Getting started with setting up a business in Dubai can be an intimidating prospect; however, the process is nowhere near as tricky as it seems.
There are many licenses and registrations, but with a clear idea of what’s required and some planning, you can be in operation quickly!
Read on to learn more about the process of business setup in Dubai. You’ll also learn what makes Dubai a unique opportunity to set up a new business venture and some of the cultural and business rules.
Why Start a Business in Dubai?
Dubai is a financial, trade and tourism hub and is recognised as the centre of many business activities.
You will greatly benefit if you register your business in Dubai due to the following:
- The Dubai government is one of the most transparent, efficient, and responsive governments globally.
- Dubai offers an excellent business climate for foreign investors.
- The excellent geographical position of Dubai at the crossroads of Europe, the Middle East, and the Gulf region, and its open economy, have attracted the business activities of people all over the world.
- Dubai welcomes foreign investors to launch business activities on a “No Objection” basis. Investors enjoy several incentives and facilities, including 100% foreign ownership.
- Many trading companies are present in Dubai, which encourages a network of business relations under the umbrella of the Dubai Chamber.
- UAE is a member of the World Trade Organization (WTO), and the Dubai Chamber promotes the inculcation of global business ethics and standards.
- Dubai has a central position in the Middle East, between Europe and East Asia, and enjoys excellent air, sea, and land communications with its neighbours.
- Dubai is a centre for finance and investment and has a central position in the global financial market.
- UAE is a member of the Arab League and the Gulf Cooperation Council.
Now that you know why starting a business in Dubai is an excellent choice let’s look at the process.
Choose an Industry
Every business setup in Dubai must register as a sole proprietorship, the simplest form of business in Dubai.
Sole proprietorships share many of the same characteristics as a limited liability company (LLC). It is easy to set up and administrate, but the owner handles any debts the business incurs.
Research the industry you are starting in. If the industry is new, you may face challenges like a lack of suppliers and clients. It is also essential to choose an industry you are familiar with or can gain a thorough understanding of before diving in to ensure your business setup in Dubai is successful.
In addition, you must choose your industry based on the type of business you are planning. Some industries must be established as partnerships, such as consulting services, law firms, accountancy firms, and doctor practices.
Choose Between a Mainland and a Free Zone
There are two types of business setups in Dubai: the UAE mainland and the free zone.
Dubai has many free zones, areas where businesses are free to operate tax-free, but they are subject to additional rules and regulations. Free zones can be an excellent way to start a business as they are free from the UAE Ministry of Labor and Ministry of Economy oversight.
Other benefits of a free zone include:
- No corporate or personal tax
- No currency restrictions
- 100% repatriation of capital and profits
- Exempt from import and export tax
- Complete company ownership
However, setting up a business in Dubai in a free zone requires a business license.
A UAE mainland business is not a free zone but is also not directly governed by the Ministry of Economy or Ministry of Labor. The responsibility for conducting business falls upon the incorporated company. The Board of Directors and the shareholders run the company. Both are liable for the actions of the business and its debts.
While this is a more straightforward setup than establishing a free zone business, you have to run it properly, or you can face the same harsh penalties as a free zone business. Setting up a UAE mainland business is more expensive and requires more legal compliance and regulation to ensure business success.
The type of business you choose will depend on the industry you are operating in and your circumstances.
Carefully Choose a Name
Choosing a business name is the first step in starting a business in Dubai or any country or territory.
Choose a name that is distinctly local but also has an international appeal. The phrase “and company” is not legal in the UAE, but you can include the word in your business name.
The name should not be offensive, or the same as another registered business name. Note that the name, company papers, and logo should be distinct from the business’s registered name, papers, and logo.
Obtain a Trade License
You must have a trade license to operate as a company. The Dubai Chamber of Commerce & Industry (DCCI) issues trade licenses.
You’ll need a trade license for an LLC and CP. To get a trade license, you must provide the following:
- Trade license application form
- Original copies of passports of each shareholder
- An electronic copy of the Articles of Association (AOA)
- Request to transfer the trade license to a new location
- Trade license renewal form
- Request to transfer trade license to a new location is only required if there is an alteration in the business’s registered address.
- The trade license fee is AED 1800.
- You should renew your trade license annually.
- If a free zone company or free zone LLC sets up the business, you will need to request a certificate of incorporation.
If the business is set up as a mainland company, the Ministry of Justice must approve the company name.
The Ministry of Justice will also provide the Emirati Investor’s name. The investor and nominee must have a valid passport or UAE ID.
The Ministry of Justice also requires that the nominee should not be a Dubai resident and that they have a valid bank account. You should submit an application for a trade license to the DCCI.
The application will be forwarded to the Ministry of Justice to determine the Emirati share of ownership. Finally, the application will be forwarded to Dubai Customs and Federal Tax Authority for verification.
Once approved, the DCCI will issue the Trade License. Dubai Customs, the Federal Tax Authority and the Ministry of Finance will receive the trade license. The trade license is valid for two years.
Renewing a Trade License
You must provide the following to get a Trade License renewed:
- Request to renew Trade License with Trade license Form 17
- Application fees (AED 2,060)
You must submit the original trade license with the renewal form.
To submit a business license application, you’ll need your trade license (if you don’t have a trade license, you must register with Dubai Customs first) In addition to the above, you may be required to provide the following:
- “Company” form (issued by the Ministry of Finance)
- “Free zone” form (issued by Dubai Customs)
- “Tax Identification Number (TIN) form (issued by the Federal Tax Authority)
You can go to any branch of the DCCI to submit the application.
Open a Bank Account
You can open a bank account at any bank in Dubai. To open an account, you will need the following documents:
- Trade license Original bank certificates
- Letter from the nominee (stating that they are the nominee)
- Letter from the investor (stating that they are the investor)
- Signed letter from the investor
- A copy of the Trade license
- A copy of the sponsor’s passport or UAE ID
- A copy of the nominee’s passport
- A copy of the sponsor’s Emirates ID
- A copy of the sponsor’s title deed
If you are opening a business account, you will also need a copy of the business license and bank statements. First, you need to get a Tax Identification Number (TIN) from the Federal Tax Authority office.
You’ll need to go to your local tax office with your trade license to get a TIN.
Once you have a TIN, you can:
- Get a bank account in your name
- Open a company bank account
- Get business cards and letterhead
- Get a Federal Tax Authority registration number
- Apply for municipal service connections
Apply for a Business Visa
If your business is based outside of Dubai, you can apply for a business visa at the Dubai Land Department. The Dubai Land Department must approve business visa applications before they are submitted to the Dubai Police.
You will need to provide the following documents when you apply for a business visa:
- Business registration certificate
- Business license
- Trade license
- Application letter
- Reservation letter (If you are not a resident of Dubai)
Once you complete these steps, you’ll have all the paperwork needed to start a business in Dubai.
Dubai Cultural Business Practices
There are some other things to consider other than paperwork, however.
You’ll need to learn about the culture and how people in the UAE do business. The country (and region) is steeped in Islamic tradition. Dressing modestly and professionally is a must. It’s also important to note the importance of in-person networking.
Dubai businesspeople want to know who they’re doing business with. Small talk and courtesy are essential skills to have. You should also print two-sided business cards, with one side in English and one in Arabic. Emails and phone calls are also discouraged, as many people view these forms of communication as impersonal. Instead, schedule a meeting a week (preferably two weeks) in advance.
When meeting your counterparts, introductions begin with a handshake. Greet the eldest member of the group you’re meeting first, as this is seen as a sign of respect in Muslim cultures. After the handshake, place your right hand on your heart as a sign of respect. For men, it’s essential to understand the cultural rules when greeting female colleagues. You should avoid initiating a handshake with a female unless they first extend their hand to you.
You should always accept at least one glass of kahwa, which is a traditional Islamic drink. As you would when shaking hands, always use your right hand to accept the drink.
The general workweek is different than in Europe and the United States. In Dubai, people typically work Sunday through Thursday. Thursday evenings and Fridays are days of prayer, so you should avoid setting up a meeting on these days.
It’s essential to keep the Holy Month of Ramadan in mind, which is a religious holiday in the UAE and the Muslim world. During Ramadan, most workdays are only two to three hours, and on Eid Al Fitr, there should be no work.
By following these general guidelines, you’ll find the transition into the Dubai business world more accessible. Respect the culture and the people, and they’ll respect you as well. You’ll find that your business life in Dubai is much more fulfilling when you embrace the culture.
Let Us Help You With Your Business Setup in Dubai
Dubai is one of the best places in the world to start your business. A vibrant economy, business-friendly policies, and one of the best quality of life ratings in the world make Dubai and the UAE a fantastic place for any type of business.
We can help you with immigration, VAT registration, banking services, compliance, health insurance, and more. Our professionals are ready to help you with your business setup in Dubai. Contact us today for more information.