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
|Time needed||Several weeks to a month|
|Things you need||Business documents, application forms, budget|
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
- Digital Marketing
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.
|The Differences Between a Mainland and Free Zone Company|
|Definition||Any entity located outside the designated free zones in Dubai. These businesses are also managed and regulated by Dubai’s Department of Economic Development (DED).||Any entity located within one of the designated free zones in the city. These businesses are regulated by independent free zone authorities that may come from the public or private sector.|
|Jurisdiction||Anywhere in Dubai, the UAE or even around the world.||Only within the designated free zones or in another country.|
|Ownership||Foreigners need a local sponsor, although you have autonomy of running your business.||Foreigners are granted complete ownership of a company within the free zone.|
|Costs||You can set up a company in the mainland for as low as $7,700.||The capital requirement for starting a business in the free zone will depend on the area.|
|Licensing||Requires varying documents during the process of incorporating your business with the Dubai economic department.||Applying for a free zone license will be done on a single independent free zone authority.|
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:
- 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:
|Dubai Multi-Commodities Center (DMCC)||Minimum of $13,612|
|Dubai Silicon Oasis||Minimum of $27,225|
|Dubai South||Minimum of $81,676|
|Jebel Ali Free Zone||Minimum of $136,127|
|Dubai Airport Free Zone||Minimum of $272|
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:
|Commercial License||Distribution, Importing, Exporting|
|Professional Services License||Auditing, IT Solutions, Accounting, Engineering, Marketing Or Consultancy|
|Industrial License||Manufacturing, Processing, Assembling Products|
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.
- Filled-out application form
- Colored copies of your passport or ID
- Colored copies of passport or ID of all the shareholders, manager or director
- A copy of the business plan
- Specimen signatures of the owner, manager and all shareholders
- Certificate of reference from a shareholder’s personal bank for new businesses or two years audited financial reports for an existing business
- Letter of Intent
- No Objection Certificate (NOC) from sponsor (for individual applicants)
- Unit title deed
- Registry Identification Code Form (RIC) for the manager or director of the company
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.
- Filled-out application for business registration
- Share capital information
- Notarized and attested Board Resolution appointing the company’s Manager or Director
- Notarized and attested Memorandum and Articles of Association
- Notarized and attested Power of Attorney given to the Manager or Director
- Passport-size photo of the Manager or Director against a white background
- Notarized and attested specimen signature of the Manager or Director
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:
|Business Activity||Agencies to Get Additional Approvals|
|Legal consultancy and any other legal activities||Ministry of Justice|
|General transport services including alarm and safety systems, driving schools, car rentals, car and car parts dealers and fire equipment businesses||Ministry of Interior|
|Telecommunication services||Telecommunications and Digital Government Regulatory Authority (TDRA)|
|Architectural and engineering services||Local Municipal Department|
|Insurance consultancy and insurance-related activities||Ministry of Economy|
|General services, travel and tourism, ship and maritime businesses, charter services, air transport and car clubs, and foreign company branches||Executive Council|
|Onshore and offshore gas, oil-field and oil drilling services||Supreme Petroleum Council|
|Health-related services||Local Health Departments|
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.
- Certificate of Incorporation or Registration
- Valid Trade License
- Company Memorandum and Articles of Association
- Share Certificates
- Passport copies of all shareholders and authorized signatories
- Board Resolution authorizing a member of the company to open the corporate bank account (if applicable)
- Proof of address
- Personal bank statements for the last 6 months
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.