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Setting business in Dubai

Setting up a business in any country can be a daunting task as rules, regulations and requirements will most likely differ from your home country. So for all the Enterprising entrepreneurs, here all the information you need to know for a successful new business setup in Dubai.

BUSINESS SETUP IN DUBAI : MAINLAND VS. FREEZONE

Business owners have the option of setting up a business in Dubai in either the mainland or a free zone. The main difference between the two is the ownership rules. To start a business in the mainland areas of Dubai, foreign nationals needed to have a UAE national to act as sponsor, owning a 51% share of the business. This rule has since changed after the introduction of the 100% foreign ownership law in 2018. Now, foreign nationals can consider a new business setup in Dubai without having a UAE national act as a sponsor. If foreign nationals want to start a business in a free zone aka free trade zones in Dubai they will have 100% ownership of the business, however, these companies can only conduct business and trade with companies outside the UAE. To know more about free zones in Dubai, check out our feature on the difference between free zones and freehold areas in Dubai. Read More >>

STEPS TO SETTING UP A BUSINESS IN MAINLAND DUBAI

Here is a complete guide to starting a business in Dubai’s mainland areas.

BUSINESS SETUP IN DUBAI : MAINLAND VS. FREEZONE

You have the option of conducting business anywhere in the UAE

You have an unlimited number of visas available to you

You have a greater choice of commercial activities to license

WHO IS ELIGIBLE TO SET UP A BUSINESS IN DUBAI?

Foreign nationals can set up a business in mainland Dubai, however, there are restrictions.

Previously, foreign nationals could only consider a new business setup in Dubai if they have a UAE national act as sponsor. As a sponsor, the UAE national would own a 51% share in the business or be a local service agent (LSA), with the foreign national retaining 49% of the business and paying the LSA an annual stipend.

But after the introduction of the 100% foreign ownership law, foreign nationals can now consider a business setup in Dubai without a having a UAE national act as a sponsor. Read More >>
This new business setup in Dubai does exclude certain industries including:
  • Oil exploration and production
  • Investigation, security, military (including manufacturing of military weapons, explosives, dress, and equipment)
  • Banking and financing activities
  • Insurance
  • Pilgrimage and Umrah services
  • Certain recruitment activities Water and electricity provision
  • Fishing and related services
  • Post, telecommunication and other audio visual services
  • Road and air transport
  • Printing and publishing
  • Commercial agency
  • Medical retail (including pharmacies)
  • Blood banks, quarantines and venom/poison banks
Read More >>

COST OF SETTING UP BUSINESS IN DUBAI

As you can expect, setting up a business requires a significant upfront investment that will go towards office space, license fees, employee visas and so on.

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HOW TO START A BUSINESS IN DUBAI

The first thing you will need to do is, of course, decide what your business is and what type of license it needs. Currently, the DED has over 2,100 business license types available, split across tourism, industrial, commercial and professional.

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SETTING UP A BUSINESS IN A DUBAI FREEZONE

The main difference between setting up a business via the Dubai Economic Department (DED) in Dubai and in a freezone is that a freezone business allows you 100% ownership of your operation, with no need to be sponsored or partner with a UAE national. However the type of business you set up and costs will depend on the freezone you apply to, along with processes.

BENEFITS OF COMPANY SETUP IN DUBAI’S FREEZONES

  • Enjoy 100% exemptions on import and export taxes
  • Enjoy 100% repatriation of profits and capital
  • Less bureaucratic licensing procedures
Read More

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As you can expect, setting up a business requires a significant upfront investment that will go towards office space, license fees, employee visas and so on. This cost will also differ depending on the actual type of business you intend to start (commercial, industrial, service) and the type of legal formation you will be creating (establishment, company, branch).

How much capital you need for a business in Dubai also varies depending on the form of business – for example, PJSCs need AED 30M while PrJSCs need AED 5M paid in full. There is no legal requirement for minimum capital for other types of operation, but whatever this capital needs to be mentioned in the Memorandum of Association and also be an amount deemed ‘sufficient’ to meet the purpose of the business.

Need some more guidance on the costs involved in setting up a business in Dubai? Check out our Expert Advice feature where one of the industry’s leading expert discusses the cost of setting up a business in Dubai.

The first thing you will need to do is, of course, decide what your business is and what type of license it needs. Currently, the DED has over 2,100 business license types available, split across tourism, industrial, commercial and professional. Depending on the type of business you choose, you might require a different set of approvals.

The next step is to determine what type of legal entity (legal form) you intend to set up (such as LLCs, branch, SME etc). Depending on your type of business, however, the type of legal entity you set up might differ.

Once you’ve decided on the above, it’s time to decide on your trade name and to apply to register it. This can be done via a lawyer, a DED service centre, Happiness Centres and the Business in Dubai app. Keep in mind that you will need to make sure that your proposed name follows the guidelines such as being related to your license type.

Next, you will need to apply for initial approval from the DED. If you intend on setting up a company dealing with commodities, securities or legal services, you will require additional approval.
Following approval, you will need to approach an authorised entity (such as the DED or a law firm) to draft your business’ MoA, and then sign your LSA or Corporate Agent agreements. Once again, these requirements depend on the legal form of your business.

It’s now time to find an office space in Dubai as all businesses in the city require an actual physical address. In order to register for Ejari online, you will require your initial approval certificate along with your tenancy agreement and other documents. Only once you obtain this attested Ejari document, can you go ahead with obtaining your actual business trade license.

Depending on the type of business you are setting up (for example, a business type out of control of the DED) you might have to apply for additional licenses from your business type’s governing body.

Now, all you have to do is submit all your documents to the DED or Happiness Lounge and you can get to work running your very own business!

If you’re interested in setting up a business in Dubai and would like to meet some likeminded individuals, why don’t you check out some of these co-working spaces, many offering networking and angel investor events. And don’t forget to check out the latest office space prices in Dubai to start planning your new business finances!