Business Setup in Dubai as a Foreigner
Dubai is known as the dream destination for entrepreneurs and business owners to expand their businesses internationally. The business climate of Dubai actively welcomes foreign investors from every corner of the world. The ease of doing business in Dubai is nowhere to be found on the planet.
The prime business environment of Dubai has helped in raising the number of non-resident business tycoons who have established their businesses here. The 0% tax on corporate and personal income further attracts foreigners to stay and open their companies in Dubai. Plus, the world-class infrastructure, the introduction of long-term visas, the strategic global location, and an ever-growing economy has additionally solidified the city’s reputation in the eyes of foreign nationals.
Benefits of Starting a Business in Dubai as a Foreigner
Dubai is home to countless business opportunities for non-residents and non-natives across the globe. Entrepreneurs choose this Pearl of the Gulf to get benefitted from its flourishing economy due to a huge number of reasons. Some of these reasons are mentioned below:
- Strategic Location: Dubai offers a firm strategic regional location for a business looking to international markets for growth. It is so because it serves as a doorway to Asia and Africa.
- Elite Sea and Airports: You will find outstanding airports and seaports in Dubai for non-stop trading between various international markets of Asia, Africa, and the Middle East.
- Zero Tax: No income, corporate, import/export, customs, or any other taxes are imposed on companies operating in Dubai. Prime organizations established in Dubai are subjected to above 66 international double tax avoidance treaties.
- Easy Currency Exchange: There are currently no exchange controls in place for easily moving funds.
- Immensely Diverse Economy: Besides natural gas reserves and petroleum products, transportation, innovation, tourism, trade, and technology are mainly involved in boosting its economy.
- Low Crime Rate: Dubai is one of the safest cities to live and work in with comfort and ease.
- 100% Foreign Ownership: Registering your company in the free zones of the UAE offers you 100% foreign ownership.
- No Geographical Barriers: You can perform your trading business activities without facing geographical barriers and enjoy 100% repatriation of capital and profits as well.
- Business-Friendly government: The Department of Economic Development (DED) is the government body that supports business ventures and helps in establishing businesses.
Types of Business Licenses for Foreigners in Dubai, UAE
Immigrants planning on expanding their business in Dubai and other UAE emirates can get their hands on two common types of business licenses; free zone license and mainland license.
Free Zone License
Fresh entrepreneurs or individuals who are new to the business should opt for a free zone license. In general, this license type is the most cost-effective and straightforward way to setup a company in the Emirates as a non-resident. Working in various free zones offers you 0% corporate tax, no restriction on currency, and 100% customs tax exemption.
Mainland License
Foreign investors prefer Dubai mainland over any other destination for company formation. This is so because business owners can do business anywhere in U.A.E. No capital is required for a local Dubai mainland business license. However, as a non-native, you may need to collaborate with a local agent to make your enterprise functional.
Documents Required to Start a Business in Dubai as Non-Residents
The documents that you would need to submit with your application for business setup in Dubai, U.A.E are enlisted below:
- Filled out the application form
- NOC from your local sponsor (for startup founders)
- Copy of existing trade registration certificate or license (if you have an existing business, applicable only for local companies)
- Colored passport copies of the director, manager, and shareholders of the company
- Certificate of reference from a bank of the company’s shareholder or audited financial reports of two years for the corporate entity
- Sign of the appointed director or manager for the new company and the company’s shareholders
- Your business plan
- Articles of incorporation (if necessary)
Steps to Start a New Business in the UAE as a Foreigner
Follow these steps to start a business in Dubai, UAE right away.
Step 1. Applying for Visa
Before forming your company, you should apply for a Dubai visa to avoid any inconvenience in the application process. Without a visa, you cannot enter the city. You will have to visit the Immigration Department and submit the following list of documents:
- Business plan
- Visa application
- Security amount
- Passport or copy of passport
- Details of your ticket
- Purpose of your visit
- Your personal bank statement
- Your latest colored photographs
Step 2. Choosing Business Activity
Choosing a specific business type solely depends on your personal preference or on your existing company/establishment. The type of business license depends on your chosen business activity.
Step 3. Company Naming Procedure
Then, you will choose a unique business name for your company. Keep in mind that there are some restrictions that you have to consider when selecting a trading name. You can include your initials or surname if you want to include your name in the company name. Anyways, the restrictions are as follows:
- The business name should not contain any name or logo of external bodies nor the name of a religion, or governing authority
- The business name must not violate the public order of the country or the public morals
- The business name must not have been already registered
- The business name must be compatible with the needed type of legal status and activity
- The business name must be followed by the business structure or legal form of the company
Step 4. Find a local sponsor
Finding a local partner is not a requirement for everyone. It is necessary to search for a local sponsor only for those who opt for establishing a business on the mainland of Dubai. Your local partner will own major ownership of your corporation.
Step 5. Acquiring Initial Approval
Next up, you will get initial approval from the DED. In order to acquire initial approval, you will submit your application and supporting documents.
Step 6. Drafting Memorandum of Association
The next step is to draft the MoA (Memorandum of Association). The MoA is a document that represents the charter of the company and governs the external activities of your business. It is notarized in the Dubai court.
Step 7. Submitting Fees
You will get a payment voucher after submitting your application and relevant documents. Within 30 days of obtaining the payment voucher, you have to submit the license fees and clear the payment. Once the payments are made, you will receive your license.
Step 8. Registering your business
Finally, you will visit the Dubai Chamber of Commerce and Industry to register your business.
Step 9. Renting Office Space
You might need to rent an office space to set up your company and perform your business activities in the UAE.
Cost of Starting a Business in the UAE
One of the first things you’ll need to consider is the cost before setting up a new business in Dubai. The good news is that the United Arab Emirates is known for its business-friendly policies and relatively low taxes, so the cost of business incorporation can be quite reasonable compared to other places around the world.
That said, the actual cost of registering a new business can vary widely depending on a number of factors. For example, the nature of your business, the size of the business, and the location you choose will all play a role in determining your startup costs.
Here are some of the costs that you may incur when starting a UAE business:
- Registration and licensing fees
- Office space rental
- Visa fees
- Employee salaries and benefits
- Marketing and advertising expenses
- Legal and accounting fees
Note: There may be other expenses that aren’t listed here, and it is specifically based on your business.
Can non-residents start businesses in Dubai?
Absolutely! Non-residents can start businesses in Dubai, as the government encourages foreign investment and has implemented regulations to facilitate business setup for non-residents.
What types of companies can I establish in Dubai?
As a foreigner, you can choose between free zone companies or mainland companies, each with distinct advantages and requirements.
What are free zones and why should I consider them?
Free zones in Dubai are designated areas offering benefits like 100% foreign ownership, tax exemptions, and simplified procedures. They are ideal for businesses focused on global trade and export.
How do I obtain a trade license in Dubai?
Obtaining a trade license in Dubai involves registering your company, determining the appropriate license type, and fulfilling the legal requirements for your business activity.
Can I start a limited liability company (LLC) in Dubai?
Yes, foreigners can start LLCs in Dubai, providing limited liability protection and enabling participation in various commercial activities.
What types of businesses thrive in Dubai?
Dubai’s diverse economy accommodates a wide range of industries, including service businesses, manufacturing, trading, technology, tourism, and consulting. Assess the market demand and consider sectors with growth potential.
Is a business visa necessary to start a business in Dubai?
Yes, a business visa is required to legally operate a business in Dubai. It allows you to reside in the UAE and manage your business activities.
How can I open a business bank account in Dubai?
To open a business bank account, prepare the necessary documents such as your trade license, passport, proof of address, and company incorporation papers. Choose a bank that caters to business needs and offers convenient services.
Can foreigners establish businesses outside free zones?
While free zones offer favorable conditions, foreigners can also establish businesses in mainland areas by partnering with a local sponsor. This allows you to target the local market and benefit from proximity to downtown Dubai.
What are the requirements for hiring employees in Dubai?
To hire employees, comply with labor laws, obtain work permits, provide proper employment contracts, and adhere to regulations set by the Ministry of Human Resources and Emiratisation.
Are there any restrictions on foreign ownership in Dubai?
In mainland companies, foreigners must have a local partner or sponsor with a majority share (51%). However, free zone companies allow 100% foreign ownership.
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