UAE & DUBAI’S TOP 5 PLACES TO SET-UP AN IT CONSULTING / TECHNOLOGY COMPANY

The United Arab Emirates (UAE) has positioned itself as an attractive destination to start a business. The country continues to invest in innovation, development, and state of the art infrastructure to transform itself and the Emirates of Dubai specifically to become a ‘Smart City’. Since the pandemic, the IT sector in the UAE has witnessed a surreal boom. Large tech businesses are now expanding their operations or their regional headquarters to the UAE. The UAE Government Smart City initiative has attracted innovative businesses in the fields of supercomputers, cloud services, biometrics, big data analytics, blockchain, and advanced AI…etc. With more tech businesses entering the UAE market, this attracts top talent from across the globe to work and live in the UAE. 

HOW TO START AN IT / TECH START-UP COMPANY IN DUBAI & THE UAE?

Innovative technology start-ups have great support for setting up a business and entering the UAE market. There are special economic zones that offer incubation for businesses to experiment and thrive along with support within a business community. 

WHICH AUTHORITY IS BEST TO SET UP & REGISTER AN IT / TECH START-UP COMPANY IN DUBAI & THE UAE?

Creation Business Consultants have shortlisted five key authorities which are recommended for technology-related companies and start-ups.

• DEPARTMENT OF ECONOMIC DEVELOPMENT (DED) – MAINLAND / ONSHORE LICENSING & REGISTRATION AUTHORITY 

Mainland Dubai is recommended for those tech entrepreneurs who aim to provide services to clients within the UAE and internationally. DED is the most common and recommended authority to register a technology company.  A DED license provides greater flexibility for businesses and enables them to bid for and work with UAE governmental and semi-governmental bodies. The licensing category to register an IT company falls under a Professional License. The benefit of a Professional License is it provides 100% foreign ownership. However, with all IT business related activities, this license type requires a business to have a Local Service Agent (LSA) / National Service Agent (NSA) listed to complete the company set up and registration. An LSA / NSA is a UAE national that acts only as a representative, they have no civil responsibility, no monetary involvement, no legal interest in the entity’s profits and assets, nor any management, control, or any involvement in the business operations. 

Tech businesses in mainland Dubai can start their operations through flexible office spaces (i.e. business centres), but the initial investment to set up may be slightly higher than a free zone option. 

• DUBAI INTERNATIONAL FINANCIAL CENTRE (DIFC) INNOVATION LICENSE – FREE ZONE LICENSING & REGISTRATION AUTHORITY 

DIFC offers a subsidised licensing regime for tech-related businesses. DIFC offers an ideal platform for Fintech businesses since the jurisdiction is a hub of financial services. The businesses are allowed to engage clients through B2B transactions and attract international clients. The company can be set up in a variety of styles ranging from Partnership to Limited Liability with full ownership of the business. The DIFC offers reduced licensing rates, cost-effective co-working space solutions, and incentivised residence permit rates. 

• ABU DHABI GLOBAL MARKETS (ADGM) REGTECH – FREE ZONE LICENSING & REGISTRATION AUTHORITY 

RegTech is an Abu Dhabi Global Markets platform for technology companies to set up their operations; however, at a relatively and marginally lower cost than the DIFC. Just like DIFC, ADGM is an independent jurisdiction governed by its own laws (Common Law), with its own Courts, regulatory body, and licensing authorities. Both these jurisdictions also stand amongst the top financial services jurisdictions around the globe. The RegTech regime can be set up as a Limited Liability or a Partnership, etc. It is a recommended jurisdiction for tech companies that would like to target financial services companies as their clients or offer technology services that can be best utilised by Financial Services Businesses.

• DUBAI INTERNET CITY (DIC) – FREE ZONE LICENSING & REGISTRATION AUTHORITY 

DIC is a long-standing and one of the oldest economic zones in the UAE. DIC is designed purposefully to cater to technology-related companies. DIC is governed by the Dubai Development Authority and follows UAE Law (Civil Law). The jurisdiction is home to some of the largest technology companies in the world including Microsoft, Cisco, Oracle, HP, and several other technology giants which creates a technology cluster in the heart of Dubai. DIC has a favourable licensing regime for technology-related start-ups and offers flexible office spaces for new businesses. Leasing spaces in DIC are quite limited which means that office space costs are higher compared to mainland Dubai and other free zones. All DIC companies are limited liability companies or branches and have complete foreign ownership. Like all free zones, the entities enjoy a tax-free environment. The only major drawback with this licensing authority is the restriction on working with the UAE Governments or local mainland businesses. Should a company wish to contract with the government or mainland businesses, a mainland license must be obtained. 

• DUBAI MULTI COMMODITIES CENTRE (DMCC) – FREE ZONE LICENSING & REGISTRATION AUTHORITY

Although DMCC is not a purpose-built jurisdiction for technology businesses, yet DMCC is a ‘multipurpose’ free zone and the infrastructure offered by the free zone makes it one of the top awarded free zones that is recognised around the globe. The jurisdiction does not offer any special incentives for technology-related businesses, but businesses enjoy all the benefits of a free zone company along with an infrastructure that is flexible, efficient, and overall convenient. The free zone is not cost-effective either and may not be suitable, in terms of initial costs, for start-ups. DMCC itself is home to over 20,000 businesses which offers great access to technology companies to develop their business and reach to regional and international clientele. 

All licensing regimes in the UAE follow a similar registration process. Licensing process differs if the shareholders are individuals, a subsidiary, or a branch company. For individuals interested in a technology start-up, the application process requires identification of the documents of the principals along with their profiles and their business plan. Once the applications are submitted, they are reviewed by our compliance and operations team, and once all is in order, they are submitted to the respective authority to issue a provisional approval. For a subsidiary or a branch of a foreign company, the corporate documents along with their audited financials (applicable for branches only) and resolutions are required to be legalised by the UAE Embassy in the home country and the Ministry of Foreign Affairs in the UAE. 

After the provisional approval is secured, the companies can shortlist their office space, sign a lease, and submit it to the authorities to issue the registration documents. Businesses can then start the process of residence permits for the managers and employees. After the manager/authorised person’s residence permit is approved, a corporate bank account application can be submitted. The timeline for the process completion varies between jurisdictions and the business structure. 

For more information on the most suitable licensing authority, contact our team at Creation Business Consultants for your free consultation email [email protected] or call +971 4 878 6240. We look forward to guiding you on the most suitable option. 

Scott Cairns,
Managing Director