dubai business company ae d4f13ae2 300x159 - How to start a business in Dubai as a foreigner?
April 21, 2021

A new business setup in Dubai just got easier than ever before. The government of the UAE is eager to attract entrepreneurs from all around the world to boost their economy. They are trying to move the focus of their economy from oil and gas to different sectors. As a result, the ease of doing business in Dubai is increasing with every new law and amendment.

Recently, they made an amendment that allows foreigners to own 100% of a business in Dubai. This applies to almost all businesses that are allowed in the UAE except some strategically important ones. Businesses in the transportation and oil and gas sector still cannot be 100% owned by foreigners. Other businesses in the service, trade, finance, and real estate industries are always welcome in Dubai.

Process of business setup in Dubai

If you already have a business in mind, you need to start by researching whether the business is legal and profitable in Dubai or not. Considering that the business you have in mind is allowed and profitable, here are the steps you need to follow to start a business in Dubai as a foreigner:

·       Business activities

The business you have in mind will require a trade license. And the type of trade license you will have to acquire will depend on the business activities your business will perform. There are thousands of business activities you can perform in the UAE, but they are categorized under four trade licenses. They are Commercial Trade license, Industrial Trade License, Professional Trade License, and Tourism Trade License.

·       Jurisdictions

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You can choose between two economic zones for your business setup in Dubai. The mainland and free zones are the two jurisdictions. Each comes with its own advantages and disadvantages. Some businesses are more benefited when located in the mainland and some in the free zones. Different free zones also cater to different businesses as well. For example, the free zones in the ports favor import and export businesses over IT businesses. The industrial free zones favor the manufacturing and packaging business.

·       Legal structure

Since your business will be considered as a separate entity, it will be subjected to rules and regulations. The legal structure of your business will determine the consequences of its actions. Here are the legal forms you can choose for your business in Dubai:

  1. Sole Proprietorship
  2. General Partnership
  3. Joint Venture
  4. Professional Company
  5. Civil Company
  6. Limited Liability Company
  7. Public Shareholding Company
  8. Private Shareholding Company

The legal structure you select will determine the future course of your business. So, pick the correct form after considering your options carefully.

·       Trade name

You need to get the trade name reservation certificate and trade license from the Department of Economic Development in Dubai. The trade name you select has to be unique. So, make sure the name does not match with any other businesses in the UAE or the Department of Economic Development will not provide the required certificate. As explained in the first step, you need to determine your business activities and apply for the respective license.

·       Office space

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You also need some important documents for the application to the Department of Economic Development in Dubai. Some of these documents can only be obtained when you acquire office space in Dubai. These documents include a tenancy agreement, an EJARI, and some other Real Estate Regulation Authority documents. Consider the size of your office space because that will determine the number of visas you can apply for.

·       Initial approval

When you have decided on all this information and collected the necessary documents, you have to get initial approval from the Department of Economic Development in Dubai. They will provide you the initial approval certificate if everything is valid. They will reject your application if they find that some things do not agree with the laws in the UAE. Then you will be back to square one. That is why it is wise to seek help from professionals who have experience with business setup in Dubai.

·       External approval

Based on your business activities, you will also need some external approvals from other governmental and non-governmental agencies. The Department of Economic Development will direct you to the embassy or bank from where you need to get these external approvals.

·       Memorandum of Association

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The last step before the final application for the trade license is to draft the Memorandum of Association. As the Memorandum of Association needs to be drafted to comply with the requirements of the UAE. It is a delicate and important matter, so you should get the professionals who have drafted a Memorandum of the association before to do it.

·       Trade license

Finally, you need to submit all the documents to the Department of Economic Development in Dubai and pay the fees. Here is a list of all the documents you will require:

  • Passport copies of all the partners
  • Trade name reservation certificate
  • Initial approval certificate
  • External approval certificates
  • EJARI registration certificate
  • Tenancy contract

After all, this is said and done, the Department of Economic Development will take 1-2 weeks to provide the trade license for your business.

Why choose Dubai for your business setup?

Here are a few reasons why Dubai is the perfect spot for your start-up:

·       Tax benefits

Personal and corporate income is free of tax in the UAE for selected sectors.

·       100% ownership of businesses

Many other countries do not offer 100% ownership to foreigners.

·       Available human resource

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Dubai has liberal labor laws, which attract talents from around the world.

·       Geographic location

The geographic location of Dubai allows makes it a central hub for businesses.

·       Free zones

Free zones make business setup in Dubai even easier than it already is.

Bottom Line

Dubai is an attractive spot for entrepreneurs from around the world. However, the ease of doing business in Dubai does not mean that starting a new business is easy. A new business setup in Dubai is only straightforward and easy when done with no errors. Any mistakes will only lengthen the process and make things complicated. That is why it is suggested to seek counsel from company setup professionals who have gone through the whole process many times.


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