If you’re considering starting your own business in another country, consider Dubai. It is a well-known and renowned trading hub in Dubai, located in the Middle East and North Africa (MENA) region. Dubai boasts a wealth of benefits for companies and organizations looking to prosper and connect with the world. Today we are going to talk about what you need if you want to know what a business setup in Dubai is all about.
At the start of 2019, the economy of Dubai increased by 2.1 percent, and the total GDP reached USD 56.7 billion in the first six months. In 2022, it was predicted that the GDP would increase to 3.8 percent. The prospects for growth have drawn growing numbers of entrepreneurs to Dubai. It’s good news if you’re planning to start your business in Dubai. The process is straightforward, particularly through the free zones in the UAE.
What do you must know before creating
In general, there are some things to be aware of before starting setting up your company in Dubai. Let’s go over each one of them.
Economic Zone Free Zones against Offshore
Before you can set up, deciding whether you’d like to work in the Free Zone or Offshore is necessary. On your needs, each option has its distinct advantages and requirements.
Free Zone
If you’re seeking full control of your business, you should consider getting a license and a location within one of the Dubai-free zones. The Dubai government established free zone concepts to attract foreign interest in establishing companies within the city. In essence, it’s an economic zone where entrepreneurs can benefit from a variety of benefits of ownership as well as tax-free advantages.
But, one of the main drawbacks a business can face when operating in a free-charge zone is that you’re not allowed to transact directly with UAE, the local marketplace.
At present, there are more than 30 free zones that are operating in Dubai. Generally, every free Zone is based on the industry sector and provides licenses to companies in these groups.
Offshore
Offshore companies may be registered with free zones and benefit from the same advantages. But, it’s not an alternative to an organization that is a free zone. The major difference between a free zone company and an offshore company is the activities of the company. Offshore businesses are permitted to conduct business outside the UAE but not inside. There are no requirements for a minimum amount of capital to be deposited before incorporation.
But, unlike an unregulated business, the requirement for a sponsor is to be present, which limits the amount of foreign ownership you can have to 49 percent.
Different types of licenses
In addition to deciding on a zone in addition, you’ll be required to determine the type of license needed. It is the Department of Economic Development (DED) is in charge of granting rights, and there are three primary types of support you could apply for:
Commercial license
To establish an enterprise in Dubai that involves trading or purchasing and selling products, you must get a commercial license. This license can be used for companies that deal with import and export, logistics, sales and travel and tourism, general stores, and real estate.
Industrial license
This type of license is granted to companies that manufacture natural resources and materials into products that are finished – either by hand or mechanically. This license applies to textiles, metal fabrication, and paper manufacturing businesses.
Professional license
The professional license is given to companies that are service providers such as artisans, craftsmen, or artisans. Some examples of businesses applying for this license are beauty salons, medical services, and repair services.
Sponsorship
A local sponsor is not required to establish the Free Zone, such as DMCC. One of the primary benefits of incorporating in a non-profit zone is that you can select an entity that has 100 100% foreign ownership without the requirement of a UAE country as a sponsor or partner.
Dubai Free-Zone company formation process
When establishing an enterprise, Free zones are more sought-after by foreign-born entrepreneurs and reason. They offer zero personal and corporate tax and 100% ownership of the company, and repatriation of 100% of capital and earnings, and there are no restrictions on the currency.
Here are the seven steps you’ll need to follow to start your company in the Zone of no cost:
Find out about your business’s activities
The first step for creating your own business and getting the necessary license is to identify the purpose of your venture. There are more than 2,100 different business opportunities, each of which falls into various groups within the commercial, industrial, professional, and tourism sectors. You can access the complete listing on the DED website.
Pick a free zone
As mentioned earlier, there is more than thirty free Zone in Dubai. Your type of business may influence the free Zone you choose to establish your business. Locating your business near other firms within the same field makes general sense.
DMCC, the world’s most prestigious free Zone, and the Government of Dubai Authority on business and commodities were awarded the Global Free Zone of the Year by Financial Times’ fDi Magazine.
Select a brand name
When you choose your company’s name, It’s crucial to ensure that it is in line with the strict UAE name rules. Words that contain offensive language may be considered cruel to religions or even refer to political organizations or the mafia are prohibited. If you’re considering naming your company after someone, you’ll need proof that the person is the owner or a business partner (no abbreviations or initials permitted).
The process of naming your business can be arduous. You can cut down on time and energy by consulting a professional to guide you through the process and to get your name recognized.
The first step is to apply for approval.
It is necessary to request the initial approval to confirm your Dubai DED has no objections to your business being established to allow you to begin the next steps of obtaining the license. Applying online, in person, or through a third party (like via an attorney firm) is possible. The documentation you’ll need to submit will vary based on the nature of your business; however, they are generally:
- The form for registration and licensing of businesses
- A copy of your ID or passport
- Copy of your residence permit or visa
- The articles of association of the company.
- A feasibility study for the project