How to Set up a Business in Dubai

Business Setup in Dubai is a challenging yet rewarding endeavor that allows you to bring your ideas to Dubai life. With the increasing popularity of entrepreneurship, more individuals are realizing the potential for growth and financial stability that comes with owning a business.

Dubai has seen a significant surge in new business registrations, with over 8,000 businesses being registered each month. This not only showcases the entrepreneurial spirit within the community but also contributes to economic development and job creation in the country.

By starting a business, you have the opportunity to pursue your passion and make a positive impact. Dubai, with its strategic location, thriving economy, and favorable business environment, has become an attractive destination for business setup.

This guide aims to provide you with a comprehensive understanding of the steps involved in setting up a business in Dubai, empowering you to transform your entrepreneurial dream into a reality.

Steps for setting up a business in Dubai

Man Climbing a Mountain

Setting up your business in UAE or a new country can be a daunting task. Although setting up your business here in Dubai is very much easier as compared to other countries. But only if you have good professional advisors with you.

Let’s discuss some of the key points or steps for setting up a business in Dubai. Here are the steps involved in setting up a business in a free zone:

i. Determine the type of legal entity

The first step is to choose an area either freezone, mainland, or offshore in your desired emirate.

Now let’s discuss in detail the three common legal forms of business available:

Free Zone Limited Liability Company (FZ LLC)

This legal structure allows for the formation of a separate legal entity with limited liability. It requires a minimum of two and a maximum of 50 shareholders, who can be individuals or corporate entities. The shareholders’ liability is limited to their share capital in the company. FZ LLCs are often preferred by businesses that intend to have multiple shareholders or partnerships.

Free Zone Establishment (FZE)

A Free Zone Establishment is a legal structure where a single individual or corporate entity is the owner of the company. The owner has full liability for the company’s obligations and debts.

LLC (Limited Liability Company)

An LLC is a popular choice for foreign investors in Dubai. It requires a minimum of two shareholders and allows for the distribution of profits and liabilities among shareholders. Meanwhile, the liability of each shareholder is limited to their respective shares in the company’s capital.

Sole Establishment/ Civil Establishment

A Sole Establishment is a business owned by a single individual. The owner has unlimited liability for the company’s debts and obligations. It is a suitable option for small businesses or professional service providers.

Civil Establishment

A Civil Establishment is a business structure for professionals such as doctors, lawyers, engineers, consultants, etc. It allows individuals to practice their profession under their name. The owner has unlimited liability for the company’s obligations.

When deciding which type of establishment is right for you, consider factors such as the nature of your business, liability protection, ownership structure, and long-term goals.

ii. Choose a trade name

Select a unique and appropriate trade name for your business. Consult with the concerned free zone authority or the Department of Economic Development (DED) to ensure that the name is available and complies with the required regulations.

iii. Choose an office space

For the first year, you can work without any office space, but it depends on the business activity and type of business area. For the second year, it is mandatory to have an office space that suits your business requirements. Free zones often offer flexible options for office spaces and facilities.

iv. Apply for a business license

Submit an application for a business license to the free zone authority. The license will specify the activities your business is allowed to undertake within the free zone.

V. Get pre-approvals and obtain your license

Complete any necessary pre-approvals and submit the required documents to register your business in UAE. This typically includes providing the necessary legal documents, lease agreements, and shareholder information. Once approved, you will receive your business license.

Where to set up a business in Dubai?

Dubai offers various options for setting up a business, including free zones and mainland (non-free zone) areas. The choice depends on your business requirements, target market, and preferences.

Business Setup in Dubai

Here are some popular locations to consider:

Free Zones

Dubai has numerous free zones, each catering to specific industries and providing business-friendly environments. Some prominent free zones in Dubai are:

  • Dubai Multi Commodities Centre (DMCC) – Ideal for businesses in the commodities sector.
  • Jebel Ali Free Zone (JAFZA) – Well-suited for industrial, trading, and logistics companies.
  • IFZA (International Free Zone Authority)
  • Dubai Media City (DMC) – Suitable for media and advertising companies.
  • Dubai International Financial Centre (DIFC)
  • Meydan Free Zone
  • Dubai Silicon Oasis (DSO) – Focused on technology and innovation companies.
  • Dubai Internet City (DIC) – Ideal for IT and media-related businesses.

Other free zones include:

Mainland

Setting up a business in Dubai mainland allows you to operate across the entire emirate and beyond. Some key mainland areas include:

  • Business Bay: A central business district with a mix of commercial and residential developments
  • Sheikh Zayed Road: A major highway lined with numerous office towers and commercial spaces.
  • Downtown Dubai: A vibrant area with a mix of businesses, entertainment, and residential properties
  • Al Barsha: A well-established area with a diverse range of businesses and commercial centers.
  • Dubai Marina: A waterfront community with a mix of residential and commercial developments.

Offshore

When considering offshore company formation in Dubai, there are three main options available, each with its distinct features, conditions, and benefits:

  • Jebel Ali Offshore (Jafza Offshore)

Established in Dubai’s Jebel Ali Free Zone, this offshore jurisdiction offers a well-regulated and internationally recognized business environment. Jafza Offshore allows for 100% foreign ownership and full repatriation of capital and profits.

  • Ras Al Khaimah International Corporate Centre (RAK ICC)

RAK ICC is in Ras Al Khaimah, one of the Emirates of the UAE. It offers a flexible and cost-effective option for offshore company formation. RAK ICC allows for 100% foreign ownership, minimal reporting requirements, and no requirement for physical presence in the UAE.

  • Ajman Offshore

Ajman Offshore is based in the Emirate of Ajman and offers an attractive environment for offshore company setup. It allows for 100% foreign ownership and offers tax advantages, including exemption from corporate and income taxes. It offers simplified company formation procedures and minimal reporting requirements.

When selecting a location, consider factors such as proximity to your target market, accessibility, infrastructure, available facilities, business support services, and any industry-specific requirements.

Types of Business Licenses in Dubai

In Dubai, there are several types of business licenses that you can obtain based on the nature of your business activities. The license you require will depend on the specific industry, the scope of your operations, and the location of your business (free zone or mainland).

Types of Business License

Here are some common types of business licenses in Dubai:

Commercial license

This license is required for businesses involved in trading or commercial activities such as buying, selling, and distributing goods. It covers a wide range of activities including general trading, specific product trading, and e-commerce.

Professional license

Professionals such as consultants, accountants, engineers, doctors, and artists require a professional license to operate their businesses. This license is issued to individuals or companies providing specialized services that require professional qualifications.

Industrial license

If your business involves manufacturing or industrial activities, you will need an industrial license. It is necessary for companies engaged in activities like production, processing, or assembly of products.

Tourism license

This license is required for businesses operating in the tourism sector, including travel agencies, tour operators, hotels, and hospitality establishments.

It’s important to consult with professional advisors to determine the specific license required for your business activities. They can guide you through the process and provide detailed information on the documentation, fees, and procedures associated with obtaining the appropriate license for setting up a business in the UAE.

Business Setup in Dubai Free Zone

Setting up a business in a Dubai free zone involves several steps. Here is a summary of the process:

Determine Your Business Activity

Identify the nature of your venture and choose a business activity from the list of over 2,100 options available on the concerned free zone authority.

Select Your Area (Freezone)

Research and choose a free zone area in Dubai that suits your business needs and sector. Proximity to businesses in the same industry can be advantageous.

Decide on a Company Name

Ensure that your chosen business name complies with the UAE’s naming conventions. Avoid offensive language, references to religion, and politics. If naming the business after a person, provide proof of their ownership or partnership.

Apply for Initial Approval

Submit an application to the concerned free zone authority for initial approval. This step verifies that there are no objections to starting your business.

Simplified document requirements for business registration:

  • Completed application form.
  • Business plan.
  • A clear scan of the passport copy in jpeg or pdf is required.
  • White background studio photo for Emirates ID and visa purposes.
  • Old entry stamp photo in the passport when last time visited Dubai (if you have, if you don’t, please mention it).

Further details required:

  • Decide three trade names and mention them for your license. 
  • Email address.
  • Phone number (UAE if you already have one or your home country).
  • Home address (UAE if you already have one or your home country).
  • Any other nationalities (If Freezone requests more details please do advise)

Apply for Final Approval

Gather all necessary documents, location addresses, and legal information for final approval. In some cases, you may require licensing approval from other government authorities. Additionally, submit the documents, including the initial approval receipt, lease contract from the Real Estate Regulatory Agency (RERA), duly attested service agent contract (for non-GCC nationals), and approvals from other relevant entities. Upon completing these steps and obtaining the final approval, your business is ready to operate in the Dubai-free zone.

What is the cost of a business setup in Dubai?

Lost Cost Business Image

Setting up a business in Dubai, United Arab Emirates involves several specific costs and requirements. Here’s a general overview of the costs associated with starting a business in Dubai:

  • Trade License

The cost of a trade license depends on the type of business activity and the jurisdiction within Dubai. The fees range from AED 5750 to AED 50,000 or more.

  • Office Space

Dubai offers various options for office space, such as commercial buildings, business centers, or free zone facilities. Costs depend on factors like location, size, and quality. Office rents can range from AED 50,000 to several hundred thousand dirhams per year.

  • Sponsorship and Local Partner

In Dubai, for certain business activities, it is mandatory to have a local sponsor, but it depends on the type of the business and the business activities. However, the cost of sponsorship varies, and agreements are typically made on a case-by-case basis.

  • Visa and Immigration

Costs associated with obtaining residency visas for business owners, employees, and dependents can include visa application fees, medical examination fees, Emirates ID card fees, and visa stamping fees. These costs can vary depending on the type and number of visas required.

  • Additional Costs

Other expenses may include professional service fees for legal assistance, bank account opening, and PRO services to handle government-related documentation and processes.

It’s important to note that these costs are approximate and can vary depending on several factors, including the type of business, location, and specific requirements. It is advisable to consult with a business setup consultant or professional service provider in Dubai to get accurate cost estimates and guidance tailored to your business needs.

Conclusion

In conclusion, when it comes to starting a business in Dubai, partnering with a top business setup consultancy in Dubai like ours can be a smart choice. Emirates Business Setup offers a wealt