In the past few decades Dubai has transformed itself from a port in the desert into one of the most extravagant, exciting, and go-to destinations in the world for tourism and trade. While landmarks like the Burj Khalifa and the Dubai Fountain are there to draw in the tourists, the free zones are designed to attract the business owners.
Dubai can be particularly beneficial for a company, but before you get started and book your flight to the crown jewel of the Middle East, it is important that you understand exactly how to open a company in Dubai, and what benefits are awaiting you.
Why Do Business in Dubai?
The appeal of Dubai for businesses has never been higher than it is today. It stands as an extravagant supercity, primed as a global leading hub for trade — attracting business from all corners of the planet. To encourage foreign business in Dubai, the Emirate set up a number of free zones, offering a variety of perks such as visa allowances, infrastructure, and more.
Here are the main reasons that operating within Dubai can benefit you and your business.
Dubai Free Zones
Dubai free zones are areas of the city specifically marked for trade and services in an attempt to make the region more attractive to foreign investors and business owners.
The appeal of these free zones is based on the significant benefits offered to its companies. These zones have been key to the evolution of the city and the region as a whole.
Benefits of operating within the Dubai free zone include:
- 100% foreign ownership
- 100% reparations
- Significant tax exemptions
- Visa benefits
Boasting one of the most liberal economies in the world, Dubai is a haven for business owners. There are zero taxation policies in place for many business types across all of the free zones in the nation.
Owning a company in Dubai makes you eligible for certain visa benefits that non-company owners are unlikely to be automatically eligible for. A company director will be eligible for a UAE Residency Visa for yourself, your family, and any expat employees you may bring with you.
A UAE Residency Visa makes you eligible for a number of benefits, including the ability to:
- Lease an apartment on a long-term basis.
- Free exit/entry to and from the UAE
- Easier to gain a visa for other nations, including Schengen countries
- Work and invest freely
- Open a UAE current account
- Access financial facilities
- Apply for an Emirate driving licence
- Access health services
- Register children into schools
The infrastructure within the Dubai free zones is purpose built to encourage trade and industry. With excellent facilities available; including factories and office spaces, high-speed internet universally available, and world-class travel links.
The Difference Between Free Zone and Non-Free Zone in Dubai
The key difference between free zone and non-free zone in Dubai when it comes to the running of a company is that a business operating within a free zone is unable to operate in Dubai outside of these areas without the support/sponsoring of an Emerati. Whereas within the free zones, there are no such restrictions in place.
However, there are other slight differences, which include:
|Dubai Mainland||Dubai Free Zone|
|All companies opening up on the mainland will require approvals from the required governing bodies||Every free zone will have different regulations when it comes to approvals for startup companies. Regardless though, approval will only ever be needed by the authority of the company’s specific free zone.|
|A business established in Dubai’s mainland must appoint either an individual local sponsor, a corporate local sponsor, or a local service sponsor. These figures must be UAE nationals and they will hold 51% of company shares.||A foreign investor starting a business in a free zone has complete ownership over their company without the need for a local UAE sponsor.|
|Mainland companies have no restrictions when it comes to visa eligibility. The amount of visas issued to a business are dictated by the size of their premises.||The amount of visas issued for free zone businesses will depend on which zone they are operating in. Typically a company will be issued between 1-6 for their workforce. However, it is possible to receive more.|
|A UAE mainland business must lease or purchase work space above the 140 sq.ft minimum requirement.||There is no minimum space requirement within the free zones.|
|Yearly financial audits are compulsory for all businesses operating on the UAE mainland.||A financial audit is either mandatory or not required depending on which free zone jurisdiction the company comes under.|
The Procedure to Open a Company in Dubai
The procedure to open a company in Dubai is fundamentally different depending on whether the business is on the mainland or in a free zone. There are more steps involved should you intend to open up a business on Dubai’s mainland when compared to the free zone, where it can be relatively more simple in comparison.
How to Open a Business on the Dubai Mainland
Opening a business on Dubai’s mainland requires a series of steps, procedures, and approvals from the relevant authorities and government entities.
It is now possible to apply to start a business in Dubai, in a slightly more simplified way than were you to do it in person.
Here is how to open a company in Dubai’s mainland:
- Select the business’ activity.
- Fill in the required legal form for your chosen business activity.
- Register your company’s trade name.
- Apply to the government for initial approval — foreign investors are required to obtain approval from The General Directorate of Residency and Foreigners’ Affairs to gain approval.
- Find a local sponsor
- Draft a memorandum of association and a local service agent agreement.
- Decide upon a physical location for your business.
- Get additional final approvals from the government should they be required.
- Submit documents and pay all fees
- Collect your business licence
How to Open a Business in a Dubai Free Zone
In comparison to on the mainland, opening a business in a Dubai free zone is relatively more simple. Free zones are designed to be less complicated in order to attract significant foreign investment.
Here is how to open a company in Dubai’s free zones:
Decide the Legal Entity of the Business
The first step in opening a business in the Dubai free zone is to determine the legal entity of your company. In a free zone your business can be either:
- Free Zone Limited Liability/Free Zone Company
- Free Zone establishment
The main thing separating the two different types of legal entity is the amount of shareholders involved.
Not every free zone in Dubai will allow the registration of both types of business. It is important to remember to double check with your chosen zone’s authority to determine whether it is suitable for your company.
Select Legal Trade Name
At the same time that you are determining the legal entity of your company, you should also select a trade name and check that no businesses in your selected free zone have registered the name already.
It is also important that your trade name follows requirements, such as:
- Your company name cannot have Abu Dhabi/United Arab Emirates in the name.
- Must not contain religious names or logos
- Cannot contain reference to a governing authority or external body
- Cannot violate the morals of the region
- The name must contain the legal form of the business (LLC, DMCC etc.)
- Must be compatible with the legal status of the company
- The name cannot have been previously registered
Apply for a Licence
Applying for a business licence is one of the most important aspects of opening a business. There are multiple different types of licence for companies, therefore it is important that you check with your relevant authority and only apply for the correct licence depending on the expected activity of your business.
Choose Your Office Space
As a business operating in the Dubai free zone, you are required to either buy or lease an office space. Unlike the mainland, you are able to function using a flexi-desk.
The specifics of your space will depend on the amount of employees and the activity of your business.
Register Your Business and Obtain Licence
The final step of registering your business has multiple factors you need to consider, these include:
- Gaining the initial approval from their respective free zone authority – this includes showing relevant forms, licences, financial reports, legal documentation etc.
- Paying all relevant registration and licence fees. The amount owed is dependent on the specifics of your company.
- Begin the visa process.
Once all of the above has been completed, you will be able to obtain your licence. This can be done either in person or online.
How Ruthberg Can Help You Open a Business in Dubai
The complications of opening a company in Dubai and its free zones are heavily based on the specifics of the business, and where you intend to set up.
Should you intend to open your business on the Dubai mainland it is important to be aware that the process is overall more complicated and involved than were you to do it in a Dubai freezone.
It should be remembered though that the process and cost involved of opening a business in a free zone can also be different depending on the zone and type of company you wish to open.
Ruthberg are experts in business on Dubai’s mainland and its free zones. This puts us in an ideal place to assist you in setting up your business while avoiding any unnecessary fees or possible stumbling blocks.
For more information on what Ruthberg can do to help, contact us via Whatsapp, phone at +971 50 508 0586, or email at email@example.com.