Dubai is without a doubt one of the world’s top places to do business on the corporate level. This is because the Dubai government is particularly interested in and supportive of creating a dynamic business environment in Dubai.Company formation in Dubai offers good business opportunities for many different types of business structures. So, it makes sense to start any kind of business in Dubai, where the government encourages entrepreneurs from all over the world to do so.
Starting a business in Dubai requires a clear understanding of how to choose the best business structure in Dubai. You need to know if the best business structure in Dubai is a Dubai mainland Company, a Free Zone Company, or an offshore company. After that, you need to choose the right kind of company, licence, and business activities you want to offer.
Different Ways to Start a Business in Dubai
In Dubai, there are three different types of jurisdictions that can be used to start a business. All of these places have their own rules, and different kinds of businesses find them helpful.
Company from Mainland
A company that is licenced by Dubai’s Department of Economic Development (DED) is called an onshore company or a Dubai mainland company. Mainland Company is free to do business both in and outside of UAE.
Free Zone Business
The purpose of the free zones in Dubai or the UAE is to do international business or business between the free zones. Free zone company formation is very popular with investors or corporations because it comes with benefits like:
100% foreign ownership
Customs privileges
Exemption of taxes
Cost Effective and affordable
Well established transport network and road connectivity
Affordable cost for high-quality labor
Offshore Company
Most businesses like to set up an offshore company, also called a non-resident company, in Dubai or RAKEZ. However, this is the best way to do international business, and you can’t do business in UAE with an offshore company. People also like to set up an offshore company as a holding company so they can hold:
The holding company owns the shares of other companies in other countries.
Legal rights to intellectual property like patents, trademarks, copyright, etc.
Licensing of franchises of companies.
Types of Entities for Company Formation in Dubai
If a foreign company wants to start a business in Dubai, they have eight main legal entity options, such as company formation in Dubai or business formation in Dubai. Here’s what they are:
Setting up a limited liability company
Dubai free zone company formation
Setting up an offshore company in Dubai
Dubai Mainland Company Setup
Offices with a branch or a representative
Professional firms in Dubai
Shareholding companies
Joint venture companies
What are the Types of Business Licenses Available in Dubai?
The Department of Economic Development (DED), Dubai is the main licensing authority that issues licenses for all sorts of business activities in Dubai. One of the most important requirements for all business licences is to choose the right type of licence from the three types below:
Dubai Commercial License
All kinds of business activities are covered by a Dubai Commercial License. It’s a type of Limited Liability Company (LLC). Article 22 of the Companies Law says that there should be at least 51% shares owned by people from the UAE. For this commercial licence, a local Emirati (Dubai Local Sponsor) will hold 51% of the company’s shares and be paid annually for doing so. Either an individual or a business can be the local sponsor.
Professional License in Dubai
It can be a sole proprietorship or a civil company, depending on how many investors or partners are involved. The person with the licence can have 100% foreign ownership. To get this licence, a UAE citizen must be named as the Local Service Agent, but he won’t own any shares in the company. The fee for sponsorship is paid once a year.
Dubai Industrial License
For starting an industrial or manufacturing business
Advantages of Setting Up a Business in Dubai
All kinds of companies should be able to bring back all of their profits and capital.
100% of free zone, offshore, and (professional licence holder) mainland companies are owned by people from other countries.
Companies in a free zone or on the mainland that have a professional licence don’t need a sponsor from their home country.
Offshore companies and a number of tax-free zones don’t have to pay any taxes. Very little tax on other places to do business.
Labor and staff that are relatively cheap, easy to find, and good
Infrastructure (offices, warehouses, roads, etc.) of world-class quality and closeness to important airports and seaports.
Bank accounts can be opened and managed in a variety of ways, and they can hold more than one currency.
Investors, their families, and employees can get 3-year visas.
The process of registering a company is easy and quick because of modern technology.
The best homes and businesses with the most up-to-date communication systems and reliable utility systems.
What is the Procedure for Company Formation in Dubai?
Pick the company’s name
When forming a company in Dubai, the first step is to decide what the company will be called. Before it starts, every business will choose a trade name. This business name must be unique and follow the rules set by DED. DED has to agree on this name (Department of Economic Department)
Choose the right business activity
You need to know what kind of business you are running. If you are selling things, you need a commercial licence, but if you are offering services, you need a professional company.
Find a local sponsor
For Dubai mainland company formation, you need a local sponsor who is a local Emirati (except for those with professional licence where local Emirati will be act as a local service agent). A local sponsor will pay an annual fee to own 51% of a company.
In the case of a professional licence, you need local service agents. The person from the UAE won’t have any shares in the professional company.
Select the office Location
For company registration in Dubai, you also need to choose a good location and make a tenancy agreement. You can also choose a virtual office in any of the business centres, but it depends on the business activity.
Preparation of the M&A
The next step is to make the new company’s MOA (memorandum of association).
Final Submission
For the final submission, you’ll also need a licence application, a memorandum of agreement (MOA), a tenancy contract, and a few other documents, depending on the type of business you’re running and where you want it to be.