The cost of establishing a company in Dubai for foreigners

Dubai is considered one of the most prominent global destinations for business and investment, as it enjoys a strategic geographical location linking East and West, in addition to an advanced infrastructure and an economic system that encourages growth and innovation. With increasing international interest in Dubai as a commercial center, many foreign investors are seeking to establish their companies in this distinguished emirate. Dubai comes with a variety of legal and business options that can meet the needs of startups, medium and large companies alike. Through this article, we will review the cost of establishing a company in Dubai for foreigners, focusing on the types of companies available, the basic costs associated with the establishment process, in addition to the tax benefits and incentives provided by the government to attract foreign investments.

Whether you are a new investor looking to enter the UAE market, or an entrepreneur looking to expand your business, understanding the costs and factors involved in setting up a company in Dubai will help you make the right and informed decisions. Through this article, we will provide you with the comprehensive and accurate information you need to successfully start your investment journey in Dubai.

The cost of establishing a company in Dubai for foreigners

Steps to establish a company in Dubai for foreigners

Establishing a company in Dubai for foreigners requires following specific steps to ensure compliance with local laws and obtaining the necessary licenses. Here are the basic steps to establish a company in Dubai for foreigners:

1. Determine the type of business: The first step is to determine the type of business you want to engage in. Commercial activities in Dubai are classified into several categories, including commercial, industrial, and service.
2. Choosing a company type: There are several types of companies that can be established in Dubai, such as limited liability companies (LLC), companies in free zones, foreign branches, and civil companies. Choosing the appropriate type depends on your needs and type of activity.
3. Choosing a business name: Choose a business name that is in line with Dubai’s naming laws. The name must not contain any offensive or objectionable words and must be unique and not used by other companies.
4. Obtaining initial approval: Submit an application for initial approval from the Dubai Economic Development Department (DED). This step includes submitting the required documents such as the founders’ passports and business plan.
5. Determine the location of the company: You must determine the location of the company and rent a commercial office. This requires submitting a lease contract certified by the Real Estate Regulatory Authority (RERA).
6. Preparing the Articles of Association and Partnership Agreement: Preparing the Articles of Association and Partnership Agreement and notarizing them with a notary public in Dubai. These documents include details about the company structure, partners, and ownership percentages.
7. Obtaining additional approvals: You may need to obtain additional approvals from competent government agencies based on the type of business activity. For example, companies operating in certain sectors such as health and education may require special approvals.
8. Submitting a commercial license application: Submit a commercial license application to the Dubai Economic Development Department (DED) with the required documents. These documents include the lease, initial approvals, and articles of incorporation.
9. Obtaining a commercial license: After reviewing and approving the application, the Department of Economic Development issues the commercial license. The required fees must be paid to obtain the license.
10. Opening a bank account: After obtaining the commercial license, a bank account can be opened for the company in one of the local or international banks in Dubai.
11. Obtaining residence visas: After establishing the company, it is possible to apply for residence visas for partners and employees. This step includes submitting the necessary documents and performing the required medical examinations.
12. Compliance with Laws and Regulations: After establishing a company, all local laws and regulations related to tax, accounting, and human resources must be complied with to ensure a legal and smooth running of the business.

Types of companies available to foreigners

When considering setting up a company in Dubai , foreigners have several options to suit their needs and investment goals. These companies vary between free zone companies, local companies, and offshore companies, and each type has unique characteristics in terms of establishment, costs, and privileges. In this section, we will review the three types available to foreigners in detail.

Free zone companies

Free zone companies in Dubai are an attractive option for foreigners due to the many benefits they offer. Free zones are special economic zones that aim to attract foreign investments by offering tax and commercial facilities and benefits. The most prominent advantages of establishing a company in free zones are:

1. 100% Foreign Ownership: Foreign investors can own the entire company without the need for a local partner.
2. Tax exemption: Companies in free zones enjoy complete tax exemption on income and profits for periods of up to 50 years, with the possibility of extending this period.
3. Ease of procedures: Registration and establishment processes in free zones are characterized by simplicity and speed, which makes it easier for investors to start their business quickly.

Local companies

Local companies are those established within Dubai and subject to local laws. Foreign investors who choose to establish local companies must adhere to certain legal requirements imposed by the country. The most important features and characteristics of local companies are:

1. Local partner: UAE law requires a local partner to own 51% of the company, while a foreign investor can only own 49%.
2. Access to the local market: Local companies can operate freely in the local market and contract with government and private agencies without restrictions.
3. Diversity in activities: Local companies provide a great diversity of commercial, industrial and service activities that can be practiced.

Offshore companies

Offshore companies, or offshore companies, are companies established in Dubai but operating outside the borders of the UAE. This type of company is ideal for international business, e-commerce, and asset management. The most prominent features of offshore companies are:

1. Business Flexibility: Offshore companies provide great flexibility in conducting international business and investing in multiple areas.
2. Privacy: These companies ensure high levels of confidentiality and privacy for investors, which enhances the protection of assets and information.
3. Tax exemptions: Like other companies in free zones, offshore companies benefit from full tax exemptions on income and profits.

By choosing the right type of company, foreign investors can take advantage of the promising economic opportunities that Dubai offers, and establish successful and sustainable businesses that align with their investment goals.

Basic costs of setting up a company in Dubai

When considering setting up a company in Dubai , it is essential to understand the basic costs associated with the process. These costs vary based on the type of company, its location, and licensing requirements. Here is an overview of the costs to consider:

Registration and licensing fees

Registration and licensing fees are among the first costs an investor faces when establishing a company in Dubai. These fees include:

1. Company registration fees: They vary according to the type of company and the region in which it will be registered. For example, the fees for registering a company in free zones are different from the fees for registering a local company.
2. License fees: Every company needs to obtain a license to conduct business. Licensing costs vary depending on the type of business, and some activities may require additional licenses.
3. Contract documentation fees: These include documenting the articles of incorporation and partner contracts. These are one-time fees paid upon establishing the company.

Office and commercial space costs

Companies need workspaces that suit the nature of their activity. Office and commercial space costs vary based on several factors:

1 . Location: Rental costs vary greatly between the city center and outlying or industrial areas. Free zones are a popular choice because they provide a convenient business environment and competitive prices.
2. Office size: Determined based on the number of employees and the type of business activity. Small businesses may need small offices, while larger companies may need larger spaces.
3. Office equipment: includes the costs of furniture, technical equipment, and infrastructure necessary to work efficiently.

Legal and consulting fees

Hiring legal and financial advisors is vital to ensuring the proper formation of the company. These costs include:

1. Lawyers’ fees: These include drafting contracts, providing legal advice, and ensuring compliance with local laws.
2. Financial consulting fees: This includes preparing financial plans and providing advice on capital structuring and tax management.
3. Audit and accounting costs: Companies need audit and accounting services to ensure financial transparency and compliance with financial standards.

These costs are essential to establishing a successful company in Dubai. It is important for investors to plan these costs well and include them in the business start-up budget to ensure the process runs smoothly and the desired goals are achieved.

Tax benefits and incentives in Dubai

Dubai is one of the most attractive destinations for foreigners to establish their companies, thanks to a range of tax benefits and incentives offered by the government to enhance the business environment and encourage foreign investment.

• Tax exemptions

Tax exemptions are one of the most prominent advantages that Dubai offers to foreign investors. In many free zones, companies can benefit from complete exemption from corporate income tax and VAT for a number of years. This enhances the competitiveness of companies and increases their ability to achieve greater profits without incurring the large tax burdens that may exist in other countries.

• Government incentives

The Dubai government offers a wide range of incentives to support startups and foreign investors. Among these incentives is the provision of advanced infrastructure that includes equipped offices and modern commercial spaces at competitive prices. The government also provides support in the areas of research, development and vocational training, which helps companies improve their efficiency and increase productivity.

• Financial facilities

In addition to tax exemptions and government incentives, Dubai provides many financial facilities that facilitate the process of establishing companies. Among these facilities is the possibility of obtaining financing from local and international financial institutions on favorable terms. Banks in Dubai also provide credit facilities and integrated banking services that support companies in managing their cash flows and meeting their financial needs.

Thanks to these tax advantages and incentives, Dubai becomes an ideal environment for establishing foreign companies, enhancing the chances of success and growth in a market characterized by dynamism and diversity.

Documents required to establish a company in Dubai for foreigners

Establishing a company in Dubai for foreigners requires submitting a set of papers and documents to ensure compliance with local laws and regulations. Requirements vary slightly depending on the type of company and the geographical area in which the company will be established, whether it is in the free zone or outside it. Here is an overview of the documents required to establish a company in Dubai for foreigners:

• Copy of Passport: A valid copy of the passport of each partner or founder is necessary to submit. Pages must be clear and legible.
• Personal photos: A number of passport-sized personal photos of each partner or founder.
• License application form: Fill out the commercial license application form that can be obtained from the authority concerned with issuing commercial licenses.
• Business Plan: Some authorities may require the submission of a business plan that explains the nature of the business and services that the company will provide.
• Memorandum of Association and Articles of Association: The Memorandum of Association explains the company’s structure and details of the partners. The articles of association determine the internal regulations of the company.
• Initial approval: Some commercial activities may require obtaining initial approval from the competent authorities before proceeding with other procedures.
• Proof of Address: Provide proof of current address such as a utility bill or lease.
• Special approvals: Some commercial activities require special approvals from competent authorities, such as the Ministry of Health for medical activities or the Roads and Transport Authority for transportation-related activities.
• Bank account: Open a bank account in the name of the company under establishment, and provide proof of this account.
• Lease Agreement: Submit a lease contract for the company’s headquarters proving the existence of an approved office or work space.
• Foreigners’ Permit: In some cases, a permit may be required from the Department of Economic Development allowing foreigners to establish the company.
• Registration fees: Pay the prescribed fees for the registration process and obtaining a commercial license.

In conclusion, it can be said that establishing a company in Dubai for foreigners requires careful consideration of the costs and options available. Dubai, with its strategic location and thriving economy, offers golden opportunities for business and investment. By choosing the appropriate type of company, whether in free zones, local, or overseas, foreign investors can benefit from the many advantages that the emirate offers.

Basic costs include registration and licensing fees, office and commercial space costs, and legal and consulting fees. These costs vary depending on the type of company and the chosen location. However, the benefits and tax advantages that Dubai offers, including tax exemptions, government incentives and financial facilities, largely offset these costs, making Dubai an attractive destination for business.

Understanding these factors and good planning can lead to establishing a successful and prosperous business in Dubai. Therefore, foreign investors are advised to cooperate with experienced legal and financial advisors to ensure compliance with local laws and take advantage of available opportunities to the maximum extent possible. In this way, Dubai can be a springboard for success and growth in regional and global markets.

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