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Dubai has become a go-to destination for company owners looking for favorable tax laws and a pro-business political system. However, as is often the case with scaling or starting a business in new territories, there are many things to consider when it comes to company formation in Dubai.
Below are the top things an entrepreneur needs to know about business setup in Dubai, drawing from the experience of our business setup consultants who know this first-hand: with a deep understanding of the market, its potential, and legal pitfalls.
Why Set Up a Company in Dubai?
Here are some of the reasons company owners are choosing to do business in Dubai:
- Taxation – the corporate tax rate for a company in Dubai is 9%, and VAT is 5%.
- Market Access – Dubai is the “gateway to the Middle East” as well as North Africa, giving companies access to a market of more than 2 billion people.
- Business-Friendly Regulations – a lot of companies set up a business in Dubai because of its regulations. Alongside the clear legal framework for intellectual property and a relatively quick and streamlined setup, the business-first government offers various incentives and support programs for startups and SMEs.
- Order Execution Policy: The procedure for executing orders on behalf of clients must be available for clients.
Choose the Right Company Structure
The main company structures you can register in Dubai are:
- Sole Trader – a single-person company.
- Partnership – companies controlled by two or more people directly (i.e., not via a separate entity such as an LLC) are in a partnership.
- Civil Company – this company structure applies to businesses such as consultancy firms and engineering practices where partners are the sole owners.
- Limited Liability Company (LLC) – LLC company formation in Dubai involves the creation of a separate legal entity. This entity controls the business, which, in turn, is controlled by shareholders.
- Free Zone Company (FZC) – companies that look for a more favorable business environment can consider a setup in one of 50 free zones. Each free zone has its regulations, which often include no personal tax for owners, exemptions from import/export duties, and other benefits tailored to numerous industries.
Understand Mainland vs. Free Zone Setup
As already mentioned earlier, there are two economic regions to operate in Dubai: the mainland and a free zone.
- Mainland business setup in Dubai = businesses are regulated by the Department of Economic Development (DED) and have the ability to operate throughout the country, the wider UAE, and around the globe. There are almost no restrictions on the business activities of mainland companies. Additionally, companies can apply for government tenders.
- Free zone business setup in Dubai = businesses are regulated according to the free zone’s rules, and there could be some restrictions on the company’s activity within the UAE. Operating under one of the free zone business licenses in Dubai can offer substantial financial benefits, but it should be carefully chosen to best serve unique business needs.
Don’t Delay Your Trade License
One of the main mistakes our Dubai business setup consultants see company owners make is waiting too long to apply for a trade license. There are three main types of licenses, and each one has its own approval timeframes:
- Commercial – this license is suitable for companies that buy and sell goods. The application process takes approximately 2–4 weeks.
- Industrial – this license is suitable for manufacturing companies. The application process can take as few as 3 days or as long as 4 weeks.
- Professional – this license is suitable for service companies, such as consultancies. The application process takes up to 4 weeks.
A trade license is vital for any company wishing to set up in Dubai, so taking the approval timeframes into account is essential when registering a new business in Dubai.
Consult Legal Experts from Day One
There is no doubt that there are dozens of things to consider when it comes to setting up a business in Dubai.
That’s why it’s crucial to understand the legal landscape and, in turn, how to remain compliant before even applying. The best way to do this is to work with business setup consultants in Dubai, such as the Inteliumlaw experts.
Choose a Name that Meets UAE Requirements
Names matter when it comes to company registration in Dubai. Our experts can advise you on this, but in general, company names can’t contain the following:
- Offensive language;
- Religious references;
- Words that may be confused with existing brands on the Dubai company register or government entities.
Prepare Required Documents in Advance
It is essential to verify the identity of the key personnel behind the business to set up a company in Dubai. Corporate experts can help collect the necessary documents and submit them on your behalf.
The main documents required for the Dubai business setup process are:
- Passport;
- Visa;
- Proof of residence and/or office address (and lease/ownership documents);
- Business plan;
- Memorandum of Association (MOA) and Articles of Association (AOA);
- Trade name reservations certificate;
- Bank statements/financial documents.
Understand Bank Account Opening Challenges
Having a local bank account is a great benefit for a company in Dubai. Despite all the myths, the process of account opening in Dubai is not an easy and fast process. You will go through tough compliance and might even be rejected. The process involves four important steps:
- Choose a suitable bank and business account.
- Gather and submit the necessary documents, including your trade license, MOA, AOA, and passport.
- Attend a personal meeting with a banker.
- Provide the additional requested documents.
- Communicate with the bank properly to provide the right positioning and cover all the questions.
- Wait to receive approval from your chosen bank.
With the help of our business setup consultants in Dubai, you can successfully open a bank account in around 4 weeks.
Stay Compliant with Ongoing Obligations
Dubai business law is always evolving. Indeed, as its popularity as a business hub grows, the government reacts accordingly, making it even more favorable for companies of different sizes and kinds.
That’s why staying up-to-date on the laws governing how to do business in Dubai is a must. Again, this is where local business law experts become an essential tool in your company’s arsenal.
Plan for Growth Beyond Setup
Setting up a business can be both challenging and exciting, but one must resist the temptation to focus on the now. Getting the initial details right is important, but don’t assume that your legal commitments stop there.
Starting a business is the first step. With a deep understanding of the local market, our corporate consultants in Dubai will help you ensure your business is well-positioned for future opportunities. A sound setup today opens the door for benefiting the most out of the region’s thriving environment, thus fueling your long-term growth.
