Business Setup in Dubai

Dubai

Dubai has risen from a sandy, peaceful beachfront to lofty heights in just a few years. Dubai is renowned as a land of opportunities and a paradise for dreamers. It demonstrates how foresight and innovation may lead to a brighter future. 

Dubai is already a significant player in the global marketplace and is well-positioned to determine the world's digital future. 

As a result, it's no surprise that the city draws businesses from all over the globe. So, anyone wishing to expand their business and keep up with the fast-paced world might choose Dubai. 

A Glimpse at Dubai's Burgeoning Economy

Before starting a business, the essential thing one should consider is to think about the economy of Dubai.

Knowing about Dubai's growing economy benefits all business people, entrepreneurs, and investors. So, there's no harm in learning about the economy. Please have a look at it to get a brief overview.

The Dubai Economy is predicted to increase by 3.4 per cent in 2022, according to a recent estimate from Dubai's Department of Economic Development. 

The emirate's long-term economic potential depends on trade, local manufacturing, e-commerce, a reviving real estate market, and the resurgent tourist industry. The Dubai economy is well-positioned to shift to the next phase of its economic cycle smoothly.

In addition to that, it is predicted that in January, Dubai's non-oil private sector economy will grow again, owing to an increase in new orders.

What Qualifies Dubai as the Perfect Place to do Business?

When people observe Dubai's economy, they are attracted to start a business or invest there. 

Dubai is situated halfway between east and west, connecting the best of both worlds. It also has a harbour and an airport, which makes logistics easier. 

As a result, businesses involved in international trade, import and export, tourism, and logistics may thrive in this region.

Moreover, as you are interested in doing it, you should know why it is a suitable place for doing business. Dubai's strategic position, political and economic circumstances, superb infrastructure, tax exemptions, expat-friendly visas, and comfortable lifestyle lures one to start a business in Dubai. 

What are the Different Jurisdictions in Dubai?

 There are three different jurisdictions in Dubai. They are: 

• Mainland (Onshore)
• Free zone
• Offshore

How Does a Business Benefit from the Different Jurisdictions in Dubai?

As Dubai is one of the seven emirates of UAE, one should have hands-on experience about which zone you should select for your business. 

There are several advantages of doing business across every jurisdiction. However, each jurisdiction has its own set of rules and regulations. Following the laws and regulations can assist you in running a successful business in Dubai. So, let’s have a glance at them one after one. 

Benefits of Mainland Business 

• Freedom to trade throughout Dubai and the UAE
• The ability to trade globally and increase your presence
• Opportunity to expand your business and team
• Ability to expand your product line
• Ability to work with the governments of the UAE and the GCC 

However, while considering the mainland, there were few other benefits. For example, one should be tax-free, have 100 per cent foreign ownership of the majority of the company, and not require a local sponsor.

If you wish to establish a company on the mainland, don’t hesitate to read the eight easy steps to start a company in Dubai mainland. 

Note: Under the current government policy, over 1000 activities are exempt from the need for a local sponsor. A foreigner can own the entire company. 

Benefits of Free zone Business

There are more than 30 free zones in Dubai. Each free zone is unique, and doing business in any one of the free zones will favour business. 

Look below to see the important benefits.

• 100 per cent foreign ownership
• 100 per cent repatriation of profits and capitals
• Exemptions from corporate and personal tax
• Import and export tariffs are exempted (but you cannot import into mainland UAE)

In addition, one should be aware of how a freezone does business in the Dubai mainland. 

Note: Businesses operating in the free zones are not subject to many restrictions imposed by federal and local laws and regulations. 

Benefits of Offshore Business

The most offshore jurisdictions in Dubai are RAK and JAFZA. Let’s see what the benefits they provide while doing a business are. 

• Exempted from tax
• No requirement for office space
• It doesn’t require any physical presence
• Free from many legal formalities

Types of Legal Entities in the Dubai Mainland

While establishing a business, the company law applies to all firms, branch offices, and representative offices of foreign organisations incorporated and functioning on the mainland. 

The companies permitted by the Companies Law are: 

Limited Liability Company

A limited liability corporation can be started by a minimum of two shareholders or a maximum of fifty shareholders. In addition, their liability is limited to their business capital shares. 

Public joint-stock company

In Dubai, a joint-stock corporation is a commercial organisation that needs a minimum share capital. If there are more than ten founding members, you can form a public joint-stock corporation.

Private Joint-Stock company

A private joint-stock company requires at least two founding members and a minimum initial capital commitment of AED5 million. In addition, a private joint-stock company may not have more than 200 shareholders. 

Partnership Company (General Partnership)

In Dubai, a partnership limited by shares must have at least two partners. A general partner will be one of the shareholders held entirely responsible for the company's debts and obligations. In contrast, a limited partner will only be held accountable for the degree of their participation. 

Limited Partnership Company (Simple Liability Partnership)

A limited liability partnership company might have two to fifty shareholders. 

Types of Legal Entities in Dubai's Free Zone

An individual or corporation intending to conduct business in a free zone must first establish an operational entity. Each free zone has its legal entities that can be formed. The most prevalent sorts of commodities that can be created in the free zones are as follows: 

Free Zone Establishment (FZE)

An FZCO or FZ-LLC is comparable to an FZE but has a different legal capacity from its shareholders. It may, however, have more than one shareholder, unlike an FZE. 

Free Zone Company (FZCO or FZ-LLC)

An FZCO or FZ-LLC is similar to an FZE, but it has a different legal capacity from its shareholders. It may, however, have more than one shareholder, unlike an FZE. 

A Branch Office of a Local or a Foreign Company

A foreign or domestic company's branch office is not a separate legal entity from its parent company. As a result, the parent business that established the branch office is responsible for the obligations of the foreign or local firm branch. 

A Private Limited Company in the DIFC

A private limited corporation is a legal entity with a legal personality and one or more shareholders. The capital of a DIFC private limited company is divided into transferable shares, and there is no minimum capital requirement.

Note: There are no legal entities in an offshore company.

Business Opportunities in Dubai

Do you know what business opportunities are available to investors, entrepreneurs, and startups in Dubai? If you want to excel in it, keep reading it.

Import & Export

Importing and exporting is a highly profitable business in Dubai. Therefore, starting an international trade firm in Dubai may be worthwhile for optimal growth and profitability.

 Furthermore, establishing your firm in a free zone like DMCC may help you succeed by giving you access to superior logistics and transportation infrastructure. 

Healthcare

 COVID-19 has presented many hurdles, but it has also shown fresh prospects in Dubai's health-tech industry. By 2025, the UAE healthcare sector will produce AED 39.4 billion. 

Real Estate 

Dubai is one of the most popular ex-pat destinations globally, with foreigners accounting for 70% of the population. As a result, Dubai's real estate industry offers various options, including property development, property management, and brokerage. 

Information Technology

As the Dubai government showcases many policies and initiatives to drive tech innovation, Dubai has become the best place for international tech-based businesses, and it attracts tech entrepreneurs. Due to government support, Dubai will become the world's most innovative city by 2022.

E-commerce

The COVID-19 epidemic's digital transformation enabled Dubai's retail e-commerce market to reach a new high of $3.9 billion in 2020, up 53% year on year.

Dubai's adoption of 'smart government projects' and programmes has been essential to the city's e-commerce sector's growth. Improved logistics, trust in digital payments, and greater security is all elements that have contributed to the development of Dubai's e-commerce business.

It's even feasible to start an e-commerce firm in Dubai and then run it remotely from another place while taking advantage of its low tax rules. Moreover, while wishing to start an e-commerce company, it is good to know how to get an e-commerce license in Dubai.

List Out the Dos and Don’ts of Starting a Business in Dubai.

While starting a business in Dubai or any of the emirates, it is necessary to note the dos and don’ts while starting a company.

If you understand the market better, then the success is yours.

Do’s	Don’ts
Do select the ideal company formation	Don’t be too casual
Do get the right licence	Don’t keep to yourself and operate in a silo
Do find a reliable sponsor if required	Don’t complicate things – take professional help
Do get your visa requirements sorted	Don’t rely on verbal commitments
Do team up with a strategic partner	Don’t overlook the cultural sentiments

 

The Business and the Legal Environment in Dubai

In a brief period, Dubai has established a comprehensive and dynamic legal and regulatory framework that provides foreign firms and investors with tremendous peace of mind when selecting to invest or conduct business in Dubai. 

The framework also encourages local Dubai businesses to flourish in a well-regulated environment. The Ruler and Government of Dubai have acknowledged the need for a dynamic approach to law and regulation in this fast-changing world. This has been essential to Dubai's sustained growth and prosperity.

How Does Dubai Give Priority to the Startups in Establishing their Firm?

Dubai has a vast network of incubators that help startups grow from a concept to fully functional companies. Incubators provide the ideal atmosphere for small and medium-sized firms by providing early finance, working spaces, training programmes and seminars, networking opportunities, and investor access.  

Dubai currently boasts several enabling platforms for entrepreneurs and startups, such as TechStars Dubai, Turn8, In5, FinTech Hive, Astrolabs, etc.

How Dubai's Economy Boosts After the Expo 2020?

Expo 2020 influences several sectors in Dubai. The property market in Dubai, on the other hand, gained substantially from this edition of the global fair. It allowed them to see the city's modern infrastructure, innovation, sustainable human-centric design, and facilities. 

Apart from the real estate sector, Expo 2020 also benefited the tourist industry. During the Covid-19 outbreak, Dubai was one of the first to open its airports to travellers.

The number of tourist visits to Dubai aided the tourism sector's revival, as visitors explored Dubai's other attractions outside of Expo 2020.

In addition, the expo 2020 benefited the emirate's hospitality, logistics, and food and beverage industries.

Steps of Formation of a Company in Dubai

Dubai is an excellent location for beginning a business or expanding an existing one. However, if you want to become a billionaire or more, you can keep reading and analysing the numerous phases until you understand them completely.

The following are the steps for business formation in Dubai. 

Decide your Business Activity

The first step is to choose a profitable business activity for your company. According to the Department of Economic Development, there are thousands of approved activities in Dubai. Trading, agriculture, hospitality, and manufacturing are just a few activities.

Furthermore, many free zone firms are prohibited from engaging in specific activities due to their location.

You may then select the ideal activity for your company when you've found it. First, however, undertake some market study to check which sectors are currently booming before settling on an activity. 

Strategic Location

 After finding a suitable business activity, your next concern should be finding a convenient location for your business.

Depending on the business requirements, one can select mainland, freezone, or offshore. Each jurisdiction has its benefits and requirements.

If you consider starting a business in Freezone, read the benefits of starting a Dubai free zone company.

Choose a Suitable Name

 You must adhere to Dubai's strict name laws when naming a firm.

Offensive words in a name might be disrespectful to religion or religion-related issues. If your business is named after someone, you must show that they are a partner or owner (no initials or abbreviations allowed).

It may be challenging to come up with a name for your firm. However, employing an expert to help you follow the requirements and have your name authorised might save you time and effort.

Obtain Your License

 After deciding on a good name, the following step is to secure a licence. The sort of licence you need depends on your company's needs.

If choosing and obtaining a licence proves challenging, a business consultant can assist you.

One should be able to start a business after getting a business licence.

• Application form duly signed by any authority
• Address proof
• Personal data sheet of shareholder(s)
• Business plan
• Passport copy and specimen signature of manager, shareholder, and director
• Certificate of incorporation
• Details of an existing company (for setting up of branch)

Open a Bank Account

 The next step in forming a company in Dubai is to register a corporate bank account for your company. Choose a reputable bank depending on your needs, whether it's a local or international bank. Make sure the bank you choose for your business has excellent financial services and facilities.

Obtain a Visa

The procedure of obtaining a visa in Dubai is a structured one that begins with the submission of a visa application and finishes with the issuing of your visa permit. To ensure your stay in Dubai with your family, domestic helpers, and other dependents, you can apply for several visas.

Look at our blog on visa services if you want to know more.

Types of Licenses in Dubai

As we all know, starting a business in Dubai necessitates the acquisition of a license. The different types of business required for your business are:

• Commercial license – Provided for general trading businesses
• Tourism license- provided for travel and tour industry
• Professional license- provided for service-related businesses
• Industrial license- provided for manufacturing goods

To have a thorough understanding of the various licenses, read about the business licenses in Dubai.

Note: In Dubai mainland, the Department of Economic Development issues the license. In addition, you may visit the DED website to learn more about the business operations that fall under which license.

Moreover, in the Dubai free zone, the relevant freezone authority issues the appropriate license. There is no necessity for a license in an offshore company.

Documents Required for Company Registration in Dubai

There are various types of businesses in Dubai; each one would require its own documentation set. For business registration in Dubai, the following papers are required:

• Application form of the Business
• Business Plan
• MOA and AOA which are duly notarised by the authority
• Passports of the Company's Executives
• Sponsor's passport as proof of citizenship in the UAE
• NOC from the Sponsor
• Bank Reference Letter for Each Shareholder

For an industry license, apart from the above documents, the following documents have to be provided:

• Copy of the feasibility study
• Existing company profile
• Information related to the investor

For Setting up Branch Offices

• Copy which is attested related to the certificate of incorporation, MOA and AOA
• Board resolution of the company
• Three months' bank statements related to the parent company
• Passport copy and original power of attorney

What is the Company Formation in Dubai Cost?

Below is the approximate range of company formation costs in Dubai.

Jurisdiction	Company setup cost	License cost	Visa cost
Mainland	20,000 AED	10,000-12,000 AED	4000 AED
Free zone	16,000-18,000 AED	12,000 AED	4000 AED
Offshore	3500 USD	3500 USD	-

Our Business Setup Services in Dubai

Business Setup Worldwide is a group of trained specialists that take the required steps to deliver tailored company formation services. We provide a full spectrum of business formation services, from pre-incorporation to post-incorporation. Our team in Dubai consists of highly skilled experts that can assist you with:

• Incorporation and registration of a business
• Local sponsorship 
• Company secretarial Service, corporate bank account accounting and auditing
• Tax service for intellectual property protection
• VAT registration for visa service incorporation of branch and virtual offices

Why Choose Us?

Starting a business and then seeing that through to fulfilment need good assistance. If you believe that you need comprehensive guidance in every phase of your company's development, Business Setup Worldwide is here to help.

Our business consultants have years of experience and knowledge in the relevant field. In addition, we have several connections around Dubai. As a result, if you think we are a good fit, we can assist you with any questions. So do contact us to get in touch.