It’s no secret that Dubai provides numerous perks to business owners, the most notable of which being 0% income tax. If you are curious about how to start a business in Dubai, Madmun Consultancy uses a time-tested process to get your idea to market as quickly as possible. And we’ve created this as an ultimate guide to help you in getting started.
Everything you need to know about starting a business in Dubai
The process of launching a business in Dubai is pretty simple. However, there are some precautions to take as it can be elaborate and time-consuming, with numerous processes and concerns to look out for.
Whether you decide to register your business by yourself or engage business setup companies like Madmun Consultancy along the way, ensure you get sound guidance on the implications of your decisions. We’ve helped hundreds of entrepreneurs across Dubai and the United Arab Emirates (UAE) launch their business, obtain trade licenses and took care of everything else in between. So we’ve created this as an ultimate guide to help you in getting started.
Why open a business in Dubai?
In 2022, about 20,000 new businesses started in Dubai alone. Unsurprisingly, many of these were registered by international entrepreneurs, which is an indication that Dubai and the UAE have extremely inviting and supportive business environments. Foreign nationals also account for approximately 80% to 90% of the UAE workforce.
There are numerous compelling reasons why thousands of entrepreneurs from over the world migrate to the UAE and Dubai to launch their businesses. The primary benefits are:
- Emirates is the second largest economy in the Arab world. With a GDP of approximately AED 692 billion, it trails only Saudi Arabia. It’s as diverse as it is large. You can start a business in a variety of fields, including healthcare, hospitality, technology, and trade.
- The UAE ranked 23rd in the Best Countries Index, thereby promisingÂ
- The UAE proudly boasts a 0% tax on both personal and business income. The only significant tax to be aware of in the Emirates is VAT, which was implemented in January 2018 is set at a flat 5%.
- The Emirates is home to numerous startup incubators and funding initiatives aimed at accelerating business growth.
The future of business in Dubai seems quite promising. And if this makes you wonder how to establish a business in Dubai, you’re not alone. The good news is that following the processes outlined in this tutorial will make setting up a company in Dubai much easier.
How to Start a Business in Dubai: The Company Formation Process
1. Select an industry
The UAE has a diverse industry base and numerous prospects for innovation, and deciding the nature of your business comes first.
Many places in Dubai and the UAE only allow certain types of business activity. Be careful not to launch a business in Dubai only to discover that you can’t function in your desired location!
For example, certain free zone sites cater to specific activities or businesses, such as media, finance, or technology. Let us have a peek at Dubai Internet City. As the name implies, it is a free zone for technology enterprises or businesses that conduct tech-related activities. Dubai Internet City is home to world-renowned tech giants such as Google, Dell, Oracle, Canon, Cisco, IBM, Schlumberger, HP, Deloitte, and Lenovo. Another example is the Dubai International Financial Centre (DIFC), where major global financial institutions such as Credit Suisse AG, Goldman Sachs International, and Morgan Stanley have operations.
However, over time, a number of sector-specific free zones have begun to accept general economic activities in addition to those for which they were originally established.
Aside from restrictions, there are additional reasons why you would wish to establish your firm near other businesses in your industry. Consider transportation options. If your company relies substantially on imports and exports, you should explore one of the free zones located near an airport or port.
The UAE has a diverse range of thriving business sectors. In 2022 and beyond, the commitment to diversification beyond the oil economy means that new firms that contribute to this vision will be seen positively.
2. Select a business location
After deciding on an industry, your next major option is whether to launch on the mainland or in a free zone. If you choose to set up in a free zone, you will benefit from the following:
- 100% firm ownership
- Complete repatriation of capital and profits
- There are no monetary limitations
- 100% exemption from import and export taxes, and
- 0% corporate and personal taxes.
However, if you want to trade directly with the UAE’s local market, you must cooperate with a mainland company that will demand a fee.
If you opt to establish your business on the mainland, you will be able to trade directly with both local and worldwide markets. However, unless your business activity comes under professional services, you must collaborate with a local partner who will own 51% of your company’s shares.
Madmun Consultancy provides mainland enterprises with a Local Corporate Nominee Shareholder who serves as their local partner. This way, international business owners can maintain complete operational and financial control over their mainland company.
3. Choose your company’s name
The UAE has some rigorous naming conventions, so double-check that any company name you choose is legally permissible.
Any names that contain derogatory language are prohibited, as are company names that relate to Allah, Him, or any other religious, sectarian, or political entity, such as the FBI or the Mafia. If you decide to name your company after someone, that person must be a partner or owner, and their complete name must be used – no initials or abbreviations.
4. Documentation for incorporation
At this point, you will be required to complete an application for your chosen company name and activity, which must be submitted to the proper government authorities along with copies of shareholder passports. Some free zones will require additional documentation, such as a business plan or a Non-Objection Certificate (NOC), which is a letter from your present sponsor indicating that you are permitted to start another business in the UAE.
Mainland corporations will have to meet certain capital requirements, which must be indicated in their Memorandum of Association.
To register your company activity and trade name, contact the Department of Economic Development in your chosen emirate and submit the necessary papers. The UAE government website, under Information and Services, has connections to the respective offices.
After your application has been processed, you will receive your company license.
Navigating the paperwork at this stage is perhaps the most difficult challenge you will face. While it may take weeks or months to fully grasp and complete this part of the process, Madmun Consultancy can save you time and extra cost. We strongly recommend that everyone who is reluctant to repetitive, long paperwork with many fine details use our services. The money and time saved during this phase alone more than compensates for itself.
5. Apply for a license
After your application has been approved, the government will issue you a company license. Regardless of the setup site, you’ll normally only need a few common documents: a completed application form, copies of shareholder passports, and so forth. Some free zones may ask you to submit a business plan.
6. Open a bank account
You will need a bank account to begin trading in the UAE. So, once your paperwork has been returned, you will have all of the necessary documentation to open your corporate bank account. The UAE is home to various banks, both domestic and international.
How to Open a UAE Business Bank Account
It usually takes between two and four weeks to open a bank account in the UAE. The bank will want to know the following:
- Your primary clients and suppliers
- Your main business areas
- Your anticipated volume of money.
- Total deposits
They may also have a few more requirements based on your needs and responses.
7. Apply for a visa
Applying for a visa is the final stage in starting a business in Dubai. In addition to filing for your own visa, several free zones allow you to apply for employees and dependents. The actual number you can send is determined by the free zone you choose to set up in.
If you want to get visas for a spouse, child, maid, or driver, you should seek expert counsel to ensure that, first and foremost, it is possible to do so in your selected free zone, and second, that you and anyone you want to sponsor for a visa meet all of the entrance requirements.
Assuming that everything checks out, the process consists of four stages:
- Entry Permit
- Status adjustment
- Medical Fitness Test
- Emirates ID registration and visa stamping
A mainland corporation can apply for an unlimited number of visas, however free zone companies are subject to certain restrictions that differ per free zone.
That is it! With these eight stages accomplished, you’ll be ready to launch your business in Dubai!
Let’s do business!
Once you’ve completed these procedures, you are all set to start trading in Dubai and the United Arab Emirates (UAE). Setting up a business in the UAE is fairly simple compared to other areas of the world, with the country ranking 16th in the current World Bank Ease of Doing Business rankings.
Dubai’s thriving business scene, aided by government incentives and the ease with which new businesses may be established, makes it an intriguing challenge for the business-minded dreamer. Dubai has its inconsistencies and relatively new social paradigms, yet the country’s hospitality and forward-thinking policies reward those who are ambitious.
Regardless of where you are in your company formation journey, keeping these principles in mind can help make the transfer easier. But you can write us on [email protected] or +971567684862 to seek professional counsel throughout the process.
