starting a business in Dubai? Here’s what you need to know.
Tips for starting a business in Dubai
In the GCC (Gulf Cooperation Council) region, the UAE is a great place to start a business. With plenty of commodities, convenient access to flights and travel, and a wealth of talent available for hire, it's no surprise that Brits are turning to Dubai to start a business.
In this guide, we'll go over the basics of starting a business in Dubai, as well as the right steps to incorporate your company. Plus we’ll introduce Zyla Accountants as a smart solution to handling your business accounting and tax requirements.
Toufic Sara from Zyla Accountants attending a recent British Chamber of Commerce Dubai event
Dubai's business environment
It is important to know some of the features of doing business in Dubai and the UAE before we go into detail about how to set up a business in Dubai.
In Dubai, you can choose between opening a business on the mainland or in a free zone. Both cases allow 100% foreign ownership, but you won't be able to have a majority stake in a strategic business if it's located on the mainland.
You will instead need a local sponsor who owns 51% or more of the company. Typically, local sponsors do not have any business responsibilities aside from leading government procedures like obtaining visas and obtaining licences and permits. All legal documents and official forms must also be signed by them.
Depending on whether you're in a Free Zone or not, license options and availability in Dubai vary, but include commercial trade, education, media, ecommerce and consultancy, for example1. Depending on the type of business, different rules may apply.
You will benefit from tax exemptions and support from Dubai authorities if you choose to have a business in a Free Zone. Your entity type and licence may restrict you from trading outside the free zone area, which can be a disadvantage.
A Dubai business can be registered online, in person, or through an agent. There are a number of options for establishing your Dubai business that differ from those in the UK, so you might want to consult an agent - but the process is fairly straightforward if you decide to go it alone.
Dubai business setup
You'll need to understand a few unique features of Dubai's and UAE's business structure options before opening a business in Dubai, including:
Sole proprietorship
Partnership company
Limited liability company (LLC)
Private shareholding company
Public shareholding company
Civil company
Branch of a foreign company
Some of these companies can only be set up on the mainland of Dubai - not in the Free Zones. You'll need to decide which works best for you before starting a Free Zone entity, since there are some advantages.
It's also important to consider whether or not you can own 100% of your company - or if you'll need a local stakeholder who owns 51% or more. In this case, your options will depend on whether your Dubai business is based in a Free Zone or not. Let's take a look at some key points about your possible Dubai business entity types one by one.
Sole proprietorship
On the Dubai mainland, sole proprietorships may be possible. Any financial risk you take will be borne by you personally, since the finances of your business entity are viewed as your own.
Partnership company
The mainland of Dubai allows general partnerships as well as limited partnerships. As a partner in a general partnership, you're personally liable for business risks. While limited liability partnerships provide more personal protection, setting them up and managing them can be more difficult.
Limited liability company (LLC)
A company equivalent to an LLC can be formed either on the mainland or in a free zone in Dubai. You can usually have between 2 and 50 shareholders, and their liability is limited to their investment.
Private shareholding company
The options for setting up a private shareholding company may vary depending on your industry and entity. Shares in this company are not available on the free market since they are owned by individuals or businesses acting as shareholders.
Public shareholding company
The shares of a Dubai public shareholding company can be traded on the stock market, just like those of a UK PLC. In order to ensure that your Dubai business is set up correctly, you will need to take appropriate legal advice.
Civil company
In case you are a doctor, lawyer, engineer, or other professional, a civil company might be an option for you. Foreigners cannot own more than 49% of some fields that are considered strategically important - if this is your intention, it's worthwhile to get professional help setting up your Dubai business to ensure you get the optimal structure for your needs.
Branch of a foreign company
If you intend to work in a Dubai Free Zone, you can set up a branch of a foreign company - an option that might appeal to those who already own UK businesses. A company in Dubai operates according to its licence agreement in the UAE, while remaining part of your home business.
A step-by-step guide to starting a business in Dubai
It depends on whether you're based in a Free Zone or not, and what industry you work in, to start a business in Dubai. In order to set up your Dubai business, you can either do it alone or work with an agent or intermediary.
Using Dubai Free Zone as an example, let's go through the steps:
Following the UAE licensing system, identify the type of business and license
Choose the type of business entity you wish to create - a Free Zone LLC, company, or establishment will all have their own features, advantages, and disadvantages
Make sure your company's trade name is registered
Building, owning, or renting an office, warehouse, or whatever building you need is possible in a Free Zone
Get your business approved by submitting the necessary documents - we'll review them shortly
After receiving your initial approvals, you can then register your business and obtain a Dubai business license
Register your business online if you'd like, or attend a meeting to get set up in person if you'd prefer. It is possible to get assistance with the registration process from a company registration agent - you may need to pay a fee, but it will ensure the process is hassle-free and smooth.
In order to apply for a licence for a Free Zone company, you will usually need the following information and documents:
Completed business licence application form
Your business plan
Copy of existing trade licence/registration certificate (if applicable)
Passport copies of the company’s shareholders and appointed manager
Registry Identification Code Form (RIC) for appointed manager (original and notarized)
The signatures of the company’s shareholders and appointed manager
Title deeds (if applicable)
Letter of Intent letter clarifying the investment idea and the investor's plan
2 years audited financial reports or certificate of reference from a bank (as required)
Your business must also be registered once you have your initial license:
Completed registration application form
Board Resolution appointing Manager/Director
Power of Attorney given to Manager/Director
Memorandum and Articles of Association
Specimen signature of Manager/Director
Passport-size photos of Manager/Director
Share capital information
Dubai is a great place to network and do business. Suzy Kerton from Zyla Accountants pictured front left.
Dubai business setup FAQs
Here are some common questions and answers about setting up a company in Dubai.
What is the cost of starting a business in Dubai?
Setting up a business in Dubai depends a lot on the type and scope of the company as well as the location. According to Dubai's authorities, a one-person company in a Free Zone would likely cost 4,085 USD, while a larger company with about 4 employees who would need visas and office space would likely cost 17,000 USD. Renting or buying an office or warehouse in a free zone area will usually determine your costs, as well as how many visas you can apply for.
How easy is it to start a business in Dubai?
The process of setting up a Dubai company should be fairly straightforward, but it may not be familiar to you. UAE government officials claim that you can set up your company online in 15 minutes or in person in 4 days. According to the World Bank, the average time to set up a company in a developed country is 10 days.
Get specific help from the Dubai authorities with a business registration guide, and learn more about investing, living and working in Dubai on the Dubai government website.
How startup-friendly is Dubai?
Dubai is a friendly place for startups - depending on what type of business you're starting and where you're based. Business approval and registration in Dubai are fast and can be done online, so if your business type is allowed in Dubai, you should have no problem setting up shop there.
What are the steps to starting a business as a foreigner in Dubai?
In a Free Zone, foreigners can open businesses and own 100% of them. Some Dubai mainland businesses can also be 100% foreign owned, but you'll need a local majority stakeholder in some industries - like those that are strategically important. In Dubai, starting a business is easy and can be done online - or you can hire a company formation agent for a fee.
Dubai can be a great place to boost your company's international trade if you decide to set up shop there.
Zyla Accountants offer a hands-on, jargon-free and refreshingly flexible approach to accounting. Our experienced accountants deliver clear-cut support to start-ups, SMEs and social enterprises to help you focus on what you do best. Contact us today for support with your business set-up.