UAE and Dubai Business Setup FAQs

The industry, economic, trade, and logistic sectors are among the most profitable and continuously growing sectors of UAE. No matter in which domain you want to set up a business in Dubai, you need a particular business license. First and foremost, you should have a basic understanding of the UAE company’s license. Whether your business is in major territories or is in a free trade zone, each onshore business must be registered and licensed. 

Securing a company license is not just a formality but also serves as a prerequisite of starting your own company. You are supposed to define the nature of the corporation along with the legitimacy of your company. A corporation license is actually a document that certifies the legal status of a company. Obtaining a trade license is compulsory for those who want to operate lawfully within the premises of UAE.

Following are some most common type of business licenses that you can come across in the UAE:

• Professional license needed for service-related businesses
• Tourism license needed for travel and tour industry
• Freelance license permit
• Industrial license required for manufacturing goods
• Commercial license needed for businesses who want to indulge in general trading

There is no straightforward answer to this discussion as it depends on the type of business that you want to set up and whether it will be based on a free zone or UAE mainland. These two key factors play a pivotal role in determining whether a sponsor is needed to start a business or not.

If a foreign entrepreneur wants to establish his business on the mainland, a local sponsor is a compulsion. The person sponsoring you should be a respected UAE national. However, if you want to set up your business on free zones, this is not the case. Businesses that are set up in the UAE mainland should have a 51% share of a local sponsor.

The three major types of sponsors that are common in the UAE premises are:

• Local service agent 
• Individual sponsorship
• Corporate sponsorship

Over the past few decades, UAE has emerged as a global tourism and investment hub. Undoubtedly any businessman would want to start a venture in a futuristic country. To start your own business in UAE, you should have a thorough knowledge of the initial cost of business setup and market trends in the UAE. Setting up a business in a free zone can be a bit different from that of the mainland. Here are the few steps that you should take to start a successful business in UAE. 

• Determine the type of your business; legal entity 
• Choose a trading name that you can get registered 
• Apply for a business license to start operations legally 
• Decide whether you want to lease or buy office space 
• Try to get preapprovals from authorized bodies 
• Comply with the rules of the respective territory 
• Register your business after getting initial approval. You need to pay a minimal amount of registration and license fees.

These are some general steps that every business owner has to take to start a business in UAE. However, certain activities may differ depending upon the area in which you want to set up the business.

As UAE ranks among one of the fastest-growing and stable economies in the world, it offers an array of opportunities for businesses and investors. Here is how you can go about strategizing a small, viable, and productive business in the UAE.

No, if your business idea has enough demand in the UAE market before getting into the registration process. Competition analysis, knowledge of the local business market, credible business plan, and viability of your service or product are some key factors that you should take into account before moving ahead. After finalizing the business activities, you should think of a unique business name that will indicate the nature of your offerings perfectly. Some leg work is needed to know if the trade name is available or not. After that, you should decide if you want to set up the business in the mainland or free zone region. Both mainland and free zones have slightly different registration processes and come with their own set of benefits and drawbacks. The nature of the business and other relevant factors will help you in making the decision. 

The next step would be applying for the business license. Different regions have different avenues for registration; that’s why it is best to hand over the process to experienced professionals. The number of employees you can get on board differ for mainland and free zones. Office space required, number of visa’s, residency of the manager, a requirement of a full-time manager, application of wage protection system, and other provisions differ from region to region.

Taxation laws, statutory regulations, and reporting obligations will affect your business operations. 

First of all, you will need to figure out the legal requirements of the UAE to start any of the businesses there. The process involves planning, research, conceptualizing, budgeting, and decision making, among others. Any amateur business person requires assistance and guidance on selecting the correct trade license. To start a new business in UAE, you should follow the following steps; 

Select a business activity for your venture while keeping in mind the practicality in the UAE market

Choose the jurisdiction as the market is divided into various economic zones naming free zone, offshore and the mainland. These zones are known as jurisdictions that have their own set of regulations and laws pertaining to business setup. Besides the legal form of your company as it sets the structure and tone of your business. Before applying for your business license, you should decide on the legal form of your company.

• Get approval from the Department of Economic Development for your company name and activities.
• Choose one of the four types of trade licenses, which are industrial license, professional license, commercial license, and tourism license. 
• Get your company registered from relevant government authorities as requested by DED
• Find a sponsor or local partner 
• Get external approvals as requested by the department of economic development 
• Make a draft and understand the complexities of the Memorandum of Association
• Rent or lease or office depending on your business needs 
• Get initial approvals from DED and collect your trade license 

It is hard to say which free zone is the cheapest in UAE as the choice will depend on a lot of factors, including the type of business you want to set up. Generally, Ajman Media City Free Zone is considered the cheapest free zone as it offers a range of business licenses to carry out different business activities at the lowest cost.  There are various office types like customized, shared, Flexi desk, etc., and world-class infrastructure. It offers 100% foreign ownership, no corporate or income tax, a quick and simple registration process, 100% repatriation of profits and capital, multiple business activities in one license, and fast license issuance. Besides, it offers a cost-effective platform to creative people and media agencies looking for a profitable business establishment.

Starting a business can be a daunting task, especially in the UAE, as you need to take into account different things to make an informed decision. Starting a company often needs expertise and experience. The investor-friendly government of the UAE has simplified the process to make it newcomer-friendly. Following are the steps to start a business in the UAE:

• Choose a local or UAE sponsor
• Select the jurisdiction – Free zone, offshore, Mainland
• Hire a consultant
• Decide on the number of employees
• Confirm the visa requirement
• Get to know if you are eligible to start a business or not
• Decide on a trading name
• Apply for a trade license
• Get initial approvals 

TRN is abbreviated as Tax Regulation Number, and it is actually an identification number that is given to every individual who is registered under UAE VAT. Every individual residing in the UAE should have a valid TRN to pay the VAT on supplies. So, it is helpful for registered businesses to make sure that they get supplies from a tax registered person. Anyone can check if the TRN mentioned is valid or not.

Here is how you can apply and get your TRN number:

• Login and create an account on the E-service through an online portal that is made specifically for this purpose to ease the process for both application and UAE government
• After getting registered for VAT, you should click on the button to get all the details of VAT or TRN in the UAE
• The VAT application has eight sections that you should fill out with the required details. After completing it, submit the details for approval
• After getting the approval, you will be registered for VAT in the UAE and will be given a TRN
• You need to provide a number of required documents without which your application will not get approval. The documentation can vary from business to business

The documents needed most commonly include a copy of the trade license of your business, the company’s contact details and address, contact details of the owner, Memorandum of Association (MOA) with an income statement, and bank details.

For processing a license, there is a fixed price. It is the government (local and federal) that set up a license prize. The delivery of licenses is immediately carried out after the process transaction is being carried out. You can also get a commission for every license. The license price includes the amount of the commission fee. 

There is no fixed price for commission. It depends on the prize charge to the buyer during a transaction. Some platforms come with a fixed commission fee, i.e., 15%, on each finalized transaction. 

There is a hidden cost included in electricity or phone bills. But in this case, there is no hidden cost whatsoever.

Partnership or investment is necessary for any business. Talking about partnership means you are not alone. So the minimum number of partners or investors in a business is at least two, but for the maximum, it varies?

According to

• Companies Act 1956; the maximum limit was 10 to 20
• Companies Act 2013, a maximum number of partners can not be more than 100, but then it has been increased from 50 to 200 for private companies 

As for Public companies, there is no maximum limit. But it changes with time. According to rule 10 of Companies Rule 2014, a partnership firm can not have more than 50 members. Having a large number of partners could be unmanageable. 

UAE is very stable in terms of finance. It provides financial support, business loans to entrepreneurs to start their business. There are certain eligibility criteria to get a loan. Banks evaluate how worthy you are to get a loan based on your income, debt ratio. You can get a loan in UAE by doing some paperwork. Every loan has a minimum monthly salary requirement. Approval of a loan depends on your paperwork which takes anywhere between a day to a couple of days. But what if I don’t have a bank account? Don’t worry; you can get a loan, but it will be easier if you have a bank account. Some banks offer personal loans with the lowest interest rates for UAE nationals who transfer their salaries to their bank account.

Import is the process of bringing goods from foreign countries to the UAE. In case of export goods will move towards other countries. It can be the best business for you. You can do import and export while meeting the country’s legal requirements in terms of licensing, documentation, and permission. The most important point is to get a license. You should have a valid trade license issued by the UAE license issuing authority and should be registered with the customs department.

For import of goods from other countries to UAE, you should have the following documents:

• Commercial invoice
• Certificate of origin
• Detailed packing list as per weight
• Import permit

For export of raw material from UAE to other countries, you should have the following documents:

• Airway bill
• Bill of landing
• Consignment note
• Certificate of shipment

If you are a foreign investor, it is obligatory that a minimum of 51% of the total company shares are held by a local sponsor, and the remaining 49% will be owned by you. Office space of 140 square feet is obligatory for you. Your company will not have any restrictions connected with visa eligibility. A financial audit is necessary for a mainland company. Your company must have approval from various government bodies. 

The offshore company is a business establishment that performs operations outside the location of its origin and the original location of registration. 

100% tax exemption is one of the major benefits of forming an offshore company. It has zero import and export duty. A physical office is not necessary. Offshore company formation permits a single shareholder. 

You can form different kinds of companies in the UAE. All business categories have their benefits and limitations. 

• Civil Company

• • It requires several professionals from different fields like medicine, law, engineering, and accountancy. 

• Limited Liability Company

• • This type of business requires two to fifty shareholders. A UAE sponsor is needed for such a type of company

• Partnership Company

• • This type of company may involve many partners

• Private Shareholder Company

• • This type of business requires two to three partners

• Public Shareholding Company

• • There must be at least ten members, and the majority of them should be UAE nationals

• Free Zone Company

• • It provides tax and custom duty benefits to foreign investors 

• Mainland Company

• • Mainland in the UAE is licensed by the department of economic development (DED). It allows doing business in the local market as well as outside the UAE

• Offshore Company

• • The offshore company is a business establishment that performs operations outside the location of its origin and the original location of registration.

Benefits associated with free zone company formation are listed below.

• Complete foreign ownership: foreign investor does not need a UAE national sponsor for company formation
• Absence of currency regulations: the government will not impose any kind of currency-related restrictions on foreign transactions
• Import and export duty exemption: for free zone companies, import and export duty is not applicable
• Tax benefits: a free zone company has a major benefit of 100% tax exclusion
• Smooth labor recruitment: A free zone company can recruit foreign nationals, and the company can conduct this recruitment without any formalities 
• Trouble-free immigration process: immigration facilities for free zone companies are efficient and saves time
• Readily available workspaces: in the case of free zone companies, warehouses and workplaces are easily available

One can make a great fortune by running a company in the UAE. It is so because UAE provides colossal perks to its businessmen. These perks include a multilingual workforce and zero income tax. Furthermore, UAE is a solid commercial capital in the Middle East, making it an ideal place to start a company. According to the World Bank’s Ease of Doing Business 2020 report, setting up a business in the UAE is more accessible than the rest of the Middle East, and the nation ranks 16 worldwide.

Looking at all the perks that UAE is offering, it is noteworthy that starting a company in UAE is not cheap but expensive. It costs somewhere around Dh34,340 ($9350) to set up a company in the UAE. It is just the basic amount that is required, and there may be some other miscellaneous expenses.

To start a company in the UAE, you first need to have a business mindset to change your problems into opportunities. People from many countries all over the world have established businesses in the UAE. To compete for those, one has to be an expert in his work field and set up the business with total concentration. 

• First, you need to select a field in which you have the expertise and want to start a business.
• Secondly, select the economic zone in which you want to set up the business. These include free zone, Mainland, and offshore.
• Thirdly, you have to get approval for setting up the company.
• Fourthly, apply for a trade license.
• Once you get the license, register your company. Then rent an office and sign a contract with the real estate where you have rented the office. 

Now you are ready to start your business.

A local sponsor can play a necessary part in setting up a business in the UAE. But this is only true for setting the business in Dubai mainland. Setting the company in the Mainland has a prerequisite of getting a local and making him your stakeholder. He becomes your partner in the business. So, it is quite clear that one needs a sponsor to start a business in Dubai mainland. But as far as operating the business in a free zone is concerned, you don’t need any sponsor as you have 100% rights over your business and don’t need any partner or sponsor. The final verdict is that if you start a company on the Mainland, then you need to have a sponsor and ask him to become your business partner. And if you want to set up the business in the free zone, then you need not worry about finding a resident of UAE and sharing your business and profits with him.

On average, an employment visa in UAE costs 7000 AED (1900 USD), including all expenses. If you are not affiliated with any Visa company or your company is not covering your Visa fee, you must consider extra translation services, medical charges, and legal fees. 

Basically, UAE offers two types of labor employment contracts on which Visa fees may vary; limited-term contract and unlimited term contract. The difference is between their period, termination, and guarantee.

UAE work permit expenses vary with categories.

Level 1 refers to the skilled workers who have a bachelors degree or higher qualification. Level 2 workers are those who hold a diploma in any field, typically people from technical and mechanical field. Level 3 workers have higher secondary or high school education level. 

In the table above, A, B, C, and D refers to the skilled and unskilled workers’ percentage employed by a company. A has more than 40% skilled workers employed and D has less than 5%.

First of all, consider and learn few important consulting skills, specific and broader knowledge required for business and different business improvement stages. You should know about different consultancy businesses such as risk management, IT management, process and operation management, project and strategic management. 

Then you can start your business in several ways. 

• You can register yourself as a freelancer and start providing your consultancy in specific regions of the UAE. Collect your required documents confirm your qualifications, and get a license.
• You can start your consultancy company in a free zone by proper registration and hiring employees for further proceedings.
• After a successful experiment, you can open your own foreign office in UAE to expand your business.

Individuals or businesses who do not intend to do business in UAE can establish an offshore company within UAE and enjoy special benefits. The UAE government has a specialized offshore company registration process in different free zones or Dubai Mainland. If you want to set up an offshore company in UAE, you need to:

• Choose the type of your company i.e., Offshore LLC, IBC, Trust, or Offshore Foundation
• Submit the application form along with required documents and other requirements
• Draft the memorandum of association and article of association as required
• Open your company’s offshore bank account

After completion of the above-mentioned process, you can establish your offshore company in the UAE and carry out business internationally. Having established an offshore company in the UAE, you will not be liable for any corporate or income taxes. You can also own real estate property in the name of your company or use it as a holding company.

LLC abbreviates to limited liability company; it is the most common type of company in the UAE. An LLC company can be formed by two partners only, while the maximum limit for partnership in one LLC company is up to 50 partners. Like all LLC companies worldwide, the liabilities are limited to all partners depending on their share in business capital. 

The regulatory authority governing the LLCs in UAE is the Department of Economic Development (DEC). It is responsible for issuing licenses and regulate the business activities carried out through LLCs. Moreover, the reason behind LLC’s popularity in UAE is their attractive business models and benefits offered by the UAE government. If you want to establish an LLC company in UAE, you’ll have to go through a certain process prescribed by DED.

The limited employment contracts are for a definite term that terminates upon the end of a definite term. However, the unlimited employment contracts are for an indefinite term that can only be terminated in certain cases. 

The limited contracts are used by employers who want the services of their employees for a specific duration or when the employers need employees for a particular project spanning over a fixed period. These limited contracts are designed for 02 years term maximum with a notice of termination in the said period. 

The unlimited contracts are for long-term employment without any specific period. These contracts can last for a lifetime and don’t require any renewal. The unlimited contracts are only terminated with the mutual consent of both parties. If any party illegally terminates the contract, the affected party can go for legal action. Moreover, both parties are required to give prior notice 1-3 months before the termination of a fixed contract.

If you hire a business consultant, he can help you improve your business and provide ideas for a successful business. He will guide you about; how to increase revenue and how to overcome upcoming challenges. 

There are few notable services that a business consultant offers

• Identify problems
• Initiate required changes
• Provides expertise in a specific market
• Supplementing existing staff
• Exclude unnecessary staff
• Provide maximum objectivity 
• Teaching and training employees
• Influence other people for success
• Save and organization from losses and distractions