Dubai is one of the world’s leading business and investment destinations, strategically located between Asian, African and European markets. With its advanced infrastructure, investment-friendly government policies and thriving economic environment, Dubai has become an ideal choice for entrepreneurs and investors from all over the world.

Establishing a company in Dubai gives you access to a strong local market, as well as the potential to expand into regional and global markets. However, the process of establishing a company requires a thorough understanding of the legal and administrative procedures followed in the emirate. In this article, we will review the basic steps for establishing a company in Dubai, starting from choosing the appropriate type of company, through registration and licensing procedures, and understanding the taxes and fees that may be imposed on your business activity.

Whether you are looking to establish a company in one of the free zones that offer many tax benefits, or you want to establish a local company that serves the UAE market, this article will provide you with the information and guidance you need to start your business project with confidence and success.

Choosing the type of company in Dubai

When it comes to establishing a company in Dubai, the first and most important step is to choose the type of company that suits your business goals and the nature of your activity. Dubai offers a variety of options for establishing companies, which can be mainly classified into three categories: free zone companies, local companies, and foreign companies. In this section, we will review each of these types in detail to help you make the best decision.

Free zone companies

Free zone companies are an attractive option for many foreign investors, thanks to the many incentives they offer. The most important of these incentives are:

Full foreign ownership: Foreign investors can own 100% of the company without the need for a local partner.

Tax exemption: Free zone companies enjoy tax exemptions on corporate profits and personal income for a period that often extends to 50 years.

Ease of procedures: The procedures for establishing free zone companies are characterized by simplicity and speed, as all steps can be completed online.

Advanced infrastructure: Dubai’s free zones provide advanced infrastructure and modern facilities that contribute to supporting businesses.
Some of the most popular free zones in Dubai are Jebel Ali Free Zone (JAFZA), Dubai Internet City (DIC), and Dubai Media City (DMC).

Local Companies

Local companies are companies that are established within non-free zones in Dubai, and usually require a local partner who owns 51% of the company’s shares. However, local companies offer some benefits that make them a suitable option for some investors, such as:

Access to the local market: Local companies allow you to deal directly with the local market in Dubai and the UAE in general.
Diversity of business activities: Through local companies, you can engage in a variety of business activities without the restrictions of free zones.
Partnership with citizens: Partnering with an Emirati citizen can be an opportunity to strengthen local business relations and benefit from his market experience.

Foreign Companies

Foreign companies are those companies that wish to establish a branch or representative office in Dubai without having to establish a completely new company. This type of company has several advantages:

Preserving commercial identity: Foreign companies can maintain their brand and the identity of the parent company.
Benefiting from the local market: Foreign companies can benefit from the local market in Dubai to expand their business.
Flexibility in operations: Establishing a branch or representative office allows for greater flexibility in operations and future expansion.
In conclusion, choosing the appropriate type of company depends on a number of factors, including the nature of the business, the target audience, and the allocated budget. It is important to conduct a comprehensive feasibility study and consult legal and commercial experts to determine the most appropriate option to achieve your business goals in Dubai.

How to establish a company in Dubai

Establishing a company in Dubai requires following a set of precise procedures to ensure compliance with local laws and regulations. These procedures include several steps that require coordination with various government agencies. We will detail these steps below:

Obtaining initial approvals
The first step in the process of establishing a company is to obtain initial approvals from the relevant authorities. The investor must submit an application that includes preliminary information about the proposed company, such as the type of business activity planned, the legal structure of the company, and the founders’ details. It is advisable to seek the assistance of a legal advisor or an expert in government procedures to ensure that the application is submitted correctly and to avoid any delays.

Trade Name Registration
After obtaining the initial approvals, the step of registering the trade name comes. The trade name is what distinguishes your company from other companies, and it must be unique and not used by any other entity in Dubai. The investor must submit several options for trade names to the competent authority, which will examine the proposed names and ensure that they comply with the applicable laws and regulations. After the trade name is approved, it is registered and becomes part of the company’s official identity.

Issuing a trade license
The final step in the registration process is the issuance of a trade license. This step requires the submission of a set of official documents such as the company’s articles of association and memorandum of association, a copy of the founders’ passports, in addition to the required financial documents. After reviewing and verifying the documents, the competent authority issues the trade license that authorizes the company to legally practice its activities in Dubai.

Issuing a commercial license also includes determining the company’s official location, which requires submitting a lease or ownership contract for the company’s headquarters. The headquarters must be available and equipped to receive the intended commercial activity.

The registration and licensing stage requires accuracy and attention to detail to ensure that the process runs smoothly and without any legal complications. After completing these procedures, the company is ready to start and conduct its business in Dubai legally.

Taxes and Fees Establishing a Company in Dubai

Taxes and fees are an essential part of the process of establishing a company in Dubai, as entrepreneurs must understand the tax system and fees imposed on companies to ensure compliance with local laws and achieve financial efficiency. This part of the article includes an explanation of the types of taxes imposed, administrative fees, and tax exemptions available.

Types of Taxes Imposed

Dubai is an attractive destination for investment due to its flexible tax system. Currently, Dubai does not impose income tax on individuals or companies, which makes it an ideal environment for establishing companies. However, there are some taxes that may apply to certain types of businesses:

Value Added Tax (VAT): VAT has been implemented in the UAE at a rate of 5% since 2018. This tax is imposed on most goods and services, and registered companies are required to collect this tax from customers and pay it to the government.
Corporate Tax in Free Zones: In some free zones, companies are exempt from taxes for specific periods ranging from 15 to 50 years, as part of investment incentives.
Customs fees: Customs fees are imposed on some imported goods and services, and their percentage varies depending on the type of goods.

Administrative fees

The process of establishing a company in Dubai requires the payment of a set of administrative fees that vary according to the type of company and the area in which it will be established. These fees include the following:

Incorporation fees: These are one-time fees paid upon establishing the company, and include the cost of submitting applications and registering the company.

Licensing fees: An annual fee is paid to renew the commercial license, and its value varies depending on the type of business activity and location.

Service fees: Service fees may include fees for issuing permits, inspections, documentation, and other government services required to operate the company.

Tax exemptions
Dubai offers a range of tax exemptions aimed at attracting foreign investment and promoting economic growth. These exemptions include:

Free zone exemptions: As mentioned earlier, companies registered in free zones enjoy tax exemptions of up to 50 years, which enhances the attractiveness of investment in these areas.
Exemptions for specific economic activities: The UAE government offers tax exemptions for certain strategic economic activities such as manufacturing, technology, and renewable energy, to encourage investment in these vital sectors.

International tax agreements: The UAE has signed several tax agreements with different countries to avoid double taxation, making it easier for foreign companies to operate in Dubai without worrying about paying double taxes.

Finally, understanding taxes and fees is a vital part of the process of establishing a company in Dubai. With proper planning and compliance with local laws, entrepreneurs can achieve sustainable success in Dubai’s thriving business environment.

Establishing a company in Dubai is an important strategic step for any entrepreneur seeking to benefit from the emirate’s thriving economic environment and advanced infrastructure. By following the steps and procedures outlined in this article, you can successfully establish your company and ensure compliance with all local laws and regulations.

Remember, choosing the right type of company for your business and needs can have a significant impact on the success of your project. Whether you choose to establish a company in the free zones, a local company, or even a subsidiary of a foreign company, you should be aware of the advantages and disadvantages of each option.

The registration and licensing procedures may seem complicated at first, but they become much easier when broken down into clear and specific steps. Ensuring that you obtain initial approvals, register your trade name, and issue your trade license in a timely manner will help you avoid legal and administrative obstacles.

It is also important to be aware of the various taxes and fees that may be imposed on you, and to understand the potential exemptions that may be available to your company. Dealing effectively with these financial aspects can enhance the sustainability and profitability of your company in the long term.

Ultimately, establishing a company in Dubai is not just an administrative process, but an investment in a bright future that requires good planning and careful implementation. By applying the information and guidelines mentioned in this article, you will be fully prepared to start your entrepreneurial journey in one of the most dynamic and advanced cities in the world. We wish you the best of luck and success in your new venture.

Top Frequently Asked Questions About Starting a Business in Dubai

What types of companies can be established in Dubai?
You can establish a variety of companies such as Limited Liability Companies (LLC), Sole Proprietorships, Holding Companies, and Commercial and Industrial Companies. There are also options to establish companies in free zones that allow full foreign ownership.

What documents are required to establish a company in Dubai?

The documents include: valid passports, residence visas (if required), a business plan, an office lease contract, and personal photos of partners and directors. You may also need additional documents depending on the type of company and activity.

How long does it take to establish a company in Dubai?
The incorporation process usually takes from a few days to weeks, depending on the type of company, the speed of submitting the documents, and obtaining the necessary approvals.

What are the costs of establishing a company in Dubai?
The costs depend on the type of company and location. Costs typically include licensing fees, company registration, office rent, visa fees, and any other government fees. There may be additional costs depending on the type of activity.

What are the main benefits of establishing a company in Dubai?
Benefits include: a strategic global location, a sophisticated business environment, tax exemptions, full ownership in free zones, excellent infrastructure, and a business-friendly legal environment.