Business Setup in Dubai, UAE | Company Formation in Dubai

Business Setup Services

Commencing a company, whether in Dubai or any other global location, is a momentous decision that encompasses vital elements such as planning, conceptualization, research, budgeting, setup, and decision-making. Moreover, seeking guidance and assistance, especially for the selection of the appropriate trade license, is critical, particularly for new entrepreneurs. In this context, we will explore the fundamental steps involved in initiating a business in Dubai, UAE.

The UAE stands out as a preferred destination for investors and entrepreneurs alike. In addition to being renowned for its investor-friendly environment, the country’s low tax policies and business-friendly atmosphere have solidified its position as a prominent business hub in the Middle East. Furthermore, the government has established rules and regulations that not only support but also encourage business owners.

How to Open a Company in Dubai – The Formation Process

While the process of setting up a business in Dubai is generally uncomplicated, the experts at Shuraa Business Setup can simplify the procedure of creating a business account for you. Additionally, they will handle the paperwork and manage any other associated matters on your behalf.

Key steps to start a business

• Select a business activity.
• Choose the jurisdiction.
• Finalize the company structure or legal form.
• Obtain approval for both your company name and chosen business activity.
• Apply for the required trade license.
• Conclude the company registration process.
• If needed, find a local agent.
• Secure external approvals as necessary.
• Draft your Memorandum of Association.
• Arrange for office space rental.
• Obtain the tenancy contract and ejari.
• Obtain initial approval for your business.
• Receive your official trade license.

1. Select a business activity

When selecting a business activity for your entrepreneurial venture, assess the feasibility of the chosen activity within the UAE market. Before starting a company in Dubai, conduct thorough research on the viability and profitability of the selected activity. Subsequently, ascertain the best timing to commence your business in Dubai, UAE.

2. Select the jurisdiction

The UAE market is divided into separate economic zones, which are Mainland, Free Zone, and Offshore, commonly known as jurisdictions. Each jurisdiction has its own set of laws and regulations regarding business setup, catering to various business requirements. However, the selection of the jurisdiction for your business depends on your particular business needs and the type of business activity you are involved in.

3. Finalize the company structure/legal form

Choosing the legal structure for your company is a pivotal decision when initiating a business venture in the UAE. This decision shapes the framework for handling profits and losses and defines the organization of resources and assets. It is recommended to establish the legal form or structure of your company in the initial planning stages, as it lays the foundation for your business. Determining the company’s legal form is a necessary step before proceeding with the application for a business license. Here are different legal forms or company structures available for registering your business in the UAE:

• Limited Liability Company (LLC)
• Sole Establishment
• Civil Company
• Local Company Branch
• GCC Company Branch
• Foreign Company Branch
• Branch in a Free Zone
• Holding Company

4. Get approval for your company name and activity

Before moving forward with the establishment of your company in the UAE, you need approval from the Department of Economic Development (DED) for your chosen trade name. This step also includes a review of your selected business activity to ensure compliance. Once these approvals are secured, you must submit the required documents to apply for your UAE trade license, marking the commencement of the company setup process in Dubai.

5. Apply for your trade license

There are four types of trade licenses in the UAE, known as business licenses, that you can choose from:

• Commercial License
• Professional License
• Industrial License
• Tourism License

These licenses are relevant for establishing a business in the UAE mainland. It’s crucial to be aware that the licensing structure in UAE free zones differs and depends on the specific business activity selected by your company.

6. Register your company

The company registration and licensing processes take place concurrently, involving multiple stages with distinct documentation and approval requirements. It is crucial to secure approvals from relevant government authorities, as specified by the Department of Economic Development. Additionally, the required documents vary for each company type and activity.

7. Find a local agent (if required)

Historically, establishing a business in Dubai required the compulsory involvement of a local partner, who had to be a UAE national. Securing a trustworthy local agent could pose a considerable challenge, especially for entrepreneurs venturing into a startup in Dubai. Engaging the services of a business setup consultant can streamline the process by connecting you with companies offering corporate sponsorship. This ensures that you obtain official authorization while retaining full ownership (100%) of your business.

8. Get your external approvals

The Department of Economic Development (DED) may require additional approvals from diverse government or non-government entities, depending on the nature of your business activity. For instance, specific businesses may need approvals from the municipality, designated banks, embassies, and other pertinent authorities.

9. Prepare your Memorandum of Association

Comprehending the complexities of a Memorandum of Association (MoA) is essential when commencing a business in Dubai. Therefore, it is recommended to seek professional guidance before drafting the MoA. Ensuring alignment with the regulations set by the UAE government, the MoA should also reflect your business objectives as you embark on the venture of establishing a company in Dubai.

10. Rent an office

Adapting to your business needs, you have the option to either rent an individual office unit or opt for a shared workspace within a business center. The decision on office space can also influence the quantity of visas you can apply for through the Department of Economic Development (DED).

11. Get the tenancy contact & Ejari

Initiating your own business in Dubai may require obtaining an ejari, serving as a tenancy contract that formalizes the arrangement between you and the real estate agency offering the rented office unit or shared workspace. Regulated by the Real Estate Regulatory Agency (RERA), the online ejari system guarantees fairness and transparency in the tenancy arrangement. To activate your Ejari account, you need to submit your tenancy contract along with a few supplementary documents. The importance of Ejari lies in its necessity for acquiring or renewing visas for your family members and/or employees.

12. Get the initial approval

Before acquiring your business license to start a business in Dubai, it is crucial to obtain initial approval from the Department of Economic Development (DED). This approval indicates that the UAE government has no objections to the commencement of your business in the country. Progressing to the subsequent steps in the application process is not possible without this approval.

13. Collect Your Trade Data

To secure your UAE trade license, you must submit the following documents to the Department of Economic Development, along with the necessary government fees:

• Memorandum of Association (MoA)
• Trade license application
• Relevant government forms
• Trade name reservation certificate
• Initial approval certificate
• External approvals (if applicable)
• Tenancy contract
• Ejari registration certificate
• Passport copies of partners
• NOC for partners (if applicable)
• Any additional requirements specified by the DED (if applicable)

Things to Know Before Setting Up Your Business

Before embarking on the process of setting up your business in Dubai, it’s essential to comprehend several key aspects. Let’s explore each of these considerations.

Economic Zone: Free Zones vs Offshore

Before setting up your business, it is crucial to decide whether you prefer to operate in a Free Zone or Offshore. Each option has its own array of benefits and specifications tailored to your specific requirements.

Free Zone 

Before setting up your business, it is crucial to decide whether If you seek full ownership of your company, consider applying for a license and establishing your business in one of Dubai’s free zones. These zones were introduced by the Dubai government to attract foreign interest and promote business setups in the city. Functioning as special economic areas, free zones allow business owners to enjoy complete ownership, benefit from a 9% corporate tax rate (applied to UAE businesses on profits exceeding AED 375,000), and experience 0% personal income tax. prefer to operate in a Free Zone or Offshore. Each option has its own array of benefits and specifications tailored to your specific requirements.

However, a notable limitation of operating a company in a free zone is the restriction on engaging in direct trades with the UAE local market. Presently, Dubai hosts over 30 operational free zones, each typically tailored to specific industry categories, offering licenses to companies within those designated sectors. Examples of such free zones include the Dubai Multi Commodities Centre (DMCC), Dubai International Financial Centre (DIFC), and Dubai Airport Freezone.