Dubai is thriving as a business hub on the global stage attracting entrepreneurs from around the globe for years. With its strategic location, exceptional infrastructure, and business-friendly policies, it offers numerous opportunities for aspiring entrepreneurs and new startups. However, starting a business in Dubai as a foreigner can be challenging. This guide will walk you through everything you need to know about business setup in Dubai including the key requisites so that you can enjoy the experience with minimum complications.
Benefits of company setup in Dubai
Dubai is a regional base for some of the giant companies like Microsoft, MasterCard, and Amazon. The city supports a wide range of industries ensuring long-term success for those seeking growth in the Middle East. Here are some of the key reasons why one must consider starting a business in the thriving heart of Dubai:-
- Convenient location –
The strategic location of Dubai provides companies with easy connections between two prominent regions, Europe and Asia. Moreover, it provides access to major ports and airports, allowing efficient transportation of goods and services.
- Access to various markets –
Dubai bridges the gap between Europe and Asia, offering access to significant markets in the Gulf area, Central Asia, and Africa. They can easily tap into the nearby markets and expand your customer base.
- Stable political climate –
The political stability and pro-business regulations of Dubai offer a secure investment climate, allowing foreign investors to invest confidently.
- Infrastructure upgrade –
The UAE government’s extensive investments in transportation, telecommunications, energy, and industry infrastructure have created a conducive environment for businesses in Dubai. Further, the establishment of free trade zones with attractive incentives and regulatory systems supports a successful business setup in Dubai.
- Lifestyle advantages –
The high quality of life in Dubai coupled with world-class infrastructure, low crime rates, leisure facilities, and low personal taxes attracts top talents from across the world. This has resulted in a growing number of diverse workforce and a favorable environment for professionals to network and interact.
Although there are numerous advantages for businesses in Dubai, business owners must be mindful of certain considerations while planning a business establishment. For instance, they must be aware of the local customs, traditions, and business practices to ensure there are no violations or offenses. Similarly, they must familiarize themselves with the labor laws of the UAE, including working hours, leave entitlements, and end-of-service benefits.
To learn all these regulations in detail, get in touch with a business advisor or company formation specialist of Shuraa.
Types of licenses for business setup in Dubai
Apart from determining a location for business incorporations, you need to identify the type of license you will need to conduct your operations. There are mainly three types of licenses available for business setup in Dubai –
- Commercial license – This license caters to businesses that engage in trading and commercial activities such as buying and selling goods, import & export, logistics, travel & tourism, retail, and real estate.
- Industrial license – This license is issued to businesses carrying out manufacturing activities and transforming raw materials and resources into finished goods – manually or mechanically. For example, textiles manufacturing, metal manufacturing, and paper manufacturing.
- Professional license – Businesses or individuals that are service providers or specialize in a specific field can obtain this license. For example, lawyers, healthcare professionals, artisans, craftsmen, engineers, architects, etc.
Guide to business setup in Dubai
Without the right business plan, you cannot execute a successful company setup in Dubai and expect revenue regardless of the product or marketing tactics you have in mind. A well-structured business plan will help create a unique business strategy, assess the achievability of your business idea, and outline any potential complications.
Choose your business activity – The first step of the process is determining the business activity that you want to carry out in Dubai. You can choose from a wide range of business activities across various sectors such as trading, manufacturing, etc. Your business activity will determine the type of license you’ll need for your operations.
Finalize a business structure – There are several options of structures available for business setup in Dubai. Each legal structure has its own regulations and benefits. Some of the common examples are:-
- Sole proprietorship
- Limited Liability Company (LLC)
- Free Zone Company
Choose a trade name – The trade name or brand name is an essential part of your business. Therefore, it must be unique, appropriate, and comply with the naming regulations of the UAE government. The Department of Economic Development (DED) in Dubai has specific guidelines for determining a trade name, which business owners must be mindful of while finalizing a name for their company.
Apply for initial approval – Before proceeding to the company registration, the business owners must first seek initial approval from the DED as their consent to proceed with the business establishment process and operations. To get this approval, they need to submit a completed application form, passport copies of the shareholders, and the proposed names for the companies.
Draft a MOA (Memorandum of Association) – The MOA is a legal company document that outlines the structure and functioning of the company. It includes necessary details of the company such as its name, objectives, capital distribution, and the roles and responsibilities of shareholders.
Finalize a location – Your business requires a registered address in Dubai such as an office, warehouse, or retail space, depending on your activity. However, make sure it meets the DED’s requirements and is in compliance with zone regulations. After selecting the location, sign a tenancy contract and obtain an Ejari, an official registration of the lease agreement.
Obtain additional approvals – Further, depending on the business activity, you need to obtain additional approvals from relevant authorities, such as Dubai Municipality for the food industry, Dubai Health Authority for healthcare businesses, etc.
Submit the license application – Once you have assembled all the necessary documents and approvals, submit your application to the licensing authorities. It typically includes –
- Initial approval certificate
- MOA
- Trade name certificate
- Ejari
- Shareholders’ passports
Open a corporate account – With a business license in hand, you can open a corporate bank account in any of the local and international banks. Other documents may include MOA, passport copies of the shareholders, and others.
Register for VAT – If the annual turnover exceeds the mandatory registration threshold, the business has to register for Value Added Tax (VAT) with the Federal Tax Authority (FTA). The business owner has to submit an application form along with the required documents.
Comply with the regulatory requirements – After registration, the business owner must ensure to comply with all ongoing legal and regulatory requirements. For example, renewing the business license annually, maintaining accurate financial records, and adhering to tax regulations. Non-compliance may result in penalties and legal complications. Therefore, businesses must make sure to stay informed and compliant.
Conclusion
The process of business setup in Dubai requires careful planning and adherence to regulations. Therefore, business owners must ensure it is smooth and rewarding. Following this step-by-step guide will help you establish a successful business in the Emirate and take advantage of the tremendous growth opportunities this vibrant city has to offer.
Shuraa Business Setup offers the best company formation solutions, assisting companies at every step of the way, from drafting documents, managing approvals, and helping with bank account setup. Reach out to Shuraa today at www.shuraa.com and see how they can help you!