What makes Dubai the ideal place to set up a business? For starters, a stable economy, a favorable business environment, which includes low taxes and easy business set-up criteria, and quality infrastructure. On top of that, a strategic location, easy availability of skilled workforce from across the globe and a forward-thinking government will ensure that businesses new and old have plenty of opportunities to attract the right talent and flourish.
Where to set up a business
Foreign investors looking to set up a business in Dubai can either establish a legal entity in mainland Dubai or in one of over 20 specialised free zones. These free zones cover sectors such as technology and innovation, media and creative industries, healthcare and medical services, logistics and manufacturing, financial services and education, among others.
Setting up a business in mainland Dubai
Mainland Dubai refers to the area outside the free zones. Mainland companies are free to operate across a range of sectors and trade with companies within the UAE or the GCC, including free zones, as there are no territorial restrictions on business activities or the location of premises.
Registration, licensing and taxes
Mainland companies are monitored by the Dubai Department of Economy and Tourism (DET) with regard to registration and licensing. The Dubai Business Registration and Licensing Corporation (DBLC), part of DET, permits 100 percent foreign ownership for more than 1,000 commercial and industrial activities, excluding economic activities with a strategic impact, which relate to seven sectors.
Businesses exceeding AED375,000 ($100,000) in profits are subject to 5 percent VAT and 9 percent corporate tax and no income tax.
Legal forms
A company setting up on the mainland must choose one of the following legal forms that aligns with its intended business activities: general partnership, limited partnership, limited liability company, limited liability company – single ownership, private joint-stock company, public joint stock company, civil company, and sole proprietorship.
The process for obtaining a business license in Dubai is fast and efficient. Business owners setting up on the mainland can choose from five licenses, depending on the business activity. Available licenses include: industrial license, commercial license, professional license, e-trader license, dual license. Businesses can apply for licenses either at Dubai Department of Economy and Tourism authorized service centres, or online at Invest in Dubai.
Steps to set up a business in Dubai
The first step is to reserve a business name. Then, the business owner defines the legal form (structure), business activity and license partner (if any), and the DET gives the initial approval for the business to be established in the jurisdiction after reviewing the trade license application and documents. In the third step, the business owner applies to receive a business license.
Businesses in free zones
Free zones are designated economic areas, usually sector-specific, with their own rules for licensing and registration. They provide a 100 percent ownership for foreign investors.
Free zones get 100 percent exemption from corporate tax if the entity is a “qualifying free zone person”, as well as from customs duty, VAT and income tax. They also get 100 percent repatriation of capital and profits from the business.
A free zone person who is recognized as a qualifying free zone person can benefit from a preferential corporate tax rate of 0 percent on their “qualifying income” only.
Different free zones offer different legal forms or company structures. The most common ones include free zone establishment (FZE), free zone company (FZCO), public limited liability company (PJSC), private limited liability company (LLC), and branch of a local or international company.
Business owners can set up in the free zone 100 percent digitally through four simple steps: registering the company, leasing business premises, obtaining a business license for the activities, and setting up additional business services.
Visas and residency
After receiving a trade or business license from the mainland or free zone, the business owner can then convert that entry permit into a residence visa.
The UAE offers the following residency visa options sponsored/work visa, green visa, golden residence visa, remote work programme visa.
After getting the visa, business owners can then apply for an Emirates ID, the UAE government-issued identity card that is mandatory for all citizens and residents.
Regulations and support
All legal entities doing business in Dubai must keep financial records and must obtain an annual audit report containing all information about income and expenses.
It is mandatory for free zone businesses to lease office space within their free zone. Meanwhile, mainland businesses may lease office space anywhere in Dubai outside of a free zone. Moreover, all rental and lease agreements must be registered with Ejari, the online registration system for all tenancy contracts in Dubai.
Dubai offers a wide support network for startups, with an active investor ecosystem of venture capital funds, business incubators and accelerators.
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