How to start a business in Dubai? Thousands of people are migrating to the UAE every year. Be it because many people want to live and work in this fabulous country, where others spend their vacation or because the want to start doing business here and use the tax advantages of Dubai.
Dubai is a city of superlatives and offers a priceless advantage for companies and individuals: 100% tax exemption - in Dubai there are no taxes, neither corporate tax for companies nor income tax for individuals. The only exception is the VAT, which is only 5% and for companies, of course, only a pass through component.
It is not mandatory to live in the UAE when you own a company in Dubai. A Residence Visa in most cases is required but it is not necessary to live in the UAE as there is no reporting obligation. In order not to have the Residence Visa canceled one must travel to the UAE every 6 months, thats all.
The first step in opening a firm in Dubai is to decide which company form is the right one? Basically, one differentiates between three types of companies, each of which offers different possibilities but is also subject to different regulations.
Mr. Alcott owns several companies in London and would like to found a holding company in Dubai for these companies. He does not plan to do business with companies in Dubai or the other Emirates and does not want to relocate to Dubai.
Company Form: Freezone with Zero Visa
Mrs. Butterfield runs an online agency and exclusively deals with clients in Germany . Since she can carry out her work from anywhere, she wants to relocate her company and her place of residence to Dubai, but does not plan to have customers in the UAE.
Company Form: Freezone with 1 visa
Mr. and Mrs. Smith work in the textile industry. They are now planning to set up a business in Dubai to sell their products there directly to customers within the United Arab Emirates. For this purpose, they also want to move with the entire family to Dubai and live there.
Company Form: Mainland LLC
This form of company is currently still offered by many agencies. Since it is practically impossible to obtain a bank account for an offshore company, this form of company can actually be ruled out from the outset.
If you nevertheless decide on this form of company, please note the following:
- No residence visa authorization hence no corporate bank account
- No business relationships with companies within the UAE
A Freezone is perfect for individuals or existing companies that want to take advantage of the tax freedom in Dubai, but do not plan of doing their main business with companies or individuals within the UAE.
Freezone companies offer many advantages:
There are over 27 freezones in Dubai for foreigners to chose from. This might be confusing and there is a lot of false information to be found online. We are partner of over 15 Freezones in Dubai and can draw from years of experience. Currently we have shortened the list of Freezones that we deal with to a handful only. You can benefit from our experience. We will setup your new company within the Freezone that will guarantee a smooth setup, a fast visa process and easy bank account opening. We will make sure you get best value for your money.
For companies that will conduct most of their business within the UAE we recommend setting up a Mainland Company. The regulations for this type of company setup in Dubai has changed considerably over the years and it is now possible for foreigners to own 100% of the company shares without the need for a local partner. However, for service and consultancy activities you will still need a local service agent.
The commercial & Industrial license covers activities which are related to trade and industry. The license for commercial activities includes for example General Trade and Car Rental Dealerships. Industrial activities include, among other things, the Manufacture and Industry of Food. This type of license does not require a local sponsor anymore and is the most common company model to date. The leagl form can be a LLC (Limited Liability Company) or Sole Establishment.
A professional license covers activities that are related to consultancy and service. For example a beauty salon, accounting, consulting, restaurant and many more. The Professional license can be set up with a local service agent. The company is owned 100% by you and a so-called Local Service Agent is appointed. He receives an annual fixed sum and there are no other obligations to be paid. The small downside of this company form is that it is not a LLC, Limited Liability Company it will rather be a Sole Establishment.
Advantages of a Mainland Company in Dubai: