Company Registration in Dubai

Mainland, Free Zone, or Offshore

One of the first things to decide on prior to registering a company in Dubai is the jurisdiction, as it will significantly affect your further options and steps. The Emirate provides three main types of licenses: Mainland, Free Zone, and Offshore. Each of these licenses comes with a set of distinct advantages and limitations. Here are the main features of each license type.

1. Mainland

In simple terms, a UAE-mainland company in the Emirates is simply a local business. This type of company is suitable for those who intend to operate directly in the Emirates and are planning to open, for example, service and retail businesses such as restaurants, shops, beauty salons, etc.

Location. Registering a business in the Dubai mainland allows for a wide spectrum of location options, which allows company owners to choose the most suitable location in terms of proximity to the target audience, suppliers, logistic routes, etc.

Ownership. As a rule, mainland-based companies in Dubai allow for full foreign ownership. However, in certain cases, opening a business on the mainland requires a local partner or sponsor with partial ownership of the business. This includes non-LLC companies engaged in such business activities as banking, currency exchange, and manpower supply.

Business flexibility. Mainland companies have the ability to operate throughout the Emirate’s mainland without limitations.

Regulation. Businesses registered in the Dubai mainland are subject to the laws and regulations of the UAE and the Emirate.

Trade across the UAE. Mainland-based businesses in Dubai require no third-party intermediaries to trade with other mainland companies.

Customs duties. Mainland companies may be subject to customs duties on goods imported and exported within the UAE.

3. Offshore

Establishing an offshore company is recommended for those who do not intend to conduct business in the UAE and wish to work exclusively with other countries. It should be noted that creating such companies requires significant investments, and opening a bank account is the most arduous and lengthy process as compared to other jurisdiction options. This is why this sort of setup is advised only for seasoned entrepreneurs.

Location. Offshore registration of a company means that it is not physically located in Dubai but is instead registered in Dubai's offshore jurisdictions -  Jebel Ali Offshore (JAFZA) and Ras Al Khaimah (RAK ICC).

Ownership. Offshore companies usually allow for full foreign ownership, and since they are restricted from operating within the UAE, there is no need for a local sponsor or partner.

Business flexibility. Instead of local business operations, the activities of an offshore company mainly revolve around investments, international trade, and holding assets.

Regulation. Offshore-registered businesses have to comply with the offshore companies regulations of Jebel Ali Free Zone Authority and Ras Al Khaimah.

Trade across the UAE. Offshore companies are prohibited from conducting business in the UAE market, which means that they aren’t allowed to trade directly with UAE’s free zone or mainland companies.

Choosing one of these jurisdictions and the corresponding license types requires thorough consideration with regard to the needs of your future company. Factors such as the planned business activities, the preferred company’s legal structure, logistics, and costs are key to making this decision. If you are undecided or need more information to make the right choice, consider consulting with local legal and business advisors.

Company Registration Costs in Dubai

The cost of registering a business in Dubai heavily varies depending on a number of aspects of the said business. Among them are license costs, registration fees, office rent, and others. It should be noted that these aspects and the associated costs depend primarily on the number of employees you intend to have. Bigger staff requires more visas, a bigger office, more additional fees, etc.

Free zones typically offer company formation packages, in which all or most related expenses are specified and included. If you choose the mainland jurisdiction, you will need to manage all the expenses either by yourself or by hiring someone to do it for you. However, in this case, you will have a broader spectrum of options at your disposal in each aspect of the business.

In general, the minimal cost of company registration in Dubai is approximately AED 6,000, while the average sum ranges between AED 17,000 and AED 25,000. This typically includes an office space or a virtual desk, a trade license valid for one year, and other cost components such as registration fees, work permits, visas, etc. The bigger the company, the higher the costs and the larger the number of components. Here is the list of the typical fees and expenses associated with registering a business in Dubai.

License costs:

Depending on your company’s business activities, you will need a certain license type to legally operate in Dubai. A trade-related business requires a trade license, a service-related one calls for a professional license, while fields such as construction or manufacturing require an industrial license. Otherwise, the most common other options include freelancing and e-commerce, each of which requires a special permit.

The cost of the license is mostly based on the company’s business activities and the number of them, as well as the chosen jurisdiction. Mainland and free zone licenses have different fee structures.

Office space:

Registering a company requires a lease agreement, which is why you will need to either have a virtual desk or rent a physical office space. Depending on the office size and location required by your business, the rent costs may vary massively, but you can always find an option most suited to your needs.

Registration fees:

Depending on your company’s chosen legal structure (sole proprietorship, FZE, LLC, etc.), you will have to pay registration fees such as the initial approval.

Sponsorship fees:

If your company is mainland-based, in certain cases you may fall under the requirement of having a local partner or sponsor (a UAE national or a company) in order to launch your operation, which will require paying an annual sponsorship fee.

Visa and immigration costs:

You and your employees (if any) will need residency visas and work permits that require additional fees, such as Emirates ID and medical checkups, on top of their own costs.

Legal and documentation fees:

Depending on your setup and business type, you may need to account for expenses related to legal advice, translation, document notarization, or other legal requirements.

Initial capital:

In certain cases, registering a business with the Dubai Economic Department (for mainland companies) or free zone authorities requires a minimum share capital.

Certification and inspection costs:

Certain business activities may require inspections, certifications, and permits from government authorities. These may come with associated fees.

IP and trademark registration costs:

If you need to register a trademark or a brand name, it will require additional costs.

Registering a Company in Dubai: Steps & Requirements

Here is an overview of the key steps and requirements for registering a company in Dubai.

1. Choose a business activity: Determine the business venture you intend to pursue in Dubai. Carefully analyze the feasibility of your chosen business activity regarding the potential competition and market demand.
2. Select a legal structure: Determine the appropriate company formation type for your business, including a sole trader, partnership, limited liability company (LLC), free zone company (FZC or FZE), or foreign branch. Each legal entity carries specific benefits and obligations.
3. Choose a company name: Select a range of distinctive and fitting trade names for your enterprise, as having just one may lead to it coinciding with an already present company. Ensure that they align with the naming guidelines laid out by the Department of Economic Development (DED) and will be endorsed.
4. Secure the necessary licenses and permits: Depending on the nature of your chosen business, it may be required to obtain specific licenses and permits from the relevant Dubai authorities. These may include a freelance permit, a trade license, a general trading license, an e-commerce license, etc.
5. Choose a suitable location: Discover optimal business premises in Dubai. With a range of options including commercial space, offices, virtual workspaces, or warehouses, you can find the perfect business space in Dubai to suit your business needs.  Numerous free zones provide diverse packages with a choice of premises suitable for specific enterprise types and operations.
6. Register your company: Carry out company registration with the corresponding authorities - for example, with the DED in case of a mainland-based company or with the relevant free zone authority.  Submit all the necessary documents and pay the required fees to get registered.
7. Secure visas and work permits: Obtaining visas and work permits is a necessary step if you intend to recruit staff.  Depending on the nationality and skills of the employee, as well as the company’s jurisdiction, the specific requirements may vary. However, the most commonly required documents include health insurance, Emirates ID, and medical examination papers.
8. Establish a corporate bank account: Once you've registered your company, it's important to proceed with opening a corporate bank account in Dubai. In order to do so, you will be required to provide an array of documents, including your business license, identification documents, and MOA. Make sure to have the documents in order and have the proper field expertise to prove your company’s feasibility. It is highly advisable to prepare for this step beforehand, as the account opening procedure takes around 2 months.
9. Ensure compliance with tax regulations: Ensure that you and your company meet the required tax obligations by familiarizing yourself with Dubai's tax regulations. The relevant terms and conditions may differ depending on the type of business and the chosen jurisdiction (mainland, free zone, or offshore). Be aware of the 9% corporate introduced by the UAE authorities for particular business types with effect from June 1, 2023.

Summary

Proper registration of your company will ensure its full compliance with the UAE regulations and allow you to avoid potential troubles with the authorities, saving you from unnecessary expenses in the future. Carefully examine all the related information, gather all the required documents, and follow the necessary steps for successful company registration. In addition, stay informed about any additional requirements and changes in the regulation in order to meet the compliance standards.

It's crucial to work with local experts or business consultants who are familiar with the specific rules and regulations in Dubai, as they can guide you through the process and help ensure that you comply with all legal requirements. Our Emirabiz specialists know all the nuances of company registration in Dubai and the UAE and will provide you with all the information and assistance you may need with regard to your particular business case.