Establishing a company in Dubai for residents

Dubai is one of the most dynamic and developed cities in the world and is a global business hub that attracts investors and entrepreneurs from all over the world. Establishing a company in Dubai for residents is considered a strategic step that can open many business opportunities and provide an encouraging investment environment. Whether you are based in the UAE or thinking of relocating there, understanding the procedures and steps needed to start a company can be key to achieving sustainable success.

In this article, we will discuss in detail the types of companies that can be established in Dubai, the procedures necessary to establish a company in Dubai , in addition to the advantages and disadvantages that you may face. We’ll also provide tips to help you avoid some common challenges, which can help make your investment experience smoother and more successful. If you are looking to start your own business in Dubai, this guide will be a valuable reference for you.

Establishing a company in Dubai for residents

Types of companies that can be established in Dubai

Dubai is considered one of the most prominent global destinations for establishing a business thanks to its distinguished economic environment and advanced infrastructure. Dubai residents can establish multiple types of companies depending on their business needs and goals. Below we review the main types of companies that can be established in Dubai:

•  Local companies

Local companies are those that are established and operate within the borders of the Emirate of Dubai and are subject to local laws and procedures. These companies benefit from access to a large and diverse local market, and enjoy many advantages such as the ability to deal directly with local customers and suppliers. However, local companies need a local partner who owns at least 51% of the shares, according to local laws.

• Free companies

Dubai’s free zones provide unique investment opportunities for companies that want to benefit from a business environment free of taxes and customs duties. Free companies are characterized by the possibility of 100% full foreign ownership, in addition to great facilities in establishment and operation procedures. There are many free zones in Dubai, such as the Jebel Ali Free Zone and the Dubai International Financial Centre, each of which offers various incentives and services to attract investors.

• External companies

Offshore companies or offshore companies allow investors to establish a business entity in Dubai without the need for a physical presence in the emirate. These companies are often used for offshore investment or asset management purposes, and have many advantages such as financial secrecy and not being taxed on income earned outside the country. Dubai provides a flexible legal and regulatory environment that helps establish and manage offshore companies effectively.

By understanding the different types of businesses that can be established in Dubai, residents can choose the type that best suits their business goals and take advantage of the opportunities available in this thriving global city.

Documents required to establish a company in Dubai for residents

For Dubai residents, the process of establishing a company in Dubai requires a set of documents and documents that vary based on the type of company and the region in which the company will be established. In general, basic documents include:

• Incorporation application form: Fill out the incorporation application form that contains company details, such as name, activity, and capital.
• Passport copies: Provide clear, color copies of passports to all partners, directors, and shareholders.
• Personal photographs: Provide recent passport size photographs of partners and directors.
• Proof of Address: Provide proof of current address to all partners and directors, such as an electricity or water bill or bank statement.
• Memorandum and Articles of Association: Prepare and submit the company’s Memorandum and Articles of Association, which sets out internal laws and operating procedures.
• Initial approval: Obtain initial approval from the Department of Economic Development (DED) or the competent government body.
• Lease contract: Submit a lease contract for the company’s headquarters, which must be certified by the Dubai Real Estate Regulatory Authority (RERA) or the authority responsible for free zones if the office is in a free zone.
• Special licenses: Obtaining the required licenses based on the nature of the company’s activity, such as a commercial, professional, or industrial license.
• No Objection Certificate (NOC): If one of the partners is an employee of another company, a NOC from his or her current employer may be required.
• Authorizations: Provide legal authorizations if there are any actions to be carried out on behalf of partners or managers.
• Trade names report: Submit a report on the company’s proposed trade names, and ensure that they are not used.
• Copy of Emirates ID: Provide a copy of the Emirates ID to all partners and managers.
• Insurance: In some cases, proof of health or business insurance may be required for partners and directors.
• Chamber of Commerce Registration: Register with the local Chamber of Commerce if necessary.

Steps to establish a company in Dubai

Establishing a company in Dubai requires following a set of organized steps to ensure compliance with local laws and obtaining the necessary licenses. In this section, we will go over the main steps for setting up a company in Dubai in detail:

Choose the company type

The process of establishing a company begins with choosing the most appropriate type of business that you intend to do. There are three main types of companies that can be established in Dubai:

1. Local companies: It is considered the ideal choice for small and medium businesses targeting the local market.
2. Free companies: They are established in free zones and benefit from tax exemptions and other facilities.
3. Offshore companies: Registered in Dubai but operating abroad, they benefit from Dubai’s commercial reputation without the need for a large physical presence in the city.

Register the company and obtain a license

After choosing the type of company, comes the step of registering it and obtaining the appropriate license. This step includes:

1. Submitting a registration application: An application must be submitted to the Department of Economic Development or the competent authority, including all required documents such as a copy of the passport and business plan.
2. Choosing a company name: A name that is unique and not used by other companies must be chosen, taking into account local laws related to company names.
3. Obtaining the necessary approvals: You may need additional approvals from different government agencies depending on the type of activity that the company will engage in.
4. Payment of fees: includes registration fees, licensing fees, and any additional fees that may be imposed by the competent authorities.
5. Receiving the license: After completing all procedures and paying the fees, you will obtain the license that allows you to start working legally.

Open bank account

After receiving the license, a bank account must be opened in the company’s name to facilitate financial operations. Opening a bank account requires:

1. Submitting documents: Company documents such as the trade license, articles of incorporation, and personal identity data of the partners must be submitted.
2.  Choosing the appropriate bank: It is preferable to search for a bank that suits the company’s needs and provides appropriate banking facilities and services.
3.  Capital Deposit: In some cases, a minimum capital deposit may be required to open the account.

By following these steps carefully and systematically, Dubai residents can establish their companies and begin conducting their business legally and effectively.

Costs of establishing a company in Dubai

Establishing a company in Dubai requires careful consideration of the costs and expenses associated with this process. It is important to have a clear understanding of upfront costs as well as ongoing expenses to ensure sound financial planning. Below we will detail the most important costs and expenses that must be taken into consideration when establishing a company in Dubai.

Establishment costs

Establishment costs include a set of fees and procedures that must be undertaken to ensure that the company is established legally and officially. Among these costs:

1. Registration fees: Company registration fees vary based on the type of company and the region in which it will be established. For example, free company registration fees are different from domestic company registration fees.
2. Trade name fees: Fees must be paid to obtain a trade name for the company, and these fees vary depending on the type of trade name chosen.
3. License fees: Companies need to obtain different licenses to start practicing their activities, and fees vary based on the type of business activity.
4. Legal and accounting consultation fees: You may need legal and accounting consultation to ensure that your company complies with all local laws and regulations, and these services come at additional costs.

Current expenses

After establishing a company, there are a range of ongoing expenses that companies must incur to ensure successful business continuity. Among these expenses are:

1. Rents: The cost of rents depends on the company’s location and the size of the office or commercial space rented.
2. Salaries: Salaries are one of the largest current expenses, and companies must allocate an appropriate budget to cover employee wages.
3. Services: Includes electricity, water, telecommunications, internet, and logistics bills.
4. Marketing and advertising: Marketing and advertising campaigns are essential to attract customers and increase brand awareness.
5. Insurances: Businesses need property and employee insurance to ensure that financial risks are reduced.

Taxes and Fees

Although Dubai is known for its easy tax system, there are some taxes and fees that companies must adhere to:

1. Value Added Tax (VAT): A 5% VAT applies to most goods and services in Dubai.
2. Government fees: include license renewal fees and other administrative fees imposed by government agencies.
3. Customs duties: Customs duties apply to goods imported into Dubai, and vary according to the type and value of the goods.

Understanding the costs and expenses involved in setting up and operating a company in Dubai can aid in sound financial planning and ensure the financial sustainability of the company.

Conditions for establishing a company in Dubai for residents

Establishing a company in Dubai for residents requires compliance with specific conditions and requirements. Here are the most important conditions to consider:

1. Minimum capital: The capital must be proportionate to the type of company and its activity. In free zones, the minimum capital is often lower than in non-free zones, and can vary based on the requirements of the zone and the type of activity.
2. Personal documents: Submit the founders’ passports, residence cards, and personal photos. Passports must be valid.
3. Licenses: Obtaining the appropriate license for the type of business activity. This includes submitting applications for commercial, industrial or professional licensing based on the activity.
4. Choosing the company type: Determine the appropriate company type, such as a limited liability company (LLC), a private joint stock company, or a branch of a foreign company. In free zones, residents can own companies outright.
5. Choosing a company location: Obtaining a lease for an office or commercial space. In free zones, dedicated office space is provided by the administrative body of the zone.
6. Appointing a general manager: Appointing a general manager for the company who will be responsible for daily operations. It may be necessary to provide the company director’s details and CV.
7. Approval of the company name: Choose a name for the company that complies with UAE laws, and ensure that it is not similar to the names of other registered companies.
8. Compliance with local laws: Compliance with UAE labor and tax laws. In free zones, there may be tax exemptions, but any new laws that may be imposed must be adhered to.
9. Opening a bank account: Opening a bank account in the name of the company, and submitting the necessary documents such as the articles of incorporation, licenses, and founders’ information.
10. Registration in the Chamber of Commerce: Register the company with the Dubai Chamber of Commerce to obtain a registration certificate.
11. Submitting the business plan: Preparing and submitting a detailed business plan that explains the company’s goals, growth strategies, and target market.
12. Obtaining visas: Obtaining work and residence visas for founders and employees. This requires submitting the necessary documents and ensuring compliance with immigration requirements.
13. Establishment procedures in free zones: In free zones, procedures include submitting an application for registration, submitting documents, paying fees, and obtaining final approvals from the zone’s administrative body.
14. Preparing the company’s articles of association: Preparing the articles of association that determine how the company will be managed, the rights and duties of shareholders, and the procedures for making decisions.
15. Insuring the company’s activity: Obtaining appropriate insurance to protect the business activity from potential risks.

Advantages of establishing a company in Dubai

Establishing a company in Dubai brings with it a set of unique advantages as well as some disadvantages that must be taken into consideration before embarking on this step. In this section, we will review these aspects in more detail to help residents make an informed decision.

• Tax exemption: Dubai is considered one of the countries that provides a flexible tax environment, as it does not impose taxes on personal or commercial income. This constitutes an excellent opportunity to increase profits and maximize returns.
• Ease of procedures: The UAE government provides smooth and quick procedures for establishing companies. Most procedures can be completed electronically, saving time and effort.
  Advanced Infrastructure: Dubai provides world-class infrastructure that includes advanced ports and airports, a strong communications network, and modern roads that facilitate business operations.
• Strategic location: Thanks to its distinguished geographical location, Dubai is considered a trade gateway linking the Asian, European, and African markets, facilitating access to a wide range of global markets.
• Economic and political stability: Dubai is known for its economic and political stability, which makes it a safe and attractive environment for foreign investments.
• Multicultural Business Environment: Dubai is an international city with a multicultural society, providing opportunities for cooperation and trade exchange with different nationalities and cultures.

Tips for establishing a company in Dubai

1. Good financial planning: It is necessary to develop a solid financial plan to cover initial costs and avoid any unexpected financial stress.
2. Market research and analysis: Conducting a comprehensive study of the market and understanding the competition can help identify potential opportunities and challenges.
3. Benefit from consulting services: Legal and financial consulting services can be used to avoid compliance problems and adapt to legislative changes.
4. Constant communication with government agencies: Maintaining a good relationship with government agencies and following up on legislative updates can contribute to avoiding penalties and legal problems.

In the end, it can be said that establishing a company in Dubai carries with it great opportunities for growth and success, but it is necessary to balance the advantages and disadvantages and take the necessary measures to ensure that the desired goals are achieved.

In conclusion, it can be said that establishing a company in Dubai represents a strategic choice for residents seeking to benefit from the enormous economic opportunities that the emirate offers. Thanks to the variety of types of companies that can be established, from local companies to freelancing and offshore companies, every entrepreneur can choose the type that meets his or her business needs and goals.

The process of establishing a company requires several basic steps, including choosing the appropriate type of company, registering it and obtaining the necessary licenses, in addition to opening a bank account. Although there are some challenges and drawbacks, the many advantages such as the encouraging investment environment and developed infrastructure make Dubai a preferred destination for many investors.

By following the tips provided to avoid potential pitfalls, entrepreneurs can achieve success and make the most of the opportunities available. Ultimately, good planning and adherence to legal and administrative procedures remains the key to achieving investors’ goals in the dynamic Dubai market.

The most important frequently asked questions about establishing a company in Dubai for residents