
Who is eligible to set up a business in Dubai?
Foreign nationals can set up a business in mainland Dubai, however, there are restrictions.
Previously, foreign nationals could only consider a new business setup in Dubai if they have a UAE national act as sponsor. As a sponsor, the UAE national would own a 51% share in the business or be a local service agent (LSA), with the foreign national retaining 49% of the business and paying the LSA an annual stipend.
But after the introduction of the 100% foreign ownership law, foreign nationals can now consider a business setup in Dubai without on their own. This law regarding business ownership does exclude certain industries, including:
- Oil exploration and production
- Investigation, security, military (including manufacturing of military weapons, explosives, dress, and equipment)
- Banking and financing activities
- Insurance
- Pilgrimage and Umrah services
- Certain recruitment activities
- Water and electricity provision
- Fishing and related services
- Post, telecommunication and other audiovisual services
- Road and air transport
- Printing and publishing
- Commercial agency
- Medical retail (including pharmacies)
- Blood banks, quarantines and venom/poison banks
Cost of setting up business in Dubai
As you can expect, setting up a business requires a significant upfront investment that will go towards office space, licence fees, employee visas and so on. This cost will also differ depending on the actual type of business you intend to start (commercial, industrial, service) and the type of legal formation you will be creating (establishment, company, branch).
How much capital you need for a business in Dubai also varies depending on the form of business. There is no legal requirement for minimum capital for other types of operation, but the initial capital needs to be mentioned in the Memorandum of Association and also be an amount deemed ‘sufficient’ to meet the purpose of the business.
Need some more guidance on the costs involved in setting up a business in Dubai? Check out our Expert Advice feature where one of the industry’s leading expert discusses the cost of setting up a business in Dubai.
How to Start A business in Dubai
- The first thing you need to do is, of course, decide what your business is and what type of licence it needs. Currently, the DED has over 2,100 business licence types available, split across tourism, industrial, commercial and professional categories. Depending on the type of business you choose, you might require a different set of approvals. You can learn more in our guide about business licences in Dubai.
- The next step is to determine what type of legal entity (legal form) you intend to set up (such as LLCs, branch, SME etc). Depending on your type of business, however, the type of legal entity you set up might differ.
- Once you’ve decided on the above, it’s time to decide on your trade name and to apply to register it. This can be done via a lawyer, a DED service centre, Happiness Centres and the Business in Dubai app. Keep in mind that you will need to make sure that your proposed name follows the guidelines, such as being related to your licence type.
- Next, you will need to apply for initial approval from the DED. If you intend on setting up a company dealing with commodities, securities or legal services, you will require additional approval.
- Following approval, you will need to approach an authorised entity (such as the DED or a law firm) to draft your business’ MoA, and then sign your LSA or Corporate Agent agreements. Once again, these requirements depend on the legal form of your business. You can read our guide on DED licencing process to learn the entire procedure.
- It’s now time to rent an office space in Dubai as all businesses in the city require an actual physical address. In order to register for Ejari online, you will require your initial approval certificate along with your tenancy agreement and other documents. Only once you obtain this attested Ejari document, can you go ahead with obtaining your actual business trade licence.
- Depending on the type of business you are setting up (for example, a business type out of control of the DED) you might have to apply for additional licences from your business type’s governing body.
- Now, all you have to do is submit all your documents to the DED or Happiness Lounge and you can get to work running your very own business!
Setting up a business in a Dubai freezone
The main difference between setting up a business via the Dubai Economic Department (DED) in Dubai and in a free zone is that a free zone governs the business’ scope of operations. The type of business you set up and its costs will depend on the free zone you apply to, along with processes.
Some of the popular free zones in Dubai are
- Jebel Ali Free Zone (JAFZA)
- Dubai International Financial Centre (DIFC)
- Dubai Internet City
- DMCC
When opening a company, you have a choice of different types of company structures:
- Free Zone Establishment (FZE)
- Free Zone Company (FZCO)
- Public Limited Liability Company (PJSC)
- Private Limited Liability Company (LLC)
- Branch of a Local or International Company
Free zones offer expert services that can help your business setup in Dubai. Visit the official website of the free zones to start the process.
Cost of company setup in Dubai’s free zones
The cost varies in terms of type of business and ownership structure. For a freelancer it could start at AED 5,000 to AED 7,500. In case of a company that is a single person operation, you start at AED 15k. The cost go as the number of employees increase. Plus, business visas for such companies is linked to the space being rented.
These numbers are a guide and may vary from one free zone to another.
Benefits of company setup in Dubai’s free zones
- Enjoy 100% exemptions on import and export taxes
- Tax benefits
- Enjoy 100% repatriation of profits and capital
- Less bureaucratic licensing procedures
If you’re interested in setting up a business in Dubai and would like to meet some like-minded individuals, why don’t you check out some of these co-working spaces in Dubai, many offering networking and angel investor events.
Disclaimer: The above information is subject to change. Up to date and additional information may be obtained from the Department of Economic Development
FAQS
WHERE CAN I LEARN MORE ABOUT FREE ZONES IN DUBAI?
Read our complete guide to free zones in Dubai to learn all you need to know.
WHAT DO I NEED TO CONSIDER BEFORE OPENING A FREE ZONE OFFICE IN DUBAI?
Here are some considerations that you need to know before opening a free zone office in Dubai.
WHICH ARE THE TOP BUSINESS SETUP COMPANIES IN DUBAI?
Planning for business setup in Dubai? Check out the top business setup companies in Dubai that can help you in the process. Business setup consultants in Dubai can make the entire procedure easy so you can focus on getting your business off the ground as quickly as possible. For instance, A&A Associate LLC can assist start your operations.
WHAT IS THE MINIMUM INVESTMENT TO START A BUSINESS IN DUBAI?
Questions like how much is a low cost business setup in Dubai or minimum level of business setup in Dubai cost are common. However, there is generic answer to these queries and as discussed it all depends on ownership type, business type and other factors.
Dubai government continuously tries to create an environment where foreigners can invest and make returns. The process of business setup in Dubai is relatively streamlined. Whether you wish to open a new SME or add a branch of your already established company, Dubai could be the right place.
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Very well and cogently written article!!