2020 Company Formation and Business Set-up in Dubai

Company formation, business setup, company creation

2020 Company Formation and Business Set-up in Dubai

Are you planning a company formation in Dubai / UAE? This can be one of the best ecosystems for your novel endeavor domain as UAE is much more than just a place of marvelous architectures. Therefore, establishing a business setup means you are going to have one of the most productive grounds for your business. This is one of the various other things marking the UAE’s commercial capital the best place to company setup while the other major reasons behind company creation in UAE are ranging from welcoming business and landscape strategic location to attractive tax regime of the country.

Surprisingly, the most unsung reasons for company formation in the UAE is its easier company incorporation process. Unlike, Company setup in France or any other place worldwide, entrepreneurs don’t need to go through a long process. However, to set up any type of businesses in the UAE, it is necessary to have an understanding with the company UAE formation process.

Step by step guide for company formation in the UAE

Although the company formation in UAE consists of a straightforward process, these steps can be complex if you don’t know how to get done with these effectively. However, to make company formation in UAE easier for you, we have brought a complete guide for you. This article will help you throughout the process of Company setup in UAE. Have a look at the complete guide including before and after company setup essentials too.

Things you need to know before the business setup in UAE

There exist various terminologies which not every investor aware of. Here we have enlisted some essentials which you must know before starting Company creation in UAE. Have a look at the followings to be aware of terminologies before starting company formation in UAE.

1. PRO Service

When it comes to company formation / setup in Dubai, then, this process involves multiple legal guidelines. These are ranging from Dubai immigration, DED, ministry of finance, ministry of labor and other public sectors. An effective PRO service can come in handy when you are new to business setup in Dubai.

2. Local sponsor

For a company set up in the mainland, a company must have a local sponsor with 51% shares while the foreign investor can own 49%. Local sponsor refers to local nominee shareholder or service agent in mainland company with foreign investment. The local sponsor needs to be an Emirati and hold a family membership card.

3. Dubai Business Center

For business setup in Dubai, having a registered office is essential. For this, you can reach to the market you want to cater to. Once you have your legal documents and procedures ready to go, then shortlisting some offices with details can be a smarter move.

4. Tax Residency certificate

Ministry of Finance issues Tax Domicile certificate that you can take to avoid double taxation between the UAE and foreign jurisdictions. Are you an expat with a UAE business? Then, obtaining a TRC can let you avoid paying any taxes in your home country. However, this is possible only when your country has an agreement with the UAE.

How to proceed with the process of business setup in UAE?

Are you new to the place or have never started any business before?

Whether are you looking for incorporation procedures and requirements for basic understanding?

Here we have key factors for company formation in Dubai. Make sure to understand each point to get done with the company setup process effectively.

1. Choose businesses activities to determine the type of businesses in the UAE

When it comes to Company creation in UAE, then the very first thing you need to focus on is the type of businesses in Dubai. This will let you understand from which category your business activities belong to. This step of business setup in UAE is essential to determine your type of businesses in the UAE so that you can get to know which type of licenses are required for you. The DED (Department of Economic Development) has listed massive activities for you to choose from. Every free zone also comes up with its approval formalities and regulations. You have freedom of selecting any of the enlisted type of businesses in Dubai by DED. But it is always essential to go with the one enlisted there. Otherwise, you might face issues in licensing.

2. Decide on a company license

You need to license your business as a trade license is the most critical document your business requires in UAE. To operate locally, you can license your business by the DED (Department of Economic Development) in Dubai. However, if you want to set up your company in a free zone, then you need a license and location of your company from one of the many free zones in the UAE.

While the type of license will depend on your business activity, there are different license options for various type of businesses in Dubai. Have a look at each of these to know which one will follow your type of sales in Dubai.

Commercial License:  If you want to involve in any trading activities like selling or buying goods. To trade within or outside the UAE, your company needs a commercial trading license.

Professional trading license:  This license will be issued by the DED, Dubai, to any business relying on any intellectual abilities or talent. This license is for craftsmen, artisans or any other professional business setup in Dubai.

Industrial license:  This license is for the company setup, which will transfer any natural resources or materials into final products.

Besides these major three license categories, you can also apply for the license categories given below:

  • Freelance license
  • Ecommerce license
  • Import / Export license
  • Spa license
  • Manufacturing license

3. Decide between mainland and free zone company setup

When it comes to choosing a business type, then there exist two major options, i.e. free zone and mainland company setup. Both of these options come up with certain advantages. Such as Company creation in Dubai with a free-zone setup can offer easy and quick incorporation process while mainland Company creation in Dubai can let you trade with the UAE market directly.

Here are the basics of both types of company formation in Dubai options:

Mainland Company Formation in Dubai:

Any company falling under geographical areas that are commercialized and registered under the UAE government or its authorities is a mainland company. However, foreign shareholder equity for this company formation type is 49% maximum, while a local investor must own 51 % of shares.

This company setup represents the most developed economy because this setup is following legal government policies structure directly.

Free-zone Business setup in Dubai:

Free-zones are the most sought-after locations for Company formation in UAE. Free zones offer direct investment for foreign investors as their policies are to generate employments to support economic reforms. Free-zone company registration can be highly profitable to consider. Major reasons to consider this type of business setup in Dubai are:

  • 100% ownership, no local investor requirements
  • Tax exemption
  • Higher growth potential
  • Established network for transport
  • Large customer base
  • High-quality labour
  • Affordable office setup costs
  • Customs privileges
  1. Business setup cost estimation

Cost estimation is an important deterring factor to consider for company formation in UAE. As this can let you know how much you required for a company set up in UAE. 

Are you aspiring for a company formation in the UAE? Understand the factors your setup cost is depending on the given below.

Free Zone business setup cost

Although free zone setup cost is lower as compared to mainland business formation, here we have enlisted the factors which can cause cost variations.

  • Fees for company registration in the city
  • Trade name reservation fees
  • Business license cost yearly
  • Annual building fees
  • Visa fees per employee
  • Mainland company setup cost

Cost to set up a mainland company depends on the multiple factors given below:

  • Visa permit
  • Nature of business 
  • Trade license
  • Notary fees
  • Government department registration fee
  • Office premises

2. Pick up your company name

Selecting a particular name for your business is essential for company formation in Dubai. However, when it comes to select your company name, then there are few things to consider. You must bear a strict but easy to follow conventions for naming your company. An expert of business setup in Dubai can help you in this process.

It is essential to avoid any offensive language. Furthermore, you can’t name your business on any famous organizations here. If you are naming your business after yourself, then make sure to avoid any abbreviations. Even more, make sure your selected name is available to register. Following all these rules, it will become easier for you to choose and register your company name.

3. Make your license application

The most critical step of business setup in Dubai is applying for a company license. If you haven’t been in this process before, then it is better to hire a business formation service in UAE. Because it can help you in creating and managing your license application. However, the basic document requirements are including:

  • Properly filled application form
  • Two passport size photographs
  • Proposed owner or owners’ passport copy

3. Apply and process your visa

Just like trade license application, the process of applying for your and your employee’s visa is straightforward. If you are a novice to this, a company formation service provider can help you in this too. However, as a UAE license holder, you can sponsor for others’ visa too. This could be anyone your spouse, worker, child, etc.

While the maximum number of visas you can apply for will depend on different factors. Some of these factors include your company’s size, business setup type, your earnings, etc.

Things to consider after company formation in Dubai

  1. Are you planning to incorporate a new business? It is essential or even mandate to have an office on rent under some circumstances. Not every type of business in UAE can contemplate on having a desk space only and may need getting an office on rent instead.
  2. Dubai is a place with multiple local and international banks. Opening up your company’s bank account process may vary from bank to bank. But the presence of shareholders and director is necessary in every case.
  3. The Ministry of Labor will issue establishment cards for your company. Getting the establishment card will allow you to hire workmanship. However, a number of applications will depend on your setup type and area of the free zone.
  4. This is the final step. Start registering your employees. Check the details whether you need to hire staff or engage contractors for your business as per regulations.

Benefits of Company formation in Dubai

Do you want to know why business setup in Dubai is a better approach for businesspersons or entrepreneurs? With exciting skylines and unabashed architectures, it is super easy to understand why Dubai is the fastest-growing metropolis worldwide. Growth of Dubai has been expediential as it has transformed from a small fishing village to major hub for Company formation in UAE with past few decades years. There are multiple reasons which are compelling investors to start company creation in Dubai. Some of these we have enlisted below so that you can get a better idea about this with ease.

  1. Ease of business setup in Dubai: UAE has ranked 11th globally in 2019’s ease of doing a business report and has been ranked 1st locally. This rank is attracting more people for Company formation in UAE.
  2. Growing Economy: Growing economy of Dubai is another reason to consider, as its growth has expected to increase in 2017 by 3.1%. However, the major reason behind this is a minor dependence on oil.
  3. Strategic Location: Company formation in UAE is the best to consider because of its strategic location between east and west.
  4. More options to invest: Diverse economy of Dubai is letting foreign entrepreneurs concentrate on Company creation in Dubai. Here they can get an opportunity to plan a business set up in various business areas. Most common options are including trade, logistics, transportation, tourism, real estate and much more.

Added Benefits for Business setup in Dubai

Here are some other benefits which can also be considered as the best reasons for Business setup in Dubai:

  1. No limitations in getting employment visas
  2. Easier recruitment processes
  3. Permission to rent office anywhere
  4. Higher opportunities to expand your business
  5. Lower minimum capital requirement restrictions
  6. Manageable company setup costs
  7. Lower restrictions on legal documents processing
  8. Lower import duty
  9. Affordable office space with flexible lease or renting options
  10. Permission to undertake projects by government

Final Words

Getting started your business in Dubai is pretty straightforward, but only when you have the right help. Understand the fact your business registration is straightforward only if you haven’t made any error in the licensing application. Otherwise, things might become a stressing loop. Therefore, to make sure you are going well in every step, getting help from a business setup company can be effective. However, if you are a bit familiar with the steps, then just follow our guide from top to bottom. The results will surely be effective and fast.

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