How to Start your Business in Dubai?
You can start your business in either UAE mainland which is also called onshore or a business presence in one of the registered UAE free trade zones or Offshore. A mainland company is a company that is set up in the Mainland Jurisdiction of UAE and can trade goods and services within UAE (except Freezone) or outside the UAE.
You as an investor can apply for an online setup business or can start in manually. However starting a business manually requires a series of steps, procedures and approvals from the Economic Department and other government entities. In terms of the legal forms, UAE Company Law provides the regulations governing the operations of foreign business.
Dubai offers prospective and existing investors, all the advantages of a highly developed and sophisticated economy. Dubai’s infrastructure and services match the highest international standards, facilitating efficiency and quality.
Dubai is a dynamic, business-friendly city with a great track record of executing major projects. Dubai’s success story as a world leader in enterprise and modernization has earned the city great international distinction and made it an important business, trading and tourism hotspot.
Mainland company formation in Dubai, UAE gives you the freedom to extend your business’ branches to other parts of Dubai and across other emirates. The greatest benefit is that the mainland company can operate the business across the length and breadth of the UAE. Mainland company operations are not restricted to the geographical boundaries of the free zone.
What are the advantages of setting up business in Mainland Dubai, UAE?
While businesses have vast and expanding growth opportunities in the UAE, Dubai has remained the leading commercial hub in the Middle East, largely on account of the following distinctive features:
- Dubai is better known as the commercial capital city of the UAE
- Dubai enjoys one of the highest per capita incomes in the world
- 100% ownership and location flexibility
- No foreign exchange control, quotas or trade barriers
- Competitive import duty (5%) with exemptions
- Only 5% VAT is applicable on goods and services with exemptions
- A global business focal point
- State policies permit full repatriation of profit and capital
- A vibrant and highly efficient economy
- Most modern infrastructure
- Mixed population from all over the world
- Stable currency
- Presence of major multinational corporations
- It has one of the biggest airports in the world
- No income tax, no corporate tax (provided certain limitations are met) and no withholding tax
- Proximity to the Indian Subcontinent and Europe
- No restrictions on imports and exports except for some minor customs and administrative duties.
Categories/Types of Business Organization in Mainland Dubai, UAE
What are the categories or types of Business organizations in Mainland Dubai, UAE?
Before registering a company in Dubai you must select the appropriate category/type of business entity. There are eight main types of companies in Dubai, however, each category has its own subdivisions.
The Federal Law provides for eight categories of business organization:
- Limited liability company,
- Limited Liability – Single Owner (LLC-SO)
- Joint Liability Company
- Representative Office
- Public Joint Stock Company (PJSC)
- Private Joint Stock Company
- Professional Companies
Owing to certain restrictions, the choices commonly adopted by foreign companies are generally limited to a Limited Liability Company (‘LLC’) or a branch. The other options e.g. partnerships and joint ventures etc. are usually not favored by foreign investors.
What is a Limited Liability Company?
Limited Liability Company (LLC) is the most common form of business in Dubai/UAE. A Limited Liability Company is a company where the number of partners is at least two (2) but shall not exceed (50). A partner shall be liable only to the extent of its share in the capital.
The holder of the capital of the company shall not be liable for the obligations of the company other than to the extent of the capital as set out in its Memorandum of Association. The company shall have enough capital to achieve the purpose of its incorporation and the capital shall consist of shares equal in value. Shares may be in cash and/ or in-kind and shall be paid in full at the time of incorporation.
What is Limited Liability – Single Owner (LLC-SO) company?
Notwithstanding the minimum number of shareholders as two set forth in the Law, a single natural or corporate person may incorporate and hold a Limited Liability Company. The holder of the capital of the company shall not be liable for the obligations of the company other than to the extent of the capital as set out in its Memorandum of Association. The provisions of the Limited Liability Company contained in this Law shall apply to such person to the extent not in conflict with the nature of the company.
The liability of the partners in an LLC is limited to the extent of their investment in the company. LLCs can conduct any commercial or industrial business activity in the jurisdiction.
What is a Joint Liability Company?
A Joint Liability Company is a company that consists of two or more partners who are natural persons, to be jointly responsible in all their monies for the obligations of the company. A joint partner shall have the capacity of a trader.
Such a partner shall be deemed to conduct the commercial activities in person in the name of the company. The declaration of the bankruptcy of a Joint Liability Company means the declaration of bankruptcy of all the partners by the power of the Law.
What is a Branch Office of Foreign Companies?
Article 327 of the Companies Law allows a foreign company to exercise its main activity in the UAE by opening a branch office. A foreign company that opens a branch in the UAE may exercise freely the activities for which it is licensed.
Article 330 of the Law states that no foreign company shall conduct its activity in the UAE unless entered in the Foreign Companies Register with the Ministry of Economy and has obtained the required approvals and licenses from the relevant emirates where it operates.
Though physically apart, the branch office does not constitute a separate legal entity. As a functional means to expand and grow business reach across countries, branch offices serve as an operational vessel to establish company presence in new regions and enhance prospects of sales and revenue.
You must secure approval from the respective authority after a permit letter is issued regarding business activity from the Ministry of Economic and Commerce.
What is a Representative Office of Foreign Companies?
Article 332 of the Companies Law permits a foreign company to establish its representative office whose object is limited to market and production capabilities study without the performance of any commercial activity in the UAE.
What is a Public Joint Stock Company (PJSC) or a Public Shareholding Company?
A Public Joint Stock Company is a company with capital divided into equal negotiable shares. In PJSC, a shareholder’s liability is limited by the number of shares held by him. Minimum capital required to form a Public Joint Stock Company is AED 30 million with a nominal face value of AED 1 – 100. A PJSC must have at least 5 founder members. Partners can practice any industrial, commercial or professional business activities in accordance with DED business regulations.
The management should be vested with a board of directors consisting of a minimum of 3 to a maximum of 11 members whose term of office may not exceed three Gregorian calendar years. The Law stipulates that the companies engaged in banking, insurance, or financial activities should be run as public shareholding companies.
What are Private Joint Stock Companies (Pr. JSC) or Private Share Holding Company?
An approval from the Ministry of Economy must be obtained to establish a private shareholding company.
A Private Joint Stock Company is a company where the number of shareholders is at least 1, and no maximum. The capital of the company shall be divided into shares of the same nominal value, to be paid in full. It is not permitted to offer the shares for public subscription.
A shareholder shall be liable only to the extent of his share in the capital of the company. The issued capital of the company shall not be less than AED 5,000,000 (AED five million) and shall be paid in full. The founders shall choose from among them a committee consisting of at least 2 members to complete the incorporation procedures and to register the company with the relevant authorities.
What are Professional Companies (Civil Companies)?
Foreign investors, who are qualified, can set up a partnership firm to practice a professional activity as per the UAE Civil Code and as per the Dubai Law No. 13 of 2011 regulating the conduct of economic activities. Professional companies are set up among professionals to carry out non-commercial activities.
The firms registered as professional entities may only practice the specific professional activity and not any commercial activity. Such professional activities include rendering management consultancy marketing consultancy, consulting on various other fields, organizing and keeping accounting records or similar activities approved by Dubai Economy from time to time.
As per the UAE Commercial Companies Law, earlier the foreign ownership of an LLC may not exceed 49%, with the balance of 51% to be held by a UAE national. However, the UAE Commercial Companies Law is currently being re-drafted, and the new law is expected to allow 100% foreign ownership (subject to approval from the relevant authorities) for specific industries set up onshore.
Major Economic Sectors in Mainland Dubai, UAE:
What are the major Economic Sectors in Mainland Dubai, UAE?
The 7 Major Economic Sectors in Mainland Dubai, UAE are:
- Wholesale and Retail Trade
- Transport, storage, Communication & IT
- Banking Insurance and Capital Market
- Real Estate
What is DED – Dubai Economic Department, UAE
The Department of Economic Development is responsible for proposing the economic and commercial policy of Dubai and preparing the plans and programs required for implementing this policy. The Department provides commercial licensing and trade name registration and conducts the necessary studies to encourage and promote the private sector.
Dubai Economic Department fosters an environment for sustainable economic development to enhance the economic welfare and prosperity of Dubai and ensure consistent, relevant and timely customer communications and outreach efforts, to improve customer services across DED Group through automation, online offerings, streamlining processes and better customer care systems, promotion of entrepreneurship and SMEs.
Mainland company formation in Dubai, UAE gives you the freedom to extend your business’ branches to other parts of Dubai and across the UAE. The primary requirement for all business activities in the UAE is to own a license in any of the categories: Commercial, industrial and Professional.
Dubai Economy and other bodies have taken a number of initiatives in pursuit of Dubai’s vision. Like the following:
- Dubai Foreign Direct Investment (Dubai FDI): is part of the Department of Economic Development in Dubai, and provides essential information and invaluable support to foreign businesses looking to invest in Dubai’s thriving economy and take advantage of Dubai’s strategic location to access the MENASA region.
- Dubai Small and Medium Enterprises (Dubai SME): It was developed as a resource for support, information and outreach for the growing small and medium enterprise sector.
- Dubai Events and Promotions Establishment (DEPE): It is tasked with promoting Dubai as a year-round destination of events and retail promotions.
- Dubai Exports: It was created to ensure the success of the export sector in Dubai and the UAE, providing constant guidance, advice, and practical support to both buyers and suppliers.
- Dubai Competitiveness Office (DCO): It was established to manage the Emirate’s competitiveness affairs through coordination with local, federal, regional, and international bodies.
- Invest in Dubai (IID): The “Invest in Dubai” platform is a unified digital platform, the first of its kind to set up and conduct business in Dubai, giving investors the opportunity to get commercial licenses and start a business within just a few minutes through a digital platform, government interconnection and technology.
- Dubai Raffles: It is an innovative and integrated digital platform to manage raffle draws and other promotions including Scratch & Win campaigns, conducted in the Emirate.
- Blockchain – Unified Corporate RegistryPlatform.
- Rashid – Initiative by Smart Dubai Government.
- Happiness Lounge – a Prestigious and Distinct Services Environment that brings Happiness to the Business Community.
- Dubai Economy Talks – a Sustainable Knowledge Exchange Platform to discuss economic trends, indicators and updates. Dubai Consumer – terms and conditions of using consumer protection tent card in retail stores
- Supreme Legislation Committee (SLC): The SLC will regulate the issuing and review of legislation in the Emirate by adopting a clear and effective procedure and methodology, developing the legislative process, improving legislation quality and efficiency, and building a legal system that would fulfill the aspirations and ambitions of the Emirate.
- The Executive Council: The Executive Council aims to positively impact. Dubai’s governance, trade and culture in a way that is sustainable and promotes ongoing growth.
- Dubai Electronic Security Center (DESC): This was established to ensure that Dubai becomes a leader in cyber security and the protection of information from external cyber threats.
- Dubai Next: It is an initiative of Dubai SME, a digital crowdfunding catalyst for innovative enterprises in new and emerging sectors as well as a meeting point for innovators and the wider community to share the benefits of startup financing.
- Community Development Authority (CDA): this gives a special priority to the social sector and emphasizes on the government’s vision to increase people’s happiness and quality of life.
Approvals Entities for Specialised activities in Mainland Business set up in Dubai, UAE
What are entities for Specialised activities?
Though Dubai Economy regulates, controls and issues commercial, professional and industrial licenses to each entity operating in Dubai, there are certain activities that require prior approval or subsequent permits from relevant Ministry/Department to enable the investor to operate in the emirate.
Best Locations to set up a Business in Mainland Dubai, UAE
What are the best locations for a business setup in Dubai Mainland, UAE?
Companies established in Dubai mainland (onshore) get the freedom to trade not only in Dubai and the UAE, but also in wider Gulf Cooperation Council (GCC) states and all the Free Zones. Majority of the business owners across the world wishes to consider the Dubai is the first place for their investment. However, is advisable to choose the correct location according to the type of business. The right location will create a fertile ground for the growth of your entity.
The below are the important factors to be considered while choosing the location for your business:
- Ease of Transportation
- Costs and Charges for Setting Up
- Straightforward Official Formalities
Most preferred locations to start a Mainland Dubai Company in UAE:
- Business Bay: Many projects and developmental activities are taking place in the region. Business Bay is ideal for investment in the hospitality sector. The close proximity to Burj Khalifa is another added advantage. It is centrally located and the area provides good connectivity with the rest of the city.
- Bur Dubai: It is next to Dubai Creek and attracts a lot of tourists. This is place is ideal for textile, tourism, hotel, spices, trading industry, and computing accessories. The Ruler’s Court, Dubai Museum, heritage villages, historic places, and some of the oldest souks and is known for showcasing the culture and tradition of the Middle East.
- Deira: Deira is a prime trading hub and tourists’ favorite place for shopping. Deira – being one of the oldest localities of Dubai is home to the workforce populace. The region has so many apartments, and hotels and is a bustling place. Deira is a desirable niche for many SMEs.
- Sheik Zayed Road: The key business and tourist destinations like Dubai World Trade Centre, Emirates Tower, Financial Centre, etc are located along the most happening Sheikh Zayed Road. The world-famous Burj Khalifa stays very close to Sheikh Zayed Road. Sheikh Zayed Road offers scenic beauty too.
- Al Qusais: Al Qusais is an outlying region of Dubai. Even though it is located in the suburbs of Dubai, Al Qusais has well-developed infrastructure facilities. The region comprises housing areas and various industrial establishments. Therefore, the region is ideal to start service-oriented endeavors, educational concerns, hospitals, and trading ventures. Al Quisais could be the ideal location for your business formation if your product or service is cost-effective and your target audience doesn’t have high spending power.
- Al Quoz: This place is ideal for manufacturing companies and warehouses. It has educational institutes, medical centers, business complexes, shopping hubs, malls, retail stores, theatres, commercial outlets, restaurant chains, and more. Al Quoz is located close to the central parts of Dubai creating easy accessibility to major roads and touchpoints
- Al Karama: Karama is situated in the middle of Sheik Khalifa Bin Zayed Street and is one of the most popular area in Dubai. The area is known for a number of south and other Asian delicacies restaurant and attracts many tourists.
Major Licences issued for businesses operating in Mainland Dubai, UAE
What are the four major licences are issued for business operating in mainland Dubai, UAE?
There are four major licenses are issued in Mainland, Dubai, UAE and they are:
- Professional License – License issued for firms that undertake service-oriented endeavors like consulting, accounting firms, legal firms, educational consultants, environmental consultants, tax consultants or any other consultancies that deal with administration and management. The cost involved in the issuance of a professional license is less. In certain scenarios, professional company licenses demand the educational qualification of the shareholders in order to ensure the quality of the services. There are several company structures that can be formed with a professional license: A Limited Liability Company where a local sponsor holds 51% of the company; and a Civil Company and a Sole Establishment where the foreign investor(s) have 100% ownership of their company. However, in setting up a Civil Company or a Sole Establishment, a UAE national must be appointed as a local service agent (LSA) to complete the legal formalities.
- Branch office Licence: You may set up your branch office in Dubai. The branch company can operate as the child company of the parent company and perform all the business activities and transactions vested upon the parent company. Business establishments of the financial sector like banks, financial institutions and insurance companies can set up branch offices in Dubai.
- Commercial License – License issued for those business establishments that undertake to buy and selling of goods or services or simply trade and can be accomplished easily. Broadcast and communications companies, rental transportation services, retail companies, construction companies, healthcare businesses, real estate businesses, and other general trading entities also need to apply for a commercial trade license.
- Industrial License – License issued for firms that are involved in the manufacture of goods like factories, industries etc. In addition, approval from the External Ministries and government departments such as the Ministry of Finance, and Ministry of energy are required depending upon the type of industrial activity.
- Tourism Licence – All tourism-related activities require a valid Tourism License. The Department of Tourism and Commerce Marketing DTCM has a major role in the issuance of Tourism licenses.
How to set up your mainland Company in Dubai, UAE?
The steps involved in obtaining a trade license from the DED Dubai are very straightforward, however, it must be executed the right way to avoid any delay in the process or misrepresentation of business activity in the trade license. You may contact the respective business consultant who will provide you with end-to-end assistance in obtaining a trade license and continuing business operations in UAE seamlessly without any hassles.
Step by step instructions for Mainland Company Formation in Dubai, UAE:
- Select the Business activity and company structure: First you need to decide on the business activity type: Commercial, Trading, Consultancy, E-commerce, Real Estate, or Manufacturing matching your budget. You can choose several activities in one group of activities.
- Select the Legal form and Trade Name: When you choose a legal form for your business activity you must take into consideration of your business activity, type of business, number and the nationality of shareholders. Some of the structures used for company formation in Dubai are Sole proprietorship, Civil Company, Limited liability company (LLC), Private limited company (PLC), Public joint-stock company (PJSC) Branches, regional headquarters and representative offices of foreign companies, Single-family offices. It’s advisable to suggest three name options in order of preference – names must be clear, have meaning, not related to any religion, any country or government activity, political organization, religious organization and any punctuation marks. At this stage, it’s required to submit documents of all partners and the appointed manager partners (Passport / Visa / EID / NOC for UAE Residents / Residential address).
- Apply for Initial Approval Dubai Economic Department (DED): Obtain Initial Approval from the Department of Economic Development (DED). DED performs the notarization of MOA and then issues the Initial approval. You may contact a business consultant to get this formality done.
- Trade name registration – Find an appropriate trade name for your business and get it registered with DED. DED has the right to alter or discard the trade name if it has already been selected by another company.
- Prepare MOA & LSA Agreement: Memorandum of Association (MOA) – Get ready with the MOA that clearly indicates the operational guidelines of your company like the purpose, capital involved, share details, etc. LSA (Local Sponsor Agreement) based on the information provided.
- Establish Business Location– An office space is mandatory to set up any mainland business in Dubai or UAE. A registered office address is required for the issuance of a trade license. Information regarding ownership agreement or tenancy can be produced as evidence of a registered address.
- Get Approval: Some business activities will require external approvals from other authorities such as MOH (Ministry of Health and Prevention), Civil Defense, Police, etc.
- Apply for the License – If all the above-mentioned prerequisites are satisfied, you may apply for a trade license. DED is the agency that issues the mainland license in Dubai, UAE.
- Pay the License fee – Submit all the relevant documents connected with company incorporation to the Commercial Registration Department and DED and pay the required license fee.
- Get your License – Get your trade license from the DED. The company registration procedures shall be accomplished in a week if all the formalities are through. After the MOA, LSA signed, all approvals obtained, and all payments have been made. The license will be issued along with the MOA.
Once you receive the license there are some further steps that you need to be complete in order to be a fully functional business:
- Get a Corporate Bank account
- Get the Dubai Chamber of Commerce and Industry membership.
- Making a company stamp
- Registration with the Ministry of Finance of Immigration to obtain an establishment card to apply for shareholder /investors visas.
- Registration with the Ministry of Labour to obtain labor cards and employment visas to accomplish the employee-related formalities like labor cards and visa
- Creating a WPS mechanism to enable the companies to pay their employees’ salaries.
Documents required for setting up Mainland Company in Dubai, UAE:
What are the Documents required for setting up a mainland company in Dubai UAE?
Business licenses are provided mainly depending on the nature of the business activity and the jurisdiction of the business. The document requirements vary depending on the type of the shareholder. Individual shareholders require a specific group of documents. Corporate shareholders require another set. Both requirements are listed below.
The most prominent licenses for business setup in Dubai are commercial license, industrial license, and professional license. It takes around one week or more to get the trade license from the time you receive your initial approval. This mainly depends on the business activity and the external documentation.
Here is the general list of documents and certifications that are required for business setup in Dubai.
- Registration and licensing application, as well as proof of reserved trade name.
- Photocopy of applicant’s passport (together with residence permit/visa details for non-GCC nationals).
- Passport size photo of the director or manager
- Details of the share capital
- Attested LLC agreement
- No-objection letter from the applicant’s current sponsor for non-GCC nationals.
- Permission from the court to practice business, for applicants under 21 years.
- Approval issued by other Government authorities according to the type of activity.
- Board resolution (if the partner is an existing corporate entity).
- Name reservation and initial approval certificates
- EJARI registration certificate
- Dubai Chamber of Commerce and Industry Registration
- Photocopy of the Memorandum of Association duly signed by the Notary Public.
- Endorsements from Governmental Agencies (For Gas and Oil Companies)
- UAE Central Bank Approval and License (For Financial Institutions)
- Finance and Industry Ministry Certification (For Manufacturing Companies)
- Economy and Commerce Ministry Certification (For Insurance Companies)
- Health Ministry Certification (For Medical & Pharmaceutical Firms)
The documents needed for individual and corporate shareholders vary. The essentials that you need to keep handy are:-
Individual shareholder documents
- The foreign shareholders, directors, and managers are required to submit copies of their passports.
- Employer’s NOC is applicable if the shareholder/manager is on an employment visa of any company in the UAE is on an employment visa.
- UAE shareholder’s National ID card (copy)
FOR CORPORATE SHAREHOLDER
- List of shareholders in Arabic
- The exact copy of the Certificate of Incorporation and Memorandum and Articles of Association legalized from the UAE Embassy
- National ID card copy of the UAE National Partner
- If the company is a shareholder in the proposed LLC, No Objection Certificate from the Free Zone/ Offshore Authority
- Original Board Resolution for company setup with Power of Attorney notarized and legalized from the UAE Embassy.
Additional Documents for Professional and Public Shareholding Companies
CV and Degree Certificate Documents have to be:-
- Certified as true copies by the Notary Public in the country of origin
- Approved by the UAE Embassy in the country of origin
- Approved by the Ministry of Foreign Affairs in the UAE
Documents needed for MOE – Initial approval
In order to get MOE – Initial approval, the following documents are necessary.
- Registration forms
- Trade name registration (proof)
- Parent company’s MAA (Memorandum and Articles of Association)
- Parent company’s Certificate of Incorporation
- Passport copy of the director
- Parent company’s NOC
- Local service agent – Naturalization book and passport (copy)
- The local director of the branch requires a power of attorney.
- Board resolution from parent company
- Setting up a new branch in Dubai requires the authorization of the management of the parent company.
Documents needed for DED – Commercial License issuance
- MOE – Initial approval
- The Parent company should issue a statement that defines the business undertakings of the branch
- Parent company’s audited financial statement (previous 2 years)
- Property lease contract (copy)
- Initial approval documents (Copy)
Cost of getting Business Licence in Mainland, Dubai UAE
What is the mainland business setup cost in Dubai, UAE?
Before you plan to start a business in Dubai Mainland, it is mandatory to understand the various processes that need to be followed. The formation of mainland business setup cost is based on the nature of the business and its requirements.
The mainland license costs in Dubai for any foreign businessman can range from AED 10,000 to AED 50,000 with two or more shareholders. Now with no requirement of a UAE National to sponsor the company, the ex-pat investor gets 100% ownership of the LLC Company. Many industries have 100% foreign ownership and there is no requirement of minimum capital as well as local UAE Sponsor anymore. Foreign investors can directly register and own the full rights of the company in UAE.
The total cost of obtaining a business license in Dubai relies on several factors like company sponsor, business location, type of activities to be carried out by the company, number of partners, and the business’s legal structure. Well, additional costs may apply while applying for a license or setting up a business setup in Dubai mainland (Extra expenses include rent and official charges, etc). Moreover, to avail of a valid mainland license at the minimal price possible, you may get in touch with a business consultancy specialist.
To conclude, it can be challenging to identify all of the licenses and permits that apply to your business. Hence, it’s always best to consult a business setup specialist to make sure you comply with the licensing and regulatory requirements applicable to your venture and ensure you are positioned for future growth and success.
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