Comprehensive Guide to Setting Up Your Business in Dubai

This article was updated on June 13th, 2023

This article has been researched and written by Carolyn Cairns and the team at Creation Business Consultants and has not used AI in generating this article.

Top tips and considerations to help you create a new business or expand your operations in the UAE.

Running a business the right way sounds extremely satisfying. Throw in a downturn in the economy, living, and working in sunnier climates with lower Value Added Tax (VAT) rates. The experts at Creation Business Consultants have put together this comprehensive guide to provide the best tips to successfully establish or expand your business in Dubai.

BENEFITS OF SETTING UP A DUBAI COMPANY

There are many benefits to setting up a new business. The benefits of entrepreneurship in Dubai include:

• 100% control of your UAE company.
• 100% repatriation of capital and profits.
• 9% corporate tax (depending on the jurisdiction).
• No personal income taxes.
• Ability to open a UAE corporate bank account.
• Eligibility to apply for a UAE residency visa.
• Access to a wider market to make your business an international success story.

CONSIDERATIONS BEFORE STARTING YOUR DUBAI COMPANY

First things first: Before you decide to quit your day job and to follow your entrepreneurial dreams, there are a few things to consider for starting a company in Dubai.

BUSINESS IDEA

Every good business venture requires some degree of research. Before you jump into your plans, be sure to check to see if someone is already doing the proposed business. Be sure to find out who your competition is. Identify if there is an opportunity in the market, and whether or not you can find a unique niche or a better approach to solving a problem.

CREATE A THOROUGH BUSINESS PLAN

Once you have researched your idea and the state of the market, it’s essential you create a sound business plan. A business plan can help guide you in the right direction. Not to mention a sound business plan will be required by the licensing authorities and banks.

PLAN YOUR BUDGET

Starting a business in Dubai can be expensive, therefore, it’s important to have a set budget for the company incorporation and licensing, employment, marketing, advertising, and miscellaneous fees. While there will always be costs, planning for known costs will allow you to set aside a slush fund for the unexpected.

CHOOSE THE RIGHT COMPANY STRUCTURE

There are many variables involved when deciding on the right company structure for your Dubai company. Foreign entities wanting to perform a business in the UAE can establish a permanent presence by seeking the help of a registered corporate service provider.

A foreign entity may be licensed by:

• Incorporating a Limited Liability Company (LLC).
• Establishing a branch or representative office.
• Forming a free zone company.

CONSIDER YOUR BUSINESS ACTIVITY

Certain industries and business areas may require you to trade within a particular free zone. For example, the Dubai International Financial Centre (DIFC) is predominantly used for business activities related to financial services.

UNDERSTAND YOUR VISA REQUIREMENTS

When starting your business, you must consider the present and the future growth. Business owners are often confused with the visa entitlement and their availability. As a shareholder, you may be eligible for an investor visa. A General Manager of a new company often requires a UAE residency visa as part of the post company setup process.

OFFICE SPACE REQUIREMENTS

In order to complete a company set-up in Dubai, a business address needs to be attached to the trade license. Even if you do not require office space, your business must fulfil this company setup requirement.

A Dubai onshore license will require a lease agreement to have a certified Ejari attached. In general, most free zones provide flexi desks, smart desks, shared offices, permanent smart offices, and warehouses etc.

TIME FRAME

The amount of time it will take you to set up or expand your operations to Dubai will vary based on the following factors:

• Type of license
• If there are any external government approvals
• Number of shareholders 
• Free zone or mainland company
  • Free zone: There are over 55 free zones in the UAE. Each free zone has its own rules and regulations. Average timeframe for a North Emirates free zone company set-up is 3 working days, while Dubai free zones and Abu Dhabi free zones company set-up ranges from 2-5 weeks.
  • Mainland: The timeframe for setting up all UAE mainland companies varies from 1 day to 3 weeks and some activities may require approvals from government departments and authorities.

FREQUENTLY ASKED QUESTIONS ABOUT STARTING A DUBAI BUSINESS

• IS THE COMPANY OWNER OR SHAREHOLDER REQUIRED TO BE IN DUBAI FOR THE COMPANY SET-UP AND LICENSE PROCESSING?

The answer to this question depends on where the new company will be incorporated. Most free zone companies can be set up remotely by the shareholder(s) signing the required free zone authorisation forms. However, Dubai mainland companies require shareholder(s) to sign the company Memorandum of Association. However, with a bespoke Power of Attorney this can authorise a person to act on your behalf to complete the company set-up from start to finish saving you the time and expense of travelling to the UAE.

• WHAT DOCUMENTS ARE REQUIRED TO REGISTER A DUBAI COMPANY?

Documentation requirements will vary depending on where the company is incorporated (i.e., mainland and free zone), and the company set-up structure and type. The requirements will be different for a wholly owned subsidiary, branch, and representative offices. Documentation will also vary according to the company shareholding. For example, if the company is being held by individual(s) and/or corporate shareholders. In most cases, the minimum documentation requirements from the shareholder(s) are a valid passport copy and proof of residential address.

• HOW CAN A UAE BUSINESS GET A UAE COMPANY BANK ACCOUNT?

Once your Dubai company set-up is complete you will be eligible to apply for a corporate bank account. Creation Business Consultants has partnered with the largest and most reputable UAE banking institutions in the region. In the convenience of Creation offices, our team will support you with all corporate banking facilities. We will make introductions to the top banking relationship managers, arrange the banking meetings on your behalf, and advise on the documentation required to onboard your corporate account and banking facilities in the quickest possible time.

• MUST A NEW BUSINESS LEASE AN OFFICE FACILITY TO COMPLETE THE COMPANY REGISTRATION?

Yes, this applies to both free zone and mainland companies. To complete your trade license, you must provide an office lease agreement/Ejari certificate. Mainland business centers are now offering co-working facilities with affordable office leases. Most free zones enable a minimum office facility rental, such as a virtual office or flexi desk. The fees for a virtual office or flexi desk will vary according to free zones and are typically included in the free zone licensing and government fees.

• CAN I OBTAIN A UAE RESIDENCY VISA WITH MY UAE COMPANY SET-UP?

Yes, once the company set-up is finalised, the next step for your business consultant is to advise on the requirements needed to start the visa process.

The requirements for UAE residency visas will vary according to the following persons:

• • Shareholders (investor/partner) visa(s).
  • Shareholder family (spouse and dependents) visa(s).
  • General Manager (employee) visa(s).
  • Employee (employee) visa(s).
  • Employee family (spouse and dependents) visa(s).

SUPPORT FOR BUSINESS OWNERS

When planning to set up your business, it is important that you partner with professional business consultants to ensure that you avoid common pitfalls and mistakes.

Common mistakes include:

• Incorrect advice on structures: The most crucial part of the company set-up process is receiving the correct advice on your company structure. If your company is set-up incorrectly, it can cost you thousands of Dirhams, and weeks or months to correct which will delay your ability to start earning profits. The best advice will come from years of commercial experience and reputable qualifications and not from a sales pitch.
• Not recognising value for money: With so many company structures to select from, it can be overwhelming to understand which is the perfect fit for you. There are more than 50 free zones to choose from and onshore companies have more than 2,500 business activities available. The cheapest option is not always the correct option. The best value you can find is a compliant company structure that maximises your profit potential, both now and in the future.
• Setting up a company that lacks credibility: Some banks are now refusing to issue corporate bank accounts to companies established in certain jurisdictions. This could render a newly established company worthless if it cannot open banking facilities. Check thoroughly before committing yourself to ensure you will have appropriate banking options to suit your business.
• Placing shareholders investments at risk: Having the wrong shareholding structure for your company could mean you do not have control, placing your investors’ money at risk. For a Dubai mainland/onshore company, you need to know what to look out for and how to recognise. Likewise, free zone companies can eliminate their risk if their shareholdings are structured correctly. With several options available to safeguard shareholder investments, this is a risk that can be reduced by more than 85% if the correct advice is followed and implemented.
• Not planning for the future: Establishing a company based purely on today’s requirements could see you incurring the cost of another company set-up in a years’ time. Research shows that 64% of companies incur unnecessary costs to amend their business licenses between 18-24 months of establishment due to poor forward planning. Save your time and money by setting your company up correctly from the outset, safe in the knowledge that it will be suitable as your operations grow.
• Errors on company trade licenses: Nearly 1 in 3 companies have errors on their trade licenses. Mistakes like this can be expensive to the shareholders, costing on average AED 10,000 to correct. These errors come from setting up the company incorrectly, not keeping current on changing regulations and not fully understanding the operations and requirements of your business to begin with. Make sure you are getting the correct trade license and activities for your business before incorporating.
• Incorrect license: Your company needs to have the correct license when operating. Getting this wrong could lead to fines of up to AED 100,000.  Not only can the company face fines, but the General Manager can also be personally liable and fined. To protect your shareholders, company and General Manager, ensure your company set-up is correct for the type of trading you will be doing.
• Not maximising profitability opportunities: ¾ of all companies established in 2018 missed opportunities that could have boosted their profitability. When setting up your company, an in-depth knowledge of government processes and regulations will ensure that you receive the greatest number of activities on your trade license. This gives access to additional target markets and revenue streams to boost profitability and returns to investors.
• Not understanding local laws and regulations: It’s imperative that you are aware of the laws and regulations you will be required to abide by. As soon as your company is set-up, make sure you have an expert familiarise you with the relevant laws so you avoid expensive mistakes. Creation Business Consultants provide annual support packages to ensure your business abides by reporting standards such as: Economic Substance reporting and Ultimate Beneficial Ownership registration etc.
• Not keeping up to date with current and changing regulations: Like all countries, the  UAE regularly changes and updates rules and regulations that affect company owners. To avoid fines, jail time, or worse, it’s vital you understand the laws you must abide by and know when changes will impact you, your business, and your shareholders. The Federal Law of 2021 on Commercial Companies in the United Arab Emirates (UAE) is just one of the many laws that investors and managers must follow. You must keep up to date with all these changes.

CREATION BUSINESS CONSULTANTS

At Creation Business Consultants, we provide a wide range of corporate services to support UAE and GCC market entry. From company set-up with Corporate Sponsor & Nominee to establishing business operations, we’re here to help you get started off on the right path to success. Some of our main services include but are not limited to market research and intelligence, pre-set-up consulting, company set-up services, local sponsor/corporate nominee arrangements, post business set-up support, accounting, treasury, taxation, VAT, reporting, banking support, HR, and payroll.   

Contact a member of our team to learn more about how we can help you via email [email protected] or call +971 4 878 6240 for your free consultation.

Carolyn Cairns,
Commercial Director