How to start a Business in Dubai

It is no secret in the business community that Dubai has been highly ranked among the most attractive spots for starting a company for quite some time now, and for good reasons. From convenient logistics, a strong economy, and favorable government policies for businesses and entrepreneurs to massive opportunities for brand recognition, networking, cultural exchange, and high-quality lifestyle, the city offers all of it and beyond. Whatever company type you intend to run and whichever activity you plan to focus on, Dubai has them covered. If you want your business to flourish, your investments to pay off at great ROI rates, and your brand to be globally recognized, look no further.

As complex and tricky as the undertaking of setting up a business in Dubai may seem from the get-go, it can be broken down into a list of simple and feasible steps. Of course, there will be a variety of different details and considerations to take into account, but the overall business setup scenario and the essential prerequisites for it do not vary as much as one would think. To get you going, we have compiled a general start-up guide that will aid you in preparing for the steps you’ll need to take on this journey and a list of reasons for you to do it.

Why Choose Dubai?

The UAE and Dubai in particular are extremely business and investor friendly. Dubai is globally known as one the world’s leading business and economic hubs, home to thousands of international companies and an immense workforce, a substantial part of which consists of foreigners and expats. The UAE Government has implemented a number of policies that support foreign businesses and facilitate the process of starting and running a company in the country. It has a great number of economic free zones with a wide range of setup packages on offer to suit the needs of every conceivable business type. In addition, the abovementioned governmental policies allow for a number of benefits you and your company will be eligible for, including:

• Blooming economy: The UAE’s economy has been on the rise for several decades, offering incredible opportunities for life and business. Among the Arab states, it is second only to Saudi Arabia, and its location is very beneficial in terms of logistics.
• Tax benefits: Apart from the 5% VAT, the UAE tax policy provides 0% personal and corporate incomes tax. Most of the free zones also boast 100% repatriation of capital and profits, as well as 100% import and export tax exemption.
• Activity scope: You can choose any industry sector and specific activity to engage in. Many UAE free zones offer unique advantages for particular business types and industries, and Dubai is famous for its networking capabilities.
• Life quality: Dubai is not only a major economic but also a cultural hub. Its diverse multinational population provides countless opportunities for cultural exchange and life experiences in combination with massive residential development and all possible quality-of-life amenities.
• Business support: Each emirate has its own particular business support policies in place, but the common theme is the utmost facilitation of the process of setting up a business, which often takes just a single day. The advantages include digital paperwork, startup accelerators, visa eligibility, various setup types, and many others.

Preliminary Preparations for Business Setup: Tips & Recommendations

Naturally, the easiest way to avoid most of the potential complications related to company formation is to have a business plan prepared in advance. This is why we would advise taking your time to research the information available online regarding your future endeavor. There are plenty of information sources for you to look into, from official websites of UAE and Dubai government agencies and free zones to business consulting firms and social media. Here is what we would recommend:

• When it comes to official websites of free zones and authorities, pay close attention to the laws, rules, and regulations relevant to opening a business in the UAE and Dubai in particular.
• It is vital to consider your financial capabilities and the corresponding options with regard to your future business setup, location, and other factors. Study the latest online data on taxes, license costs, office rent, and additional fees you will face.
• We highly recommend you to try networking with other entrepreneurs to figure out the not-so-obvious potential bottlenecks and ways to overcome them. Many people have gone through the same process and might be willing to share their experiences, both positive and negative.

In short, gather as much information as you can, especially from reliable government sources. All the collected data will come in handy once you dive into the process of opening your company, and the time you spend on preparations will prove very worthwhile in the long run.

Opening a Business in Dubai: Company Formation Process & Requirements

Here is the list of pivotal steps for you to follow and information to consider in order to successfully start a business in Dubai.

1. Choose a business activity: Determine the type of business activity you want to pursue in Dubai. Research the market demand, competition, and feasibility of your particular business activity with regard to the potential location and business setup.

2. Choose a legal structure: Decide on the fitting company formation type for your business – for example, a sole proprietorship, partnership, limited liability company (LLC), a free zone company (FZC or FZE), or a branch of a foreign company. Each legal structure comes with its own requisite conditions and advantages.

3. Choose a company name: Pick a set of unique and appropriate trade names for your business, as having just one may result in it matching an already existing company. Make sure that they go along with the naming directives established by the Department of Economic Development (DED) and will be approved.

4. Obtain the appropriate licenses and permits: Depending on your chosen business activity, you will need to obtain specific licenses and permits from the respective Dubai authorities. This could include a freelance permit, a professional license, a commercial license, an industrial license, or a general trading license.

5. Choose a location: Find a suitable business location in Dubai. There is a wide range of available options, including a commercial space, an office, a virtual desk, or a warehouse, depending on the needs of your business setup. Many free zones offer different packages that include both premises and licenses suitable for particular company types and activities.

6. Register your business: Register your business with the relevant authorities, such as the DED for mainland businesses or the respective freezone authority for freezone companies. Provide all the proper papers and pay the mandatory registration fees.

7. Obtain visas and work permits: If you plan to hire employees, you will need to apply for their visas and work permits. The specific requirements may differ depending on the employee's nationality and skill level, as well as the particular emirate or freezone, but the most common are Emirates ID, medical checkup papers, and health insurance.

8. Open a corporate bank account: Once your business is registered, open a corporate bank account in Dubai. Provide the required papers, such as your trade license, MOA, and identification documents.

9. Comply with tax obligations: Familiarize yourself with the tax regulations in Dubai and ensure that you and your company meet the required tax obligations. It is important to know that the process and relevant conditions may vary based on the business type and the location (mainland or freezone) you pick. For example, on June 1, 2023, the UAE introduced a corporate tax of 9% for certain company types and entrepreneurs.

On June 1, 2023, the UAE introduced a corporate tax of 9%. Starting from this date, all UAE companies are required to register with the Federal Tax Service (FTA) and file annual returns on the FTA portal, whether they fall under this tax or not.

WHO MUST PAY CORPORATE TAX:

- Mainland companies doing business in the UAE with profits exceeding AED 375,000

- Companies registered in free zones but operating in the UAE mainland with a profit exceeding AED 375,000

- Freelancers operating in the UAE mainland with a profit exceeding AED 375,000

Do's and Don'ts of Business Etiquette in Dubai

Dubai is a multicultural city with a diverse population. It is important to be aware of the local customs and traditions when doing business in the emirate.

Do:

• Dress smartly and modestly.
• Be polite and respectful.
• Make small talk before getting down to business.
• Be punctual for meetings.
• Network in person.
• Be patient and flexible.
• Use your right hand during a handshake.
• Bring a gift for your host, such as dates or a box of chocolates.

Don't:

• Boast your achievements.
• Expect meetings and negotiations to go as planned.
• Complain about the heat.
• Make eye contact with women who are not your relatives.
• Discuss religion or politics in business settings.
• Be rude or disrespectful to local people.

By following these do's and don'ts, you can manifest your respect for the local culture and your serious intentions to do business in Dubai. Explore the city and learn about the local traditions – this way you will avoid making any faux pas and make a good impression on your business associates.

Summary

Overall, the key recommendation is to take your time in preparation for each step of the setup process instead of rushing to get to business right away. Every bit of information you gather may prove rewarding, and every minute you spend doing it may be essential to your success.

In order to ensure a smooth and successful establishment of your business, we advise seeking professional guidance from business consultants specializing in business formation and follow-up in Dubai. Our specialists are ready to provide you with all the necessary information and aid to effectively navigate you through this process.

FAQ

• Is Dubai a good place to start a business?

  Yes. Dubai offers numerous advantages for entrepreneurs in terms of both opening and running a business, including convenient logistics, favorable government policies, tax exemptions, and brand recognition opportunities.

• How much does it cost to set up a business in the UAE?

  The minimal company formation cost amounts to $1,500, excluding visas. You can also choose a freelance setup with the corresponding permit. If you’re planning to start a larger company, you will need to consider other costs such as visas and work permits for your staff.

• Is it easy to start a business in the UAE?

  Yes. A company can be set up within a few days, and you can even do it online outside the UAE. It may require preliminary preparation, but the setup process itself is not that complex if you follow the necessary steps. The country provides a number of tools to help you out, such as digital paperwork and a vast array of freezones with ready-made company setup packages to choose from.

• Can a foreigner start a business in the UAE?

  Absolutely. Foreigners are more than welcome in the UAE, as the country has a multi-national population and a number of implemented policies beneficial for foreign actors, from 100% repatriation of capital and profits to visa eligibility for business owners and employees. There are plenty of setup options available in freezones and the UAE mainland, and our team will gladly help you find the one most suited to your needs.