Dubai is a business paradise. This comes at no surprise as this Emirate has an impressive infrastructure, a set of policies in favor of investors, and more. Thus, it became necessary for many foreign investors to obtain proper guidance on how to establish a business in Dubai.
In this article, we will cover important factors that you have to know for the correct setup process of a business in the UAE. Therefore, this is a practical guide to build your venture. We will cover the following points:
- Why is Dubai considered the best place to do business?
- What is the best step-by-step to establish a business in Dubai?
- How to select the best economic location in Dubai?
- Why establish a company in the Dubai Mainland?
- How and why establish a company in a Dubai Free Zone?
- Why establish an offshore company in Dubai?
- How can we help you establish a business in Dubai?
1. Why is Dubai considered the best place to do business?
Today, the UAE is investor-friendly, as unanimously says the international community. Their public policies (financial, tax, regulatory, commercial, industrial, labor, etc.), are all aligned to favor the arrival of foreign investment. Other facts reaffirm this recognition.
Firstly, Dubai practically only charges a tax, the VAT, stable at around 5%. Even the ancient paradise, Switzerland, duplicates these numbers (11, 5%) and the Netherlands reaches 50%.
Also, Dubai has facilitated its procedures to attract capital to the extreme, always in favor of investors. Currently, it is possible to register a company in Dubai in a day and without being present in the Emirates.
1.1 Initial approaches to establish your company in Dubai
Note that this process is not completely easy. Particularly, if you come from a quite different country. For that, we wanted to collaborate, starting with this guide for establishing your business, but also with comprehensive services at your disposal.
It is also not easy to set up a company in very competitive regions. Therefore, we suggest potential investors carry out an introspection exercise that allows them to assess their personal baggage:
- Strength of your business spirit
- Resources for investment
- Capacity to follow a carefully planned path
- Willingness to access the services of a company that knows the territory and has contacts in the corresponding organizations
Keep in mind that each element is self-explanatory, as well as their importance. Particularly at the beginning of this type of project in unknown terrain.
2. What is the best step-by-step to establish a business in Dubai?
Certainly, proving yourself as an investor in Dubai is not as simple as contacting a service agent, but it helps. Most people can go through a relatively quick process using a local agent (often called Public Relations Officer) that knows very well the country.
Thus, for example, a first question is to clarify what business can you do and under what territorial economic coverage. Understand what restrictions exist in the property rights and what clients are accessible, considering the legislation in your location.
The importance of this is highlighted by the situation that we describe in the next section. Ultimately, this is crystal clear evidence about the usefulness of these officers.
2.1 The importance of a PR Officer to overcome any confusion
For instance, look at these three situations. Under the current laws, we could perform our business activities in Dubai anywhere on the mainland with the correct license. But, only about half of those activities allow most foreign shareholders to run the business. Not to mention 100% of ownership.
Along with this, we have that in the free zones, as restrictions on ownership do not exist. But there is another impediment (that does not exist on the Mainland). You cannot trade within the Emirates being a free zone firm, you can only capture customers abroad.
Now, regarding offshore firms, 100% foreign ownership is allowed. But we cannot have offices in Dubai, nor do any kind of businesses with the Emiratis, only abroad. What is happening here?
It is not your fault if you are confused. In the eyes of a foreigner, there is a conflict. However, there is also moral. If you want to enter such a world, you need by our side someone who knows it very well.
2.2 A secure step-by-step method
Given the above, it is better to avoid any headaches by getting a service agent backing you on the ground. So, make the best possible use of local PR Officers. They can help with complex tasks, including this general step-by-step.
It is a gradual process to set up a business in the UAE:
- Define your principal business area
- Define the legal figure for the firm
- Decide your preferred territorial type: Mainland, free zone, offshore
- Choice your trade name, remember restrictions below
- Apply for your Trade License
- Rent an office space if necessary
- Get Initial Approval from the Department of Economic Development (DED) or the entities in charge in free zones
- Get External Approvals from other authorities, if necessary
- Send Required Documents, in particular for licenses
And here are the main documents required by the DED:
- Passports of all partners
- Initial approval from the DED
- External approval documents
- Ejari registration
- Definitive MOA
- Form of your trade license application
3. How to select the best economic location in Dubai?
You can deduct from the previous story that the decision of your company’s location is critical. Just for this reason, the structure of this guide for establishing your business is driven by it.
3.1 Types of economic locations
There are three types of economic regions in Dubai: Mainland, free zones, and offshore. Each one focused on different objectives, although converging in the progress of the Emirate.
In short, the Mainland’s businesses seek to develop the territory, especially with commercial and industrial firms. The free zones are intended to create export capacity. Furthermore, the offshore companies focus on promoting the Emirates as a financial hub.
Definitely, the decision about the locations is crucial to the firms because it will define their features. So, we will detail in the next sections the practical process to establish a business in each type of location.
4. Why establish a company in Dubai Mainland?
For the detailed general process, refer to what was developed above in the section “a secure step-by-step method”.
We noted earlier that the first policy objective of the firms on the Mainland is the development of the region. Therefore, there are all kinds of activities allowed, especially commercial and industrial ones.
On the other hand, the Mainland is also good for renting office space. Every business must book, at least, a co-working space because are obliged to have physical offices. It is a mandatory condition for getting authorization from the DED.
4.1 Some few problems in procedures in the Mainland
Some issues are out of the norm that we presented above in the general procedures. The most frequent are the following:
MOA and LSA
On the Mainland, all businesses require a Memorandum of Association (MOA). Also, a part of them needs the Local Service Agent Agreements (LSA). The latter is a situation that affects, for example, businesses owned completely by non-GCC residents.
As part of these exigencies, you have to select a physical location and deliver the rental agreement to DED.
Additional government approvals
In some cases, other government entities ask for more approvals. For example, the Ministry of Interior, for activities related to transportation, firefighters, security systems, or car rentals. And so with many other agencies.
4.2 Deliver the documents and receive your licenses
Mainland companies must send several documents. Initial approval, a copy of a lease contract, MOA and LSA, Approvals from other government entities, and service agent contract.
If you complete all, the process will be over and you will receive your license.
Remember, you must pay for your trade license within 30 days of receiving the payment voucher.
5. How and why establish a company in a Dubai Free Zone?
Previously, we mentioned that free zone firms are directed to generate export capacity. As a result, they have forbidden to sell their products to Emiratis. These firms, in the past, were binding to get an office, but now it is not a must, except for specific cases.
Because of the restrains in commerce, some ways emerged to overcome the closure of the local market. Therefore, it is accepted to agree with a national service agent who, in their own name, attends to local consumers.
Choosing a business name
Given that you should choose a business name, this must comply with some limitations. For example, it must respect public morality, follow the legal form of the company, be an unused name, be associated with the business activity, and without mentions to religion or authority.
Documents for Initial Approval
- Completed application form
- Business plan
- Copy of existing business license and certificate of registration
- Passport copies of shareholders and Director
- Model signature of shareholders and Director
- financial reports for the corporate entity
- Director Registry Identification Key Form (RIC)
- Intention letter
Documents for registration
After getting initial approval, you must pay registration and license fees. Then you should send:
- Complete registration application
- Board of Directors Agreement for appointing Director
- Memorandum and Articles of Association
- Model signature and passport of the Director
- Information on share capital
5.1 Benefits of having a business in the Free Zone
Even with the drawbacks, many benefits are present for such a firm. For example, there is a 100% tax exemption to corporate and personal incomes and for imports and exports from the free zone.
Equally, there are 100% of corporate ownership and 100% of repatriation of profits and capital. The facilities are considered as state-of-the-art and storage, import, and export means are certified as very efficient.
5.2 Problems in procedures in Free Zones
Regulations in each free zone drive companies established in their area. To obtain the necessary approvals, you must apply with the documents mentioned. The list varies depending on the type of activity, type of company, and claims from free zone authority.
6. Why establish an offshore company in Dubai?
Before, we indicated that offshore are companies focused on impulse Dubai as a world-class financial hub. Under the laws, offshore firms only need a Dubai registration. They neither have headquarters in its territory nor execute any activity with its citizens. They function as holding companies working only abroad.
6.1 Advantages
- Full guarantees for operations abroad
- 100 percent foreign ownership
- Avoidance of double taxation
- Low setup costs
- Minimal request of capital
- Back up on a stable legal
- Businesses can register from outside Dubai
- Can open multi-accounts in Dubai
However, they cannot do business activities in the UAE nor have a physical presence within the UAE.
6.2 About the procedures
We showed you the procedures to form such ventures, in the general section on step-by-step actions. But for offshore companies, these processes are even more simplified as these corporations do not intend to engage in any business inside the UAE.
There are several ways to structure an offshore company, including offshore Limited Liability Company, trust, or offshore foundation. Each corporate structure comes with its legal framework.
In simple terms, offshore companies in Dubai receive great tax benefits, high confidentiality, and minimal bureaucracy.
7. How can we help you establish a business in Dubai?
We have presented to you the best information on how to establish a business in Dubai. We hope that the methods and comments exposed will be useful to everyone interested in this matter. Also, you can ask for our guidance and the plans we offer if you contact us.
It is the moment for you to go ahead and make reality your new venture in Dubai. You can have access to our consulting service easily. We help investors who are looking to establish their companies in the UAE, providing business setup solutions while also offering office space solutions of the highest quality.
Would you like to contact us to know more about how to establish a business in Dubai? Feel free to call us at +97143316688 or write us an email at info@connectbusinesscenter.com. Do it as soon as today! We are ready to help you.
Finally, if you want access to new employment opportunities in the region, submit your CV or resume to thetalentpoint.com. Any information you send to contact@thetalentpoint.com will not be stored.
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