Company Setup in Dubai: 11 Things You Should Know

Company Setup in Dubai: 11 Things You Should Know

Author

Ambia Hoque

Date

810,316 new businesses were launched in the U.K. in 2021. That’s a lot of business competition. But when you start a business in your home country, you aren’t just competing against other businesses. You also have taxation, ownership, and regulations to worry about. For that reason, more and more people are choosing to start their businesses in Dubai, where regulations and taxes can be looser than in many business owners’ home countries. Company setup in Dubai can be quick, easy, and less expensive than setting up a business anywhere else.

Keep reading to find out everything you need to know about setting up a company in Dubai before you get started.

Why Setup a Business in Dubai?

Many people choose to set up business in Dubai because of the free zones. Many Dubai entrepreneurs are enticed by the lack of corporation tax and personal tax in Dubai’s free zones.

You’ll also get 100% company ownership, resettlement of capital and profits, and import and export tax exemption. All this with no currency restrictions! All of these freedoms make it possible to save money while doing a company set up in Dubai. It also ensures that you can run your business the way that you want to.

Dubai is also a fascinating multi-cultural environment to work in. Many people choose to start a business in Dubai and then move their families there to participate in the amazing culture that Dubai has to offer. This highly cosmopolitan area has something to offer for everyone, and you’ll quickly feel at home.

Things to Know

While the promise of the free zones in Dubai is exciting for many entrepreneurs, if you want your business to succeed, you have to follow the protocols and know the culture. Here are some of the major things worth knowing before you start Dubai businesses.

1. Mainland, Free Zone, and Offshore Jurisdictions

The first thing you need to know when you set up a business in Dubai is the differences between the jurisdictions in Dubai. Each comes with different taxation rules, business requirements, and ownership status. Trying to start a company in the wrong jurisdiction, following the wrong rules, would end in disaster.

Make sure that you research the differences in laws and taxation in the Mainland, Free Zones, and Offshore jurisdictions, and then choose the one that will most benefit the culture of your company.

If you choose to start your business in a free zone, keep in mind that your business transactions will be geographically limited. There are tradeoffs for each jurisdiction.

2. Choosing the Right Business Structure

You’ll have to choose from a few business structures in Dubai. You can choose from a Limited Liability Company (also known as an LLC), sole proprietorship, joint venture, or a few other structures.

The most popular and famous choice for Dubai startups is the LLC, particularly an LLC in a free zone. An LLC in a free zone is the least taxed option. Plus, the tax structure is very simple, so it makes starting a business easy.

3. You May Need a Local Partner

In a mainland jurisdiction, you are required to have a local business partner. As an LLC in a free zone, you don’t need one, but having one isn’t always a bad idea. And certain business ventures may require one anyway.

With a local partner, you will still have 49% ownership of the company. While that may not be as enticing as the 100% ownership available with an LLC, it isn’t all bad news.

Keep in mind that you’re starting a business in an unfamiliar country with some unfamiliar regulations and traditions. A seasoned Dubai local business partner may not be a bad idea in the beginning anyway.

4. You Need Visas For All Involved

You’re going to need to get a lot of visas to start your business in Dubai. You’ll need a visa for you, your family, and any employees who aren’t from Dubai.

Nearly every kind of business is eligible to apply for a visa to work in Dubai, but you should still check the requirements and eligibility in the UAE anyway.

Luckily, the process for applying for and receiving a visa to work in Dubai is very simple and clear! Dubai actively wants entrepreneurs to start their businesses there, so they make the process easy and rewarding. When a country like UAE actively wants new businesses from foreign countries to start in their cities, they do the extra work to make it happen seamlessly.

5. Get All the Documents in Order

While the process for getting registrations and visas to start a business in Dubai is simplified and reasonable, it’s still important to get all your documents in order ahead of time. You don’t want anything to slow down the process or make you look unprofessional.

You can consult an advisor before you actually apply to make sure that everything is in order. It’s better to have a personal advisor notice the missing pieces than a government official – even if it slows down your process of application a little bit.

6. Consult an Advisor About Free Zones

Assuming that you want to build a business in Dubai for those enticing free zones, you’ll want to talk to an advisor about them too.

Have someone on the ground in Dubai (or take the trip yourself) to look for office spaces and preconditions that are correct for your business’s work and are within your startup’s budget.

It’s also worth noting that the free zone rules and regulations are frequently changing and can even depend on the location. An advisor can ensure that you’re up to date on the regulations for the free zone where you are most interested in doing business.

As these regulations change, keep your options open. Have your eye on a few free zones so that you can take the best opportunity that comes to you instead of zeroing in on one and having to start over if regulations negatively change.

7. Know the Requirements for a Local Bank Account

You’ll need a local Dubai bank account in order to run a Dubai business. Before you confirm and open a bank account in the UAE, make sure that you know all the minimum requirements and charges. Shop around a bit before you settle on a bank account.

You should take flexibility, convenience, and freedom into account when you choose your UAE bank account, but also consider the price. Part of the reason that people choose to start businesses in the UAE is to save money. Don’t let an extreme bank cost ruin that goal.

You can consult either with a financial advisor who specializes in Dubai to help choose a bank or talk to other successful Dubai businesses and see which banks they recommend.

8. Choose the Right Business Category

When you start a business in Dubai, you’ll need to choose a business license category. Once you choose your business category, you can only offer the services and functions in that category of business. So choose wisely!

Make sure that the category aligns with your planned business model. The Department of Economic Development has over two thousand categories to choose from. If you choose the wrong business category, you may find that your business has some unfair restrictions that prevent it from running at its full potential.

9. Business Activity Approval

While Dubai is a very modern and diverse city, it still adheres to certain traditions particular to the Arab culture. Every business has to be respectful and cognizant of those traditions. Some business categories come with restrictions because of those traditions.

Certain businesses are not allowed to function in Dubai at all, and others have heavy restrictions on them. For the business types with restrictions, they don’t necessarily mean that it won’t be worth setting up business in Dubai, but you do need to be aware of them.

The Department of Economic Development is responsible for permitting and regulating all business ventures in Dubai. If you are working within the city, your business plan must be approved by them. However, this does not apply if you are functioning in a free zone or offshore.

10. You Can’t Always Hire Your Own Employees

Before receiving approval from the city, your company needs to name a manager. However, even with a manager, you may not always be allowed to do your own hiring process.

In this case, you’ll need to engage contractors to do the hiring of Dubai locals for you. Honestly, it’s not such a bad thing. It can be hard to find the best employees in Dubai if you haven’t had a foot in the door for a while. A contractor can help you get started with the right employees.

11. The Cultural Differences

As with any new country you’ve never been to before, there are cultural differences in Dubai that you should be aware of.

First of all, many people wear traditional Arab garb. While this is not at all a requirement, you should definitely choose to dress modestly in Dubai. Not only is it a sign of respect, but in some places, it is illegal to dress in a revealing manner. You may also find that the traditional fabrics are much more suited for the heat of the area.

Public displays of affection are heavily frowned upon in Dubai. Basically, modesty is always king when travelling in Dubai. Avoid kissing, hugging, and even holding hands in public especially if you aren’t married.

Alcohol is illegal in many parts of the UAE. While it isn’t strictly outlawed in Dubai, you certainly won’t find it in the grocery store. There are also restrictions on how much you can have on your person.

How Long Does It Take to Set Up A Dubai Business?

It actually doesn’t take very long at all to be approved to start a business in Dubai! To receive your approvals for a free zone business, you can expect to hear an answer within three to five business days. For a mainland business, you can expect to be approved within ten days after receiving the trade license.

UAE residency and visas take about two weeks to obtain.

What Is the Cost of Company Setup in Dubai?

The cost of setting up a Dubai company obviously differs from field to field and from individual company to individual company.

You should set a budget before you begin any other step of the process of acquiring a business in Dubai. Some things that you should take into consideration while setting your initial budget are company type, number of shareholders, office requirements, business license type, and number of business activities. All of these will help clarify what your initial budget should be.

Of course, in many ways, starting a business in a free zone of Dubai will be less expensive than business ventures in the U.S. or U.K. As your business grows, you can adjust your budget to reflect the realities that you discover about your business.

As always, it’s never a bad idea to consult with an expert on Dubai business to make sure that your budget realistically reflects your business goals.

Bring Your Business to Dubai

With all kinds of freedoms, full ownership, and fewer taxes, there’s no reason to not do a company set up in Dubai. Not only will you love the amazing company benefits of working and building your company in Dubai, but you’re sure to fall in love with the culture too. It’s an incredible place full of financial opportunities.

Are you ready to start your free zone business? Contact us today for a consultation and to get started!

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