Dubai has transformed itself from a practitioner of primary sector activities like fishing to a provider of a great business ecosystem to emerging entrepreneurs and established businesses. Do you know how it achieved this immense success in such a short period and how it can help your business thrive? Well, let us dig deep into it. The location has been an essential player in this regard. It is strategically located with a long coastline and easily accessed from Asia, Europe, and Africa. Secondly, the government policies for establishing a business are simple and free from complications because numerous companies and foreigners are coming to invest here.
There is a steady flow of capital which helps instability of a business. The best part is you can quickly starting up a business in Dubai in 2 to 3 working days if you have done thorough background research and prudent planning. But, besides this, you have to be financially prepared with a trustworthy guide to making your business venture prosper. We will elaborate on everything in good detail as to how you can start your business in Dubai in no time.
Why should you choose to set up a business in Dubai?
We have already briefly discussed the factors that have helped Dubai gain popularity as a business hub. Now we will discuss and understand them.
It doesn’t impose administrative challenges
If the number is an indicator, you must note that UAE stands at 16th position in the Ease of Doing Business Index.
It ensures that the regulations are conducive to the operation of businesses. As a result, the free zones of Dubai are booming with opportunities such as handsome tax exemptions, 100% foreign ownership, 10 years long term visa and complete repatriation of profits earned by foreign investors.
Government chooses to leave you alone in peace
The Market activities are accessible and you can do your business freely according to commercial law of the UAE. There are not many compliances but there are some important compliance which needs to be followed.
The cost to set up a business is low
As the government provides lots of exemptions in specific areas, you can set up your business without having to spend a massive amount of money.
Taxes are minimal with loads of exemptions
Personal income is not taxed in Dubai. The import duties are negligible. The labor policies are liberal, which helps businesses to appoint employees from across the globe.
Dubai has imposed strict laws to end fraud and money laundering, making the business atmosphere reliable and secure.
The government allows you to fly away with your profits
In certain zones, you can acquire complete independence and 100 % ownership so you can keep all your profits in your pocket without having to share with anyone. Recently, the Development of Economic Department (DED) allowed 100% ownership to foreign investors on some commercial and industrial activities.
Smooth infrastructural facilities to accelerate your business
What comes to our mind when we think of Dubai? For me, it is skyscrapers, the infrastructure, including transportation facilities, telecommunications networks, supply of power, and other modern amenities, brings ease to the development of business in Dubai.
Supply of material and human resources is easy in Dubai
Whether you want to come by air or sea, it’s equally effortless to reach Dubai. One hundred twenty shipping lines and 85 airlines are operating from Dubai. People from 130 destinations can go to Dubai directly.
Income levels are high
The number of profits, opportunities, and income of the residents of Dubai is relatively high. There is easy access to affordable goods and services, including medical facilities and education being the most important of all.
What are the Business opportunities in Dubai?
Construction
Foreign investors and employees are steadily stepping into Dubai, so the construction sector is booming with opportunities. Residential and commercial projects can shower money on you. It is one of the most profit-making sectors in Dubai.
Real Estate
As construction activities are flourishing, entrepreneurs venturing in real estate can avail themselves of ample opportunities in Dubai.
Travel and tourism
Dubai has been a favorite spot for vacation and has emerged as one of the most sought tourist destinations in the world. So travel and tourism can be on your list to show your entrepreneurship skills.
Click here if you need to more about How to Start tourism company in Dubai
Retail
With population rising, a flourishing economy and high-income level make Dubai an excellent place to set up retail businesses like a storefront, sales office, departmental stores, groceries, and other services.
Health care
Expansion in professional medical services in Dubai can be attributed to its rising population. As a result, one can occasionally see many people across the continents flying to Dubai to avail themselves of cheap and qualitative health care facilities compared to other parts of the world.
Health care business ventures will be profitable, especially now when we are dealing with this pandemic.
Other sectors that can boost your business can be material supplies, defense supplies, aerospace, alternative energy sources, professional services, hotel industry, education, creative arts, and entertainment sector.
How to start a business in Dubai?
Selection of business activity/products
First, you need to decide which sector or industry will be your area of interest to start your business.
Secondly, you will have to keep in mind how relevant it is to local and global needs.
Thirdly, you have to consider which category of consumers will be your target. These are a few essential things that will help you to chalk out your business venture.
We have provided you a list above as well as we will help you to understand the setting up of businesses according to jurisdictions.
Selection of Jurisdiction
After you have selected your business activity, you will have to choose an area where your business can effectively operate from.
You have to choose from Free Zone, Mainland, and Offshore jurisdictions. If these terms confuse you, do not worry, we are here to help you understand each of the words in detail.
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Mainland jurisdiction:
It is also called the onshore company. In comparison to free zone areas where one can acquire 100% ownership of their business, foreigners can hold upto 49% of equity shares. As per recent update, Dubai DED authority allows some commercial and industry activities with 100% foreign ownership.
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Free zone:
Free zones are trade zones in Dubai where taxes like Income Tax, Corporate Tax, and Customs are not charged from companies that operate in these zones.
Moreover, owners have complete ownership, i.e., 100% ownership of their business. Such freedoms are that foreign investors will feel motivated to invest their capital and promote economic activities that will grow in and around the cities. So, business in a free zone will essentially help you to maximize your profits and grow your business manifolds.
The businesses set up in the free zone include Energy, Automobile, Aviation, Media, Investment, Information technology, etc.
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Offshore jurisdiction:
Like free zone businesses get full ownership of the company because the company does not have any office in UAE.
Corporate tax and Customs duty exemptions are there. The cost of setting up business in an offshore jurisdiction is comparatively less than the other two jurisdictions.
Finalize the legal form/company structure
The legal structure is an important criterion to be focused on while running any business anywhere in the world. Therefore, the aims and the laws of the land are critical determining factors to consider while setting up a company.
In Dubai, while establishing a company, you can choose from any of the legal structures given below:
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Sole proprietorship:
In sole proprietorship 100% ownerships with the professional type of businesses, but they require Local Service Agent (LSA) who fulfills professional commitments instead of a fee to be paid annually permitted. The only drawback is industrial or commercial areas cannot be owned.
In Free Zone, It will be Free Zone Establishment (FZE)
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Limited Liability Company:
Foreign investors can own 49% ownership, whereas an Emirati partner is required to hold the remaining 51% shares (Recent update for 100% ownership).
In Free Zone, It will be Free Zone Limited Liability Company (FZ-LLC)
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Civil company:
It is a business scope for service providers, namely accountants, engineers’ doctors, and lawyers, where 100% ownership goes to the professional partners. However LSA is required.
In Free Zone, It will be Free Zone Corporation (FZC)
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Branch office:
A branch company functioning under a parent company will have the same legal structure as the parent company and carry out similar business. However, they cannot import goods.
We have already discussed how Dubai is a good option to open a business, the potential sectors to open trade, places where you can set up your business, and the legal structure.
Now let us come to how you can set up your dream business in Dubai. You are just one step away from giving shape to your budding plan.
What are the licenses required to set up a business in Dubai?
Licenses are essential to set up any type of business in Dubai, and it is basically of 3 classes.
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Commercial License:
With a commercial license, you can trade and sell goods and services in, within, and out of UAE. For example, you can engage in selling products like shoes, clothes, handbags, jewelry , cars, food, and beverages, leather items, electrical equipment, plumbing instruments, etc., and in import and export.
The cost of a commercial License starts from around AED 20,000/-.
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The industrial License:
When resources obtained from natural or artificial sources undergo a change in their form with the help of labor or machine, this is regarded as industrial or manufacturing activities where primary products change to final products.
These companies are required to have a warehouse for the storage of their goods.
Examples of these are the textile industry, food industry, cement industry, making equipment, etc. The Department of Economic Development (DED) provides an industrial License. The cost of an industrial License starts from AED 25,000/-.
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Professional License:
While the earlier two licenses are given for the production and selling of goods, a professional License is usually given to service providers and consultancies.
They provide intangible services and earn profits out of them. But, here what they have to offer to consumers is their knowledge, skills, and expertise.
You can open up a beauty parlor, provide medical advice, consultation of any kind, impart skill-oriented training, provide education, give tax consultation, financial advice, and help in auditing and accounting.
Apart from these three main licenses, one can acquire:
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Tourism license:
The tourism industry is a flourishing sector in Dubai. To bring all tourism-related activities under one umbrella, the Department of Economic Development (DED) issues tourism licenses to hotels, tour planners, travel agencies, car rentals, hotels, homestays, sea activities, and other allied activities. It is a very profitable venture for you.
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E-Commerce license:
E-commerce is the business that has chosen the internet as a medium to market and sell their products and services. It has been legalized by the UAE government but has made it mandatory to acquire a license before moving forward In business. You can trade everything online, and it serves as a global marketplace.
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Recruitment license:
As businesses are developing in Dubai, it requires vast human resources to run them. So every year, citizens from other countries come to seek a profitable job in Dubai.
With this License, your company can create a database of employees and employers, advertise, receive applications, shortlist, do interviews and make placements in different sectors.
You can recruit UAE citizens and foreigners and even outsource labor forces from UAE to other countries. Recruitment agencies can be of various types depending on what kind of workforce they are recruiting.
It can range from low-end skilled and unskilled laborers to high corporate jobholders.
The License starts from AED 23,000/-. However, you may get competitive bids and get them done at a lesser price from consultancies.
Cost for setting up a business in Dubai
Setting up a business requires considerable capital, and they include payment for a visa, administrative charges, License, sponsorship, notary fees, registration fees at government departments, rent, social security schemes, etc.
Cost is determined mainly by the industry and jurisdiction you are selecting to set up your business in. The costs can be categorized as
Cost of legal procedures
Include charges for setting up a business, professional fees, and fees charged by the government for paperwork in the retail, trade, and service sectors. It can range from AED 10,000 to AED 50,000 .
- You have to spend between AED 9,000 to AED 10,000 to register a company in the free zone area. The charges are one time.
- License fees are to be paid yearly between AED 10,000 to AED 50,000 depending on trade, commercial or industrial.
Cost of office set up
- You can rent a space to build up your office or retail store.
- Commercial office space may cost around 100 AED/sq feet to 750 AED/sq feet per year, while a retail space may cost from 330 AED/ sq feet to 2000 AED/sq feet per year.
- The cost of electricity in Dubai for business purposes is 0.366 AED per KWH.
Cost of resident visa
This can be around AED 4,000/- to 7,000/- AED per person per year.
Capital to run a business
Apart from other costs, you have to have the necessary capital to run your business.
What are the documents required to open a business in Dubai?
We have mentioned above that opening a business in Dubai is relatively easy. However, one will require some specific documents which will enable them to get hold of the License quickly.
Personal proofs
- Visa
- Passport
- NOC from current sponsor (If he/she already has residence visa under another company)
- Address proof
- National ID
- family book
- Ownership certificate
LLC Agreement:
For an LLC, you will get 49% shares and obtain a local partner who will hold the rest 51%. You need to share the agreement between you and your partner as proof. As per the recent update, some commercial and industrial activities do not require 51% local partners.
Trade name reservation certificate:
You need to submit the reservation certificate of a business name which you have received from the economic department.
Initial approval certificate:
When the authorities receive your documents, they will provide an initial approval certificate so that you can go on to the next steps.
Approval certificate from the external department:
It is the approval from other government departments or agencies concerning your business.
Registration of Chamber of Commerce and Industry:
All commercial and industrial businesses in Dubai are registered with the Dubai Chamber of Commerce & Industry (DCCI). They record, enlist and guide members.
Certified copy of Tenancy contract:
It is the contract you sign with the owner of the property you are renting or leasing.
Registration certificate of EJARI:
EJARI is an online portal by Real Estate Regulatory Agency where all the property contacts are enlisted. It includes rental as well as lease contracts, thus establishing communication between owners and tenants. You will get a certificate on the submission of your agreement with your landlord.
Business Bank Account in Dubai
You will also need a business bank account to start a business. Dubai has plenty of domestic and foreign banks. They include:
- Emirates Islamic bank
- Commercial Bank of Dubai
- Dubai Islamic bank
- Emirates NBD
- Mashreq Bank
- Dubai Islamic Bank
- HSBC Bank Middle east limited
- Citi bank
- Standard Chartered Bank
- Abu Dhabi Commercial Bank (ADCB)
- Abu Dhabi Islamic Bank (ADIB)
- National Bank of Fujairah (NBF)
- National Bank of Umm Al Quwain (NBQ)
- Habib Bank AG Zurich
- Commercial Bank International (CBI)
- First Gulf Bank (FGB)
- Sharjah Islamic Bank
- Ajman Bank
- National Bank of Ras Al Khaimah (Rak Bank)
Documents required to open a business bank account in Dubai:
- Passport (owner, shareholder, manager)
- Residence visa
- Emirates ID
- Documents of company incorporation
- Personal bank statements of 6 months
- The sources of funds declaration
- Profile of bank account signatory
How to open a bank account in Dubai?
The process of opening a bank account is similar in the majority of banks. This involves:
- The first step is filling up the application form.
- Submit the personal and professional documents of the owner and other shareholders.
- Bank will process the documents after thorough scanning.
- Bank will do a background check of you, your partners, and your business.
- Bank will communicate with you, and finally, if everything is alright, they will open your account.
