You decided to start business in UAE. First of all, you should have a clear idea of how this business will be working and what is your target. Second step – to choose a legal type of your future company.
There are three main ways to start your business in the UAE. Let’s have a look at all of them:
Dubai company formation
Also known as “onshore company”, LLC or Sole Establishment
This type of companies is registered in Dubai Department of Economic Development (DED) and would fit those who are planning to do business locally. If you want to open a shop, beauty salon, building maintenance company or car rentals, DED is the place to do it.
In order to open a Mainland company, you should have either a local sponsor (UAE citizen), who will have at least 51% shares in your license and be a partner, or a local agent, who will not own shares, but will be your “gateway” to the local market. Whether you need a sponsor/partner or an agent – depends on the type of your business.
Start Dubai Business
Setup Free Zone company in UAE
There are over 20 Free Economic Zones in Dubai and neighboring Emirates. You should choose Free Zone if you are planning to export goods to other countries, or, for example do manufacturing and sell your product globally and in UAE. There are also great opportunities for professional businesses like IT consultancies or marketing consultancies. Free Zones will also suit creative and artistic freelancers – musicians, lifestyle trainers and others.
You do not need any local sponsors or partners in Free Zones. You will be 100% owner of your business. The limitations of Free Zones are the fact that you can’t officially lease office in Dubai (it has to be in the Free Zone itself), and 5% import duty if you sell goods from Free Zone to local UAE market.
Setup Free Zone Company
International Business Company
Also known as “Offshore Company”
This type of business entity would suit those who are doing business globally and want to have UAE registered company and bank account because of safety reasons, or in order to optimise taxes. You can carry out almost any activity apart from banking, finance or insurance related activities.
You won’t be able to have an office in UAE, but you will have a company registered address (address of your Agent). You also won’t be eligible for any visas.
Learn more about Offshore CompanyPros and cons of company types
In any of these cases, you will be free from taxes because UAE is a tax-free country.
All options have some advantages and disadvantages. Among disadvantages of Mainland companies – necessity to rent office (without approved office you won’t get your license) and pay local sponsor’s fees. Disadvantage of Free Zones – obligation to prove your capital at the stage of company formation (but luckily there are some exceptions). Offshores don’t give you a right to apply for residency visa.
But let us look at good things: Mainland companies are the best for operating in the local market. Free Zones are great for international trading companies or for people who don’t want to have local sponsor. Offshore companies are perfect for keeping your assets safe and international trading as well.
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