How Can You Set Up a Company in Dubai?

Dubai is one of the best places in the world to start a business! 

With very low taxes, a competitive market and a favorable economy, it’s no surprise that a lot of entrepreneurs have decided to take the leap in starting a company in the city.

Are you planning to set up a company in Dubai? Read on to find out how to do it right.

How to Set Up a Company in Dubai

Like anywhere else, setting up a company in Dubai is not as easy. However, it’s faster than most major cities because of how Dubai encourages foreigners to do business.

To set up a company in Dubai, you need to determine the nature of your business, choose a location, decide on a company name, know your costs and apply for a business license.

You also need to open a corporate bank account, set up your office and hire a team that will help you run your business.

In this guide, we break down all the steps to make things easier for you.

Step 1. Determine the nature of your business

The first step to setting up a company in Dubai is knowing exactly what type of business you’d like to start. There are also many business opportunities for foreigners in Dubai

This means your business activity and the industry that you want to be in. There are more than 2,000 economic activities in Dubai and the UAE but here are some of the top areas that are flourishing:

• IT Solutions
• E-commerce
• Manufacturing 
• Digital Marketing
• Logistics
• Tourism

Step 2: Choose your location

One of the most important things to learn when setting up a business in Dubai as a foreigner is the difference between a mainland and free zone company.

There are pros and cons to setting up a mainland company or free zone company. Most foreigners, however, choose to set up their business in the free zone mainly because they get full ownership of the company.

And since you’ll be moving to Dubai for your business, it’s also important to learn about the differences between a Dubai and free zone visa, which you need to apply for.

Step 3: Decide on a company name

In Dubai and the UAE, you need to follow these strict rules when choosing a business name:

• Your company name should reflect your business activity and not contradict it. Customers should be able to tell what your business is by your company name.

• Your company name shouldn’t be taken by another business in the UAE or anywhere in the world. You have the option to apply for copyright if you want to.

• Your company name shouldn’t contain any offensive, indecent and obscene words or connotations even if it’s a person’s name.

• You shouldn’t make any religious references or use the name of gods and deities from the country or anywhere in the world on your company name.

• Your company name should never reflect your political affiliations, whether in Dubai or your home country.

• Business location shouldn’t be used as part of your company name. Words like Dubai, Emirates or the UAE as well as any airport codes and affiliations are prohibited.

Your company name should also not start with words like Middle East, Worlwide, International, Global or any other related term.

However, you can use your nationality as part of your company name. For 

instance, you can use American, French or European.

• You’re not allowed to use abbreviations for your company name. It has to be in the expanded format every time you use it.

• Your company name shouldn’t be similar to any government organization in the UAE.

There are also specific industry-related rules when choosing a company name for your business in Dubai. So, it’s best to learn about them before finalizing your choice.

Step 4: Know your costs

The cost of setting up a company in Dubai will depend on the type and size of your business and the number of shareholders. Costs will also vary between the mainland and free zone because you’re registering your business with different entities.

Here’s a comparison of the common fees that you’ll need to pay when setting up a company in the mainland and the free zone:

Mainland Company

• Initial Approval (one-time fee) – $33
• Name Approval (one-time fee) – $169
• Tasheel Fee (one-time fee) – $63
• MOA Notarization Fee (one-time fee) – $408
• Annual License Fee – $2,723

Free Zone Company (Varies depending on the zone)

• Registration Fee (one-time fee) – $500
• Annual License Fee – $700
• 3-year Residence Visa Fee – $1,500
• Share Capital – Range from $272 to $272,255

If you’re setting up a company in a free zone area, you’ll also be required to pay for a share capital, which will vary depending on the zone and the type of company.

On average, you’ll need to pay a share capital of $16,612 as a company and $2,722 per shareholder.

Here are the average share capital requirements in popular free zones in Dubai:

Of course, there will be additional expenses as you start your business including your office space, recruitment cost and other things that you need to pay for.

Step 5: Apply for a business license

Whether you’re setting up a company in the mainland or a free zone, you need to apply for a business license to operate legally in Dubai.

First, you need to determine what type of license you need for your business:

Some free zones may also categorize licenses depending on the nature of your business activity. Examples would be media licenses, warehouse licenses, freelancer licenses, innovation licenses and educational licenses.

To apply for a business license in Dubai, you need to follow these steps:

Apply for initial approval 

The initial approval is needed to ensure that the Dubai government or any other entity doesn’t have any objections about your startup and you can proceed with your application.

Register your business

After getting your initial approval, it’s time to pay your registration and license fees to the right authorities.

For a mainland company, this is paid to the Dubai DED while free zone companies need to pay to their free zone authority.

To finalize the approval of your business set up, you’ll also need to submit these documents to the DED or your free zone authority:

• The receipt of your initial approval and a copy of all the documents you previously submitted.
• A notarized and attested service agent contract if your company is 100% foreign-owned. This should be done with a local service agent in the UAE.
• The lease contract from the Real Estate Regulatory Agency (RERA)
• Approval certificates from other government and private entities involved in the registration

After paying all the required fees, you can already get your final approval and register your business with the Dubai Chamber of Commerce and Industry, so you can start operations.

Check if you need to additional business approvals

If you’re operating a regular business, you’ll only need to file for the standard business registration and you can get an approval within a few weeks.

But if your business falls under one of these business activities, then you’ll need additional approvals from the following entities:

Step 6: Open a corporate bank account

Once you get your final business registration approval, it’s time to open a corporate bank account.

With the UAE Central Bank’s stricter regulations to prevent fraud and money laundering, Dubai banks now have a longer screening process before granting corporate bank accounts, especially for foreign-owned companies.

Some banks may also require additional documents for its due diligence process. This can include invoices to suppliers, receipts issued to customers, copies of contracts and reference letters.

Once you’re ready, you just have to choose from one of the best banks for corporate accounts in Dubai.

Step 7: Set up your office

It’s mandatory for all businesses in Dubai to establish a physical address. So, it’s important to set up an office as part of establishing your business in the city.

You have three options for office spaces in Dubai:

• Mainland Office (Onshore Office)

These are located on the mainland with the option to own or lease an office space or an entire building depending on your business activity. On average, the rental for an office space in Dubai can range from $11,434 to $3,811,582 per year.

• Free Zone Offices

If you choose to set up a business within a free zone, you can get an office space within that area following its legal procedures.

One of the benefits of opening an office in a free zone is that you could also take advantage of other facilities that will help you run your business efficiently.The rates for office spaces will depend on the free zone that you’re in.

• Serviced offices

A serviced office can be on the mainland or free zone and it’s basically a furnished space with utilities already set up. You also have the option of a co-working setup where you share a serviced office with another business.

Step 8: Hire your team

The final step to setting up your business in Dubai is to build your own team of employees. Fortunately, there’s no shortage of talent in the city and you also have the option to bring in employees from outside the country.

However, Article 13 of the UAE Labor Law states that you cannot employ non-nationals without getting consent from the Department of Labor and applying for a work permit.

Once an employee is hired, he will be entitled to several benefits as stated in the UAE Labor Law which includes leaves, employment contracts, fair working hours and severance pay.