Dubai is one of the most attractive destinations for entrepreneurs and investors who want to start a business in a dynamic and diverse market. Dubai offers a range of benefits for business owners, such as a stable economy, a strategic location, a tax-free environment, a world-class infrastructure, and a supportive government.
However, starting a business in Dubai also requires careful preparation and planning. There are different rules and regulations that apply to different types of businesses and activities. You need to follow the right steps and procedures to ensure that your business is compliant and successful.
In this article, we will show you how to start a business in Dubai in eight easy steps. We will cover everything from selecting a business activity and a jurisdiction, to applying for a trade license and registering your company. By following this guide, you will be able to launch your business in Dubai with confidence and ease.
Step 1: Select a Business Activity
The first step to start a business in Dubai is to decide what kind of business activity you want to do. This will determine the type of license you need, the legal structure of your company, and the jurisdiction you can operate in.
There are over 2,000 business activities available in Dubai, ranging from trading and manufacturing, to consulting and e-commerce. Choose one or more activities that suit your business goals and expertise. However, Make sure that your chosen activity is permitted and regulated by the relevant authorities in Dubai.
Find a list of business activities and their descriptions on the website of the Department of Economic Development (DED), the main authority that issues business licenses in Dubai. Use the DED Business Activity Search tool to find the best match for your business idea.
Step 2: Choose a Jurisdiction
The next step to start a business in Dubai is to choose a jurisdiction where you want to set up your company. There are two main types of jurisdictions in Dubai: mainland and free zone.
Mainland Dubai falls under the DED’s jurisdiction. To start a business there, you’ll require a license from the DED and must adhere to its rules. Additionally, you’ll need a local sponsor, either a UAE national or a company owned by UAE nationals, who will possess 51% of your company’s shares. The advantage of launching a business in mainland Dubai is the ability to trade freely with anyone in the UAE market, without facing any restrictions or limitations.
Free zones are like special playgrounds for people who want to start their own businesses. These playgrounds are in different parts of the world and they have some cool rules that make it easier for people to do business.
To play in these zones, a person needs a special pass called a license from the people who manage the playground. The best part is, they don’t need a local friend to start their business and they can own all the parts of their business.
There are some super cool benefits of playing in these zones. They don’t have to give away part of their money as taxes, they don’t have to pay extra charges when they bring in or take out stuff, they can take all their profits back home, and the rules are pretty simple.
But there’s a catch. They can’t sell their stuff directly to people in the UAE unless they have a local helper or a shop. So, it’s like having a special club membership with some really cool perks, but also a few rules to follow.
Dubai, a city full of skyscrapers, has more than 40 special playgrounds for businesses, called free zones. Each playground is unique and caters to different types of businesses.
Here are some of the most famous playgrounds:
- Dubai Airport Free Zone (DAFZA): This is a favorite spot for businesses related to airplanes, logistics, and trading.
- Dubai International Financial Centre (DIFC): This playground is popular among banks, finance companies, and insurance firms.
- Dubai Internet City (DIC): Tech companies and telecom firms love this place.
- Dubai Media City (DMC): This is where media, advertising, and entertainment businesses hang out.
- Dubai Multi Commodities Centre (DMCC): Businesses dealing with commodities, metals, and minerals find this playground useful.
- Dubai Silicon Oasis (DSO): This is a hub for technology and innovation.
To find out more about these and other playgrounds in Dubai, there’s a website of the Dubai Free Zones Council (DFZC) that has all the details.
Step 3: Determine the Company’s Legal Form
The third step to start a business in Dubai is to determine the legal form of your company. This will define the ownership, liability, and governance structure of your company. There are different legal forms available in Dubai, depending on the type of business activity and jurisdiction you choose.
Some of the common legal forms in Dubai are:
- Sole Proprietorship: a business owned and operated by one individual, who has full liability for the company’s debts and obligations
- Civil Company: a business owned and operated by two or more professionals, who share the liability for the company’s debts and obligations
- Limited Liability Company (LLC): a business owned by two or more shareholders, who have limited liability for the company’s debts and obligations, up to the value of their shares
- Branch Office: a business that is an extension of a parent company, either local or foreign, that operates under the same name and activity as the parent company
- Free Zone Company (FZC): a business that is registered and operates within a free zone, and can have one or more shareholders, who have limited liability for the company’s debts and obligations
- Free Zone Establishment (FZE): a business that is registered and operates within a free zone, and has only one shareholder, who has limited liability for the company’s debts and obligations
You can find more information about the legal forms and their requirements on the websites of the DED and the DFZC.
Step 4: Get Approval for the Company Name and Activity
The fourth step to start a business in Dubai is to get approval for the company name and activity from the relevant authority. This will ensure that your company name and activity are in line with the rules and regulations of the jurisdiction you choose.
Now apply for the initial approval online through the DED eServices portal or the DFZC eServices portal, depending on the jurisdiction you choose. Provide some basic information about your company, such as the proposed name, activity, legal form, and shareholders.
Pay a fee for the initial approval, which varies depending on the jurisdiction and the type of license you need. Find the fee structure on the websites of the DED and the DFZC.
Once you get the initial approval, reserve your company name for a period of 60 days. Follow some guidelines for choosing a company name, such as:
- The name should not be offensive, misleading, or identical to an existing company name
- The name should reflect the nature and activity of the company
- The name should not include any religious, political, or sectarian references
- The name should not include any abbreviations, unless they are part of the trade name
After that check the availability of your company name and reserve it online through the DED eServices portal or the DFZC eServices portal, depending on the jurisdiction you choose.
Step 5: Apply for a Trade License
The fifth step to start a business in Dubai is to apply for a trade license from the relevant authority. This will authorize you to conduct your business activity in Dubai and operate company legally.
Now apply for the trade license online through the DED eServices portal or the DFZC eServices portal, depending on the jurisdiction you choose. Provide some documents and information about your company, such as:
- The initial approval certificate
- The company name reservation certificate
- The passport copies of the managers and shareholders
- The articles and memorandum of association of the company
- The proof of share capital
- The lease contract or tenancy contract of the office space
- The external approvals from the relevant authorities, if applicable
To get a trade license, a certain amount of money, known as a fee, has to be paid. This fee isn’t the same for everyone; it changes based on where the business is and what type of license is needed. The DED and DFZC websites have all the details about these fees.
After the license application is sent, a message will come from the authority in charge in a few days. This message will tell if the application was accepted or not. If it was accepted, the trade license will be given. This license is good for one year and can be made valid for another year if renewed.
Step 6: Register the Company
Step six in starting a business in Dubai involves registering the business with the right authority. This step makes the business official and allows it to do things like open a bank account, hire people, and get visas.
The business can be registered on the internet. This is done on either the DED eServices portal or the DFZC eServices portal. The choice depends on where the business is located.
For the registration, some items need to be provided. These include:
- The trade license
- The memorandum and articles of association of the business
- Copies of the passports of the shareholders and managers
- Proof of share capital
- Approvals from the right authorities, if needed
There is also a fee that needs to be paid for the registration. The amount of this fee changes based on where the business is located and what type of business it is. The details about these fees can be found on the websites of the DED and the DFZC.
After the business is registered, a certificate of incorporation is given. This certificate is an official document that shows that the business is real and legal.
Step 7: Find a Local Agent if Needed
Step seven in setting up a business in Dubai is to get a local agent if it’s necessary. A local agent is like a helper who connects the business with local authorities or the market.
If the business is in mainland Dubai and the owner isn’t from the UAE or GCC, a local sponsor is needed. This sponsor will own more than half of the business’s shares and act as the local agent. The sponsor’s job is to get approvals and permits for the business, deal with any legal or admin problems, and they might get a fee or some of the business’s profits.
If the business is in a free zone and wants to trade with the UAE market, a local service agent or a local commercial agent is needed. They will act as a go-between or distributor in the UAE market. Their job is to help with importing and exporting goods or services, deal with any customs or tax problems, and they might get a fee or commission for their work.
Local agents can be found in different ways, like online, in business directories, through people’s recommendations, or at networking events. The DED or DFZC can also give advice and suggestions. But it’s important to pick a local agent who is reliable, trustworthy, and knows about the business’s industry and market. It’s also important to have a clear, written agreement with the local agent that explains what each party has to do.
Step 8: Get External Approvals
The last step, number eight, in creating a business in Dubai is to get the okay from the right people, if it’s needed. This makes sure the business follows the rules of the industry it’s in.
Certain businesses need the okay from certain people or groups before they can get a trade license or start the business. For example, businesses in health care, education, tourism, or media need the okay from the Dubai Health Authority (DHA), the Knowledge and Human Development Authority (KHDA), the Department of Tourism and Commerce Marketing (DTCM), or the National Media Council (NMC).
The DED and DFZC websites can tell if the business needs the okay and how to get it. They will need to see some documents and information about the business, like:
- The first okay certificate
- The trade license application
- The company name reservation certificate
- The passport copies of the managers and shareholders
- The memorandum and articles of association of the company
- The proof of share capital
- The lease contract or tenancy contract of the office space
- The qualifications and certificates of the professionals or employees
- The business plan or feasibility study
There’s also a fee for the okay, which changes depending on the person or group and the type of okay needed. The fee structure can be found on the websites of the people or groups.
After getting the okay, a certificate or a letter from the person or group is received, which needs to be given to the DED or the DFZC to finish the trade license application and start the business.
And that’s it! All eight steps to start a business in Dubai are done. Hopefully, this guide has been useful and informative. If there are any questions or comments, don’t hesitate to get in touch. Good luck with the business venture in Dubai!