How to Start a Business in Dubai: A Step-by-Step Guide

Dubai is a wonderful place to start a business. Its economy is going from strength to strength, even when global economic prospects remain bleak for the foreseeable future. Not to mention, Dubai is now the fifth-safest city in the world. According to the Economist Intelligence Unit's 2024 Global Liveability Index, it is also the second-most livable city in the Middle East and Africa, after Abu Dhabi. 

Furthermore, although Dubai is no longer tax-free, it still has a robust regulatory framework, business-friendly taxation, and, like we mentioned above, an exceptionally stable economy. Plus, more than 90% of the population are expatriates, so the consumer base is diverse. In short, if you’re a foreign entrepreneur looking to set up shop in Dubai, go for it, by all means! 

“But how do I go about it?” you might ask. Read on to learn everything you need to start a business in Dubai. 

Legal Structures for Businesses in Dubai

There are several different corporate structures in Dubai, and each option comes with its own set of benefits and liabilities. Therefore, it’s important to carefully consider which structure most closely aligns with your business goals and operational needs. 

Here’s an overview of some of the most common business types in Dubai:

Sole Proprietorship

A sole proprietorship is a business structure in which a single individual owns the entire company. This person has complete control over all business operations and enjoys 100% of the profits. In the UAE, individuals of any nationality can establish a sole proprietorship in the UAE, but only UAE and GCC nationals are allowed to set up commercial or industrial businesses under this model. 

Civil Company

Civil companies are often used for service-oriented professions and are popular among professionals such as doctors, accountants, engineers, or lawyers who want to provide their services in Dubai. However, an Emirati national is required to own 51% of this type of company. 

Limited Liability Company (LLC)

The Limited Liability Company (LLC) is one of the most popular business structures in the UAE. An LLC requires between two and 50 shareholders, with each shareholder's liability limited to the extent of their share in the company. Shareholders distribute profits and losses according to their shareholdings. Like for civil companies, a key requirement for LLCs in Dubai is that 51% of the company must be owned by an Emirati.

Branch of a Foreign Company

Foreign companies looking to expand their operations in Dubai can establish a branch office. Unlike an LLC, the branch is 100% owned by the parent company, which, in turn, maintains full control over its operations in the city. However, there are certain limitations, such as the requirement that any goods imported must go through a local trading firm. 

Free Zone Company

Setting up a business in one of Dubai’s Free Zones has several benefits, the most notable of which are: ease of setup, full foreign ownership, and various tax benefits. Free Zone companies usually require two to five stakeholders. 

However, businesses operating in Free Zones cannot directly trade with the Dubai market unless they collaborate with a local distributor. The specific requirements for setting up a business can also vary between Free Zones. 

Freelancers

Establishing a freelance business in the UAE is a relatively simple process, particularly in Free Zones. Freelancers are required to register with the Free Zone by submitting an application form, a CV, a bank reference, and a notarized Registry Identification Code Form. Also, it’s relatively easy for freelancers or self-employed individuals to apply for a Dubai visa. 

How to Start a Business in Dubai: A Step-by-Step Guide 

Once you’ve determined the most suitable legal structure for your company, it’s time to get into the business setup process, step by step. 

1. Choose a business activity. 

Your business license must correspond to a predefined activity or activity category from a list provided by the registration authority. For example, if you plan to start an IT consulting firm, you would choose a category like "Information Technology" or "Consulting Services." This choice affects licensing costs and determines the jurisdiction for your business setup.

2. Choose a jurisdiction for your business activity. 

There are three key jurisdictions in Dubai (and all of the UAE): 

• Mainland
• Free Zones
• Offshore

Mainland businesses are registered with an emirate's economic development authority, while free zones fall under designated authorities within an emirate and offer specific benefits. Offshore businesses cannot engage in economic activity within the UAE. 

Each jurisdiction has unique advantages: mainland is mainly for broad UAE operations, free zones for specialized incentives, and offshore for global reach. Ensure your chosen jurisdiction aligns with your business activity and goals.

3. Choose a business name. 

The next step is to select a trading name. Consult with your local Free Zone authority or the Department of Economic Development to ensure your chosen name aligns with the country’s cultural and religious values. 

UAE laws stipulate that your business name must: 

• be unique;
• be relevant to your business activity;
• not be previously registered;
• not resemble any existing company names within the UAE; and
• include an abbreviation of the legal structure, such as LLC, FZE, etc.

Given the strict naming guidelines, it’s always a good idea to have three name options on hand when seeking approval.

4. Compile all necessary documents. 

Depending on your jurisdiction, you’ll have to submit the following documents: 

• Completed application form
• Passport copies of shareholders, with a validity of at least six months
• Specimen signatures of shareholders
• Office Tenancy Contract (also known as Ejari in the UAE)
• Trade Name approval or Initial Approval
• Business plan
• Letter of intent

Prepare these documents beforehand to ensure a smooth registration process.

5. Obtain your business license. 

Once you submit your documents, authorities will review your application for approval. Generally, company registration takes 4-6 working days. To finalize licensing, you need to provide:

• Board resolution for appointing a manager or director
• Power of attorney for the manager or director
• Memorandum and Articles of Association
• Specimen signature and photo of the manager/director
• Share capital details

You must also register your business online with the Federal Tax Authority. While most business licenses are obtained from the Department of Economic Development or local Free Zones, some sectors, like manufacturing and healthcare, require specialized licenses from relevant ministries.

6. Open your business bank account.

Once you have your license, you can open a business bank account in the UAE. You can choose from several banks, including Emirates NBD, Commercial Bank of Dubai, Mashreq Bank, and Dubai Islamic Bank. 

It’s important to note that banks and government agencies closely monitor financial activities. So, if you fail to comply with regulations, you'll have to pay penalties or face account closure. Partnering with a local expert like Oblique Consult can help ensure you meet all requirements and avoid noncompliance. 

FAQs

1. Is it easy to start a business in Dubai? 

Yes, very much so, particularly when you have the right business setup advisor like Oblique Consult by your side. Our experienced team efficiently handles every aspect of the company formation process for you.

2. How much does it cost to start a business in Dubai? 

The cost may vary based on multiple factors, such as business size, legal structure, type of business license, type of free zone, etc. But all things considered, setting up a company in Dubai Mainland can cost between AED 14,500 and AED 25,000, and in Dubai Free Zones, between AED 9,000 and AED 10,000.

3. What documents are required to open a business bank account in Dubai? 

The following documents are typically required for opening a corporate bank account:

• Emirates ID copy
• Company Trade License
• Certificate of Registration
• Lease Agreement
• Passports of shareholders and authorized signatories
• Company Memorandum & Articles of Association

Additionally, banks may ask for the buyer’s and suppliers’ names, along with bank statements from shareholders’ home countries or UAE, if relevant.

4. Which are the best low-investment businesses to start in Dubai?

Here are some top business ideas with low investment and high profit potential: 

• Dropshipping
• Freelance Services (graphic design, content writing, web/app development, etc.)
• Digital Marketing Agency
• Online Tutoring
• Event Planning
• Consulting Services
• Social Media Management
• Content Creation
• Virtual Assistant

5. How much is the corporate tax in Dubai? 

Corporate taxes in Dubai for natural and juridical persons are as follows:

• 0% on taxable income up to AED 375,000.
• 9% on taxable income exceeding AED 375,000.

For Qualifying Free Zone Persons:

• 0% on qualifying income.
• 9% on non-qualifying taxable income, according to Cabinet Decision No. 55 of 2023.

Additional taxes include:

• 5% VAT on most goods and services.
• Excise Tax on specific items like tobacco, sugary drinks, and energy drinks.

If you're unsure about your eligibility or need help with company registration, Oblique Consult can provide the clarity you need. 

Oblique Consult is a leading business setup consultant in Dubai, with extensive industry experience and a diverse portfolio. We’ve successfully guided hundreds of international clients in setting up shop in Dubai. Our team will help you choose the right business structure and prepare all the required documents for a smooth and efficient business setup process. 

Contact us today to leverage our expertise and make your business venture in Dubai seamless and successful.

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