How to start business in Dubai

The UAE can be an attractive place to start a business, especially if you’re looking to sell goods in the GCC (Gulf Cooperation Council) region and scale operations in the Middle East.

Dubai provides a wealth of commodities, convenient access to flights and travel, and lots of talent for hire. It’s no surprise that the emirate is fast becoming one of the most popular places to run a business.

This guide will take you through everything you need to know to open up a company in Dubai, and the steps for incorporating should you choose the region as your new venture’s home.

Should you set up your business in Dubai’s Free Zone (DMCC)?

The Dubai Multi Commodities Centre (DMCC) is a free zone created by Dubai’s government which allows for easy global commodities trading. Situated in Jumeirah Lakes Towers (JLT), the DMCC is home to thousands of businesses spanning various industries and sectors.

As one of the largest free zones in the UAE, setting up a business in the DMCC can give you access to world-class infrastructure, various business and tax incentives, and a strategic location to operate your business.

There are many reasons to start operating your business out of the DMCC, but there are also some downsides to consider.

Pros:

• 100% foreign ownership: Dubai’s free zones are the only places in any emirate in which you, as a US citizen, can own 100% of your business as a foreign investor without needing a local partner or sponsor.
• Tax benefits: There are effectively no taxes in the DMCC Free Zone. You won’t be subject to personal income tax, corporate income tax, or withholding tax for at least 10 years. There’s an option to renew this exemption before the 10 years are up, too. There are also no currency exchange restrictions, and you’ll enjoy 100% capital repatriation, so you can transfer your profits and capital back to your home country.
• Unlimited shareholders: In the DMCC, there isn’t a limit on the number of shareholders your business can have.
• Business-friendly infrastructure: Free zones are set up with excellent business infrastructure and amenities.

Cons:

• Business activity restrictions: If you set up your business in a free zone, you’ll be restricted to conducting business inside of that free zone or internationally. You won’t be able to expand beyond the free zone into other UAE Markets, and your business activities can’t be directed at UAE consumers outside of the free zone. Businesses may, however, conduct business overseas, and should they wish to sell their product or service within the UAE, they may work through a limited liability company (LCC) outside of the free zone that has an import/export license.
• Industry-specific limitations: There are restrictions on what types of businesses you can open in each free zone. The DMCC supports more than 600 allowed business activities.
• Location: While the DMCC isn’t located in central Dubai, it’s only a 20 minute drive from the city with good transport connections.
• Fees: To set up a business in the DMCC, you’ll need to pay various fees from company registration to business license and office fees.

Opening a business outside of the free zone

While Dubai typically offers a supportive business environment for expat entrepreneurs even outside of the free zone, there are some downsides to opening a business in the emirate.

Outside of the DMCC, you must have a local sponsor, and that sponsor must have a controlling share (51%) of the company.

Local sponsors can be either individuals or local UAE-based businesses, and their role is typically limited to administrative functions including helping with government procedures like visa acquisition and obtaining licenses and permits.

They must also sign all legal documents and official forms on behalf of the company.

Businesses may also require specific licenses, some of which carry capital requirements. You can check out the Invest in Dubai website to find out more about the process and licenses.

It’s also important to note that virtual businesses (those without a physical presence in Dubai) can’t register in Dubai. Any company undertaking commercial activities is required to have a physical location in the emirate.

Visa requirements for Dubai

In both the free zones and greater Dubai, you’ll need a residence visa to set up and operate your company.

When you start your company in a free zone, you’ll be allocated a certain number of residence visas based on the office space you lease. The amount of office space you lease or purchase will determine how many visas you can apply for, and the process of setting up a company makes you eligible for a visa.

In order to maintain your visa, if you’ve set up your business within the DMCC, you’ll pay a fee according to the residence visa package you’ve selected, plus you’ll need to put down a refundable deposit.

There is a caveat for businesses forming outside of the DMCC: your local sponsor, or the 51% local shareholder, must apply for your visa for you. The sponsor must also be in charge of visa applications for your employees, so they become a central figure for key administrative processes in your business.

What types of companies are typical in Dubai?

In Dubai, the most common business types are limited liability companies (LLCs) which you can set up both in the free zones such as the DMCC and the mainland.

Outside of LLCs, the only types of business you can set up in Dubai are branches and subsidiaries of an existing local or foreign company, representative offices, or partnerships.

Limited liability company (LLC)

An LLC is a widely popular business structure in Dubai for US entrepreneurs taking on limited liability interested in starting a new venture in the mainland or one of the fee zones.

With an LLC in mainland Dubai, you’ll cede 51% of the company’s shares, and thus ownership of the company, to a local sponsor or a UAE national. If you operate in one of the free zones like the DMCC, you can fully own the company and operate in a tax-free environment.

Branch office

A branch office is an easy way to set up and operate your business in Dubai without creating a separate legal entity. As an extension of your parent company, a branch office allows you to carry out business within the UAE.

You must appoint a local service agent or sponsor when dealing with the UAE government or regulatory authorities, but you won’t need to cede any shares in this scenario.

Subsidiary company

A subsidiary is a separate legal entity from a parent company, meaning you can fully own it if you set it up in a free zone. You can also establish a subsidiary as an LLC or a different business structure depending on your company goals.

Representative office

A representative office allows you to establish a foothold in Dubai without carrying out all of your regular business activities. You can use this office to promote and market your parent company’s services.

Partnership or joint venture

As a partnership or joint venture, you can join forces with local companies or another foreign entity in either a free zone or the mainland. With two or more parties, you share the ownership of the company along with the risks.

What are the steps for setting up my business in Dubai?

If you’re looking to set up a business in the DMCC, the following step-by-step guide should help you navigate the process.

Many of these same steps also apply when setting up a business in the mainland.

1. Choose three preferred names for your business

In the online application, you’ll be asked to list three preferred names for your new business.

The DMCC will try to secure your first choice name, and will do the necessary research to make sure that the name isn’t already in use. If they find the name has previously been taken, they will secure your second or third choice name.

It’s important to note that your company’s name will always end in “DMCC”, and should you open a branch office the name will end in “DMCC Branch”.

If you are looking for a new name for your business generate some business name ideas using our Business Name Generator tool.

2. Submit documents for pre-approval

Next, you’ll need to submit the necessary pre-approval documents. For each proposed shareholder, manager, secretary, director, or legal representative, you’ll need the following documents for pre-approval:

• KYC (Know Your Client) form
• Letter of No Objection from any sponsors
• Passport and Emirates ID (if a UAE resident)
• Proof of permanent residential address (generally a recent utility bill or a letter from one’s banker)

In addition, you’ll also need a business plan if it’s required for the specific business activity. You can use our business plan template to include a business plan in your application.

If a consultant is acting on your behalf in Dubai, you’ll need a Consultant’s Appointment Letter and Power of Attorney.

There will be a fee for name registration, though this figure will depend on the services you offer.

The pre-approval process generally takes anywhere between 7 working days and one month.

3. Submit registration documents

After your documents have been pre-approved, you’ll need to submit additional documents for registration.

For each proposed shareholder, manager, secretary, director, or legal representative, you’ll need the following documents:

• Specimen signature form signed in the presence of a DMCC Member Service Executive or notarized in one’s home country.
• Passport to be reviewed by DMCC Member Service Executive or notarized in one’s home country (if UAE resident, will also need the passport visa page)
• Shareholders’ resolution (generated by the DMCC portal and signed in the presence of a DMCC Member Service Executive or notarized in a UAE embassy)
• Memorandum and Articles of Association (generated by the DMCC portal and signed in the presence of a DMCC Member Service Executive or notarized in one’s home country)
• Undertaking Letter to Comply with the DMCC’s Requirements (generated by the DMCC portal for the license manager to sign and upload)
• Third party approvals from relevant authorities (only applies to certain activities)
• Auditor appointment letter (necessary for certain business types)
• Payment for registration which will be calculated by the DMCC based on your previously submitted documents and the nature of your business

After you’ve submitted all of the necessary documents, the DMCC will issue you a Provisional Approval and Bank Letter.

Where can I go for help?

Both Dubai and the DMCC have comprehensive online resources for expats seeking to open new businesses in the emirate.

The Government of Dubai lays out steps, costs, and processes for forming a new business in Dubai, and includes many guides and how-tos.

The DMCCalso provides step by step instructions for how to form a new company. You can choose to jump right to the company set up FAQs, or their guide on starting a company or, when you’re ready, do your business application online.

Discover the Wise Business account: The simple way to manage payments abroad

When you’re ready to take your business global, you need a payment solution that matches your international ambitions.

Wise offers a smart, cost-effective solution. Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. With a Wise Business account, you can easily send, receive, and hold business funds in multiple currencies, without paying monthly account fees. You can get local bank account details to receive payments in major currencies for a one-off fee and make sending money abroad hassle-free with access to 140+ countries.

Open a Wise Business account online

Some key features of Wise Business include:

• Major local account details to receive international payments with ease.
• No monthly account fees, just a simple one-off fee for account details.
• Receive payments from e-commerce platforms such as Amazon or via Stripe.
• Create invoices using the Wise invoice generator orinvoice templates.
• Accounting integrations, including a QuickBooks Bill Pay connection.
• Signing up to Wise Business allows access to BatchTransfer which you can use to pay multiple invoices in one go.

Read the guide on how to open a Wise Business account

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