Introduction
Dubai has become a global business hub, attracting entrepreneurs and investors from around the world. With its strategic location, business-friendly regulations, and world-class infrastructure, Dubai offers ample opportunities for starting a business. However, navigating the process of setting up a business in Dubai can be challenging without the right information. In this article, we answer some of the most frequently asked questions about setting up a business in Dubai.
What Are the Different Types of Business Structures in Dubai?
Dubai offers several types of business structures, each with different requirements and benefits. The main types are:
Mainland Company: A mainland company allows you to operate across the UAE without restrictions. It requires a local sponsor or service agent, however there are some sectors that do not require this, and there is no limit on the number of visas you can obtain.
Free Zone Company: Free zones are designated areas that offer tax incentives and full ownership to foreign investors. Each free zone has its specific rules, but generally, they allow 100% foreign ownership, simplified import/export processes, and no personal tax.
Offshore Company: Offshore companies are primarily used for holding assets and international trade. These entities are not allowed to operate within the UAE market and are usually used for tax planning and asset protection purposes.
Do I Need a Local Sponsor to Set Up a Business in Dubai?
For a mainland company, a local sponsor or service agent is required, who must hold 51% of the shares. However, recent changes in regulations now allow full foreign ownership in specific sectors such as manufacturing, technology, and healthcare and activities, removing the requirement for a local sponsor in some cases. Free zone companies, on the other hand, do not require a local sponsor and offer 100% foreign ownership.
What Are the Costs Involved in Setting Up a Business in Dubai?
The cost of setting up a business in Dubai depends on the type of company, the chosen location (mainland or free zone), and the specific requirements of your business. Typical costs include:
Registration Fees: Government fees for company registration vary by jurisdiction and type of business.
Office Space: Free zones often have flexible office solutions, while mainland companies may require physical office space.
Licensing Fees: Annual licensing fees are required to keep your business compliant.
It’s important to consult with a business setup advisor to get a detailed breakdown of costs for your specific business needs.
How Long Does It Take to Set Up a Business in Dubai?
The time required to set up a business in Dubai depends on the type of company and the approvals needed. For a free zone company, the process can be completed in as little as one week if all documents are in order. Mainland companies may take longer due to additional regulatory requirements and approvals. On average, it takes between 1 to 4 weeks to complete the setup.
What Are the Benefits of Setting Up a Business in a Free Zone?
Free zones are popular among foreign investors because they offer several advantages, such as:
100% Foreign Ownership: Unlike mainland companies, free zone companies can be wholly owned by foreign investors.
Simplified Import/Export Procedures: Free zones provide streamlined customs processes, making it easier to trade internationally.
Ease of Setup: The setup process in free zones is generally quicker and involves less paperwork.
Can I Operate My Free Zone Company Outside the Free Zone?
A free zone company is limited in its ability to do business directly within the UAE mainland. To operate outside the free zone, a free zone company would typically need to partner with a mainland distributor or set up a branch office. This restriction makes free zone companies ideal for businesses focused on international trade or services that do not require a local presence.
What Licenses Are Required to Start a Business in Dubai?
The type of license you need depends on the nature of your business. Common types include:
Commercial License: For businesses involved in trading activities.
Professional License: For service providers, consultants, and professionals.
Industrial License: For businesses involved in manufacturing or industrial activities.
Each free zone may have its own set of licenses, and specific activities might require additional approvals from relevant authorities.
Conclusion
Setting up a business in Dubai presents significant opportunities, but it’s important to understand the different options, costs, and regulatory requirements involved. Whether you choose to set up in the mainland, a free zone, or offshore, Dubai’s business-friendly environment offers plenty of incentives for entrepreneurs and investors. Consulting with a business setup advisor can help navigate the complexities and ensure a smooth setup process, allowing you to focus on growing your business in this dynamic market.
Our Private Office consultancy partners with quality, unbiased consultants who can help you decide the best jurisdiction, license and structure of your business set-up. For more information, contact us at hello@kingsburyandpartners.ae
