How to Start a Business in Dubai?

Starting a business in Dubai offers numerous advantages, including zero income tax and a prime, strategic location. However, launching a company is a significant decision that requires careful planning, conceptualising, research, budgeting, set up, and decision-making. It also demands guidance and assistance in selecting the right business license, especially if you are a new entrepreneur. If you're eager to learn how to establish your business in this dynamic city, this guide is for you.

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Understanding Dubai's Business Landscape

Dubai's business landscape is characterised by a blend of local and international influences, providing a diverse and dynamic market. The emirate offers various business structures to cater to different types of enterprises, including:

• Mainland Companies: These can operate across Dubai and the UAE, engaging in various commercial activities. Under the latest regulations, Dubai allows 100% foreign ownership in specific sectors. For other sectors not covered by these regulations, foreign investors must have a local partner who holds at least 51% of the business. 
• Free Zone Companies: Located in designated areas, free zone companies benefit from 100% foreign ownership, tax exemptions, and simplified import/export procedures. They are restricted to operating within the free zone or internationally.
• Offshore Companies: Primarily used for international trade and asset protection, offshore companies in Dubai cannot conduct business within the UAE but offer benefits like full foreign ownership and tax advantages.

Documents Required to Start a Business in Dubai

Before officially starting your business operations in Dubai, you must register your company and obtain the necessary approvals. Here are the essential documents required for company registration in Dubai:

• Passport Copies: Passport copies of all stakeholders with at least 6 months validity.
• Memorandum of Association (MoA): A document outlining the company's structure and objectives.
• Office Tenancy Contract: Also known as Ejari in the UAE, this is the lease agreement for your office space.
• Trade Name Approval / Initial Approval: The relevant authority must approve your chosen company name and initial business setup.

In addition to these documents, you might need to obtain additional approvals depending on the nature of your business activity. Here are some specific approvals required by various ministries and authorities:

Additional Approvals Based on Business Activity

 Here are some Additional Approvals required depending on Business Activity:  

Process for Starting Your Business in Dubai, UAE

Starting a business in Dubai involves several critical steps and considerations. You'll need to decide on the right business activity, determine the type of license required, and choose between setting up in a free zone or on the mainland.

We've outlined seven key steps to help you navigate this process that provide an overview of everything involved.

1. Select a business activity
2. Select the jurisdiction
3. Finalize the company structure/legal form
4. Choose a Company Name
5. Get approval for your company name and activity
6. Apply for your trade license
7. Register your company
8. Find a local agent (if required)
9. Get your external approvals
10. Prepare your Memorandum of Association
11. Rent an office
12. Get the tenancy contract & Ejari
13. Get the initial approval
14. Collect your trade license
15. Open Your Business Bank Account
16. Apply for a Visa

Process for Starting Your Business in Dubai, UAE

Starting a business in Dubai involves several steps and considerations. Here's a streamlined guide to help you navigate the process:

1. Select a Business Activity

When choosing a business activity, ensure it aligns with the UAE market's practicality and demand. Before starting your business in Dubai, it's essential to conduct comprehensive research on the feasibility and profitability of your chosen business activity.

2. Select the Jurisdiction

Choose the Right Jurisdiction for Company Setup in Dubai

When setting up a business in Dubai or elsewhere in the UAE, you must choose between three jurisdictions based on your chosen activity:

• Mainland
• Free Zones
• Offshore

Mainland

Mainland companies are registered directly with the economic development authority of an emirate. These companies can operate within the entire UAE market and engage in a wide range of commercial activities.

Free Zones

Free zones are designated areas within an emirate governed by their own regulatory authorities. These zones offer benefits tailored to various business activities, such as tax exemptions, 100% foreign ownership, and simplified import/export procedures.

Offshore

Offshore companies are registered in jurisdictions that allow them to operate outside the UAE while providing benefits like full foreign ownership, tax advantages, and confidentiality.

Choosing the right jurisdiction depends on your business requirements, operational goals, and the nature of your business activity.

3. Finalize the Company Structure/Legal Form

Choosing the right legal form for your company is crucial as it impacts your dealings with profits and losses and how you organise resources. Decide your company structure early, as you cannot apply for a business license without it. Options include:

• Limited Liability Company (LLC)
• Sole Establishment
• Civil Company
• Local Company Branch
• GCC Company Branch
• Foreign Company Branch
• Free Zone Company Branch
• Holding Company

4. Choose a Company Name

Selecting a company name is a critical and nuanced part of the setup process in Dubai. The UAE has strict guidelines to ensure business names align with cultural, religious, and legal standards. Here are the essential requirements:

• Uniqueness: The name must be unique and not duplicate any existing company name within the UAE.
• Cultural and Religious Compatibility: The name should respect the country's cultural and religious values and not contain offensive or inappropriate words.
• Relevance: The name should be compatible and relevant to your chosen business activity.

Legal Structure Abbreviation: The name must include an abbreviation of the business's legal structure (e.g., LLC, PJSC).

5. Get Approval for Company Name and Activity

The Department of Economic Development must approve your company's trade name and selected business activity before you proceed. Once approved, you can submit the necessary documents to apply for your UAE trade license.

When submitting your company name for approval, it is advisable to have three name options ready to ensure a higher chance of acceptance.

6. Apply for Your Trade License

Choose from four types of trade licenses in the UAE:

• Commercial License
• Professional License
• Industrial License
• Tourism License

The licensing structure varies between the mainland and free zones and depends on your business activity.

7. Register Your Company

Company registration and licensing occur simultaneously but involve several stages of documentation and approvals. As required by the DED, you must obtain all necessary approvals from relevant government authorities.

8. Find a Local Agent (if required)

While finding a local partner was once mandatory, now you can seek corporate sponsorship for 100% ownership. Business setup consultants can assist in connecting you with suitable corporate sponsors.

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9. Get External Approvals

Depending on your business activity, the DED may require additional approvals from government or non-government agencies, such as municipalities, banks, or embassies.

10. Prepare Your Memorandum of Association

Draft your Memorandum of Association (MoA) in compliance with UAE mandates, considering your business interests. Expert advice is recommended to navigate the complexities of the MoA.

11. Rent an Office

Choose an office unit or a shared workspace based on your business needs. The size of your office can influence the number of visas you can apply for through the DED.

12. Get the Tenancy Contract & Ejari

Sign a tenancy contract with the real estate agency for your office space. Register the contract with Ejari, an online system governed by the Real Estate Regulatory Agency (RERA), which is necessary for obtaining or renewing visas.

13. Get Initial Approval

Obtain initial approval from the DED, indicating that the UAE government has no objections to your business setup. Without this approval, you cannot proceed further.

14. Collect Your Trade License

Submit all documents with the required government fees to the DED to receive your trade license. (refer to above). After submitting documents, your application will be reviewed by the relevant authorities for approval. 

Once the trade license is issued, you can officially start your business.

15. Open Your Business Bank Account

Your trade license is the key to accessing essential services in the UAE. The first priority is opening a business bank account.

16. Apply for Visas

Applying for a visa is the final step in starting your business in Dubai. Depending on your chosen jurisdiction, your business may be eligible for visas for yourself as an investor and for your employees. While investor visas are generally available for all company types, employee visas must be applied by first registering with the labour department. This ensures that your business complies with UAE labour laws and regulations, facilitating a smooth process for obtaining necessary visas.

Conclusion

If you are considering starting a business in Dubai, this guide offers a comprehensive roadmap to help you through the process. Starting a business in Dubai offers numerous benefits, including zero income tax and a strategic location, making it an attractive destination for entrepreneurs worldwide. The process requires careful planning, research, and decision-making, involving selecting the right business activity, jurisdiction, and legal structure and obtaining necessary approvals and licenses. 

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