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Steps to setup new business in Dubai

To start a business in the UAE, it is necessary to analyze the legislation and check the needs of the market. It is also important to make sure that you can obtain licenses and permits for the import of goods, and to find the most suitable business model according to your goals.

Types Of Business Entities in UAE:

There are three types of legal businesses in UAE. The legislation gives each of them different opportunities for business development and determines the geographic extent of their footprint:

  1. Local Company (Mainland)
  2. Company in Economic Freezone
  3. International Business Company (IBC)

Local Company (Mainland):

Unlimited business opportunities in any field

For a LLC, a local partner must hold 51% of the company (possibly on a nominal basis with the registration of a waiver of ownership in the Dubai court). A professional company (SE or CC) signs a contract with a local agent. The local agent is not one of the founders. Conducting free trade, services, manufacturing in the domestic market and abroad. Visa procedures for shareholders and employees are simplified. Enjoys status of a tax resident and loyalty of banks in the UAE.

Company In Economic Freezone:

Onshore legal company that is authorized to operate in any international markets

100% foreign ownership for international operations, with some restrictions on activities in the United Arab Emirates domestic market. Free international trade, export and re-export, wholesale trade in the UAE through intermediaries – distributors. Operations and services in the territory of the FZE and in international markets without restrictions. Registration of resident visas for shareholders and employees. Needs to confirm financial presence (economic substance).

International Business Company:

Offshore entity used for formation of business structures and protection of information of business owners

An effective and cost-effective tool for conducting transactions and international transactions. Retains beneficiary confidentiality in the established entity structures. The ability to act as a shareholder of companies and structures being created in the UAE or outside the country. Ownership of real estate in permitted projects in the territory of the Emirate of incorporation. Does not have the right to issue resident visas, difficult to open UAE Bank accounts, restrictions related to offshore status

Steps Of Company Formation:

  • Choose the name of the company
    • The company’s name must be unique and follow the rules and regulations of the Department of Economic Development.  The DED will give the final approval on the name you choose.
  • Choose the business activity
    • You will need to decide on what type of business activities you will perform, so you will know what type of business license to apply for.
  • Hire local sponsor
    • A local sponsor is a local Emirati who will help with any legal issues that come up.  A local sponsor is required for company formation on the Mainland. They will also hold 51% of shares in the company.
  • Select the office location
    • Finding an office space is necessary for company registration in Dubai. You may also choose a virtual office depending on the business activity you will be doing.
  • Prepare a MOA
    • A Memorandum of Association (MOA) is a document that outlines the company’s external activities. It must be prepared before making the final submission for the business.
  • Finalizing the company Formation
    • You will have to submit the required documents to the jurisdiction you selected for your company formation. These documents include your license application, the MOA, the tenancy contract, and any other documents needed.

Documents Required For Company Formation

  • A copy of your passport and the passports of the shareholders and managers.
  • Copy of residence visa
  • No objection certificate (NOC)
  • Proofs of address for shareholders
  • Government forms

Make your company a legal entity

A license validates your company as a legal entity and defines you and your business enterprise. No matter what type of company you want to form in Dubai, the first thing you are required to have is a license. It’s illegal to have a company without a license, so you will want to make sure you follow all the rules and regulations to have the correct business license.

There are four different types of licenses you can apply for in Dubai:

  • Professional License
    • This license is for service-based industries like carpenters, medical professionals, beauty salons, accountants, lawyers, and many more.  With a professional license, you have 100% foreign ownership, you get to engage with a wide range of clients and markets, and you can renew the license at an affordable cost.
  • Industrial License
    • If you plan on forming a company involved in industrial activities, then you’ll need to apply for this license. Aerospace, maritime industry, aluminum and fabricated metals, pharmaceuticals, food and beverages, and machinery and equipment are all big companies that need an industrial license. You’ll have to have a warehouse within the country to get an industrial license.
  • Commercial License
    • You will need this license if you plan on doing any trading.  Construction companies, retail companies, real estate businesses, and other general trading will have to apply for this license. There are several benefits to a commercial license like – local and international trade, tax free benefits, being able to trade a large number of products, the process is simple, and it’s easy for investors to get visas for their employees and their dependents.
  • Tourism License
    • Dubai is known for its booming tourism industry, and the government wants to make sure tourism stays on top.  There are three types of business licenses for tourism that you can apply for – an outbound tour operator, an inbound tour operator, or a travel agent.  Dubai’s central location, access to the city by air and by sea, the great infrastructure, and the no taxation policy are just many of the big advantages that bring both businessmen and tourists to the city.
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