Business Setup Dubai

How do you set up a company in Dubai? This is a question thousands of people ask themselves every year — whether it’s because they want to live and work in a place where others go on vacation, or because an existing business is looking to expand into Dubai and benefit from the country’s tax advantages.

All questions regarding “company formation in Dubai” are answered on this page.

There are several important aspects to consider when establishing a company in Dubai to ensure the business setup doesn’t become a boomerang or a bottomless pit. It starts with understanding the official regulations in Dubai, the laws within the UAE, and even local-specific requirements.

Another key consideration is the tax aspect, especially if you intend to register the company in Dubai but maintain your outside of the UAE in another country.

Choosing the right Freezone and, just as importantly, the correct business activity is crucial. These are decisive factors in whether a corporate bank account can be successfully opened for the company later on. Often, it's the small details that become critical issues down the road. All in all, there are many potential pitfalls — which makes choosing the right partner all the more essential.

How to setup a business in Dubai? To establish a company in Dubai, an appropriate license must be applied for. Depending on the location, these licenses must be applied for either directly at the Freezone or for Mainland companies at the DED (Department of Economic Development). The process of company formation also varies slightly depending on the activity and location. In the first step, it depends on the sector in which the future company will operate, i.e., whether a Mainland license might be necessary. For some activities (investment and management of third-party capital and client funds), formation in a specially regulated Freezone may be necessary.

Therefore, in the first step, specifically during the consultation, it must be clarified which company form (Mainland or Freezone)will be the optimal solution for your future business. The most commonly required company form is usually the Freezone company, and the process would then be as follows:

Process of setting up a business in Dubai

• Clarification of the activity, distribution of company shares, and assignment of positions
• Submission of information (type of company, number of shareholders, desired name, etc.)
• Submission of documents (currently, only a copy of the passport and a passport photo are required for private shareholders)
• Application for the license in the respective Freezone
• Application for the Establishment Card if visas are to be applied for through the company
• Application for the E-Visa for the applicant(s), managing directors
• Entry of the visa applicant for the visa procedure in Dubai (medical test and Emirates ID Center)
• Application for the Residence Visa and the Emirates ID
• Application and opening of company and personal bank accounts
• Application for any Family Visas, after receiving one's own visa
  
  

Requirements for setting up a company in Dubai

As far as the requirements go, they are actually quite manageable. Ultimately, to set up a company, you only need to be at least 18 years old and submit the required documents (a copy of your passport and a passport photo). However, it should be noted that the minimum age for the company account that is usually required at most banks is 21 years old.

Dubai is a city of superlatives and offers another priceless advantage for private individuals and companies (with special requirements): 100% tax exemption - there are currently no private taxes in Dubai.

A corporate tax was introduced in June 2023, but in principle only affects mainland companies. This means that companies in the UAE free zones can qualify for tax exemption, for which certain requirements must be met. In addition, it only applies to annual profits of more than AED 375,000 (approx. Euro 95,000), i.e. only profits above this exemption limit have to be taxed accordingly.

At the same time, salaries, office, telephone, etc. etc. can of course be claimed as expenses and accordingly reduce profits and therefore also reduce taxes. This means that if you live in the UAE, you can pay yourself a correspondingly high salary (no income tax) and thus reduce the corporate tax back to 0% in most cases.

In addition, if you have an annual turnover of no more than AED 3 million (approx. EUR 750,000), you can apply for a general exemption from this corporate tax. This general exemption is then valid until a maximum of December 31, 2026 and provided that the annual turnover does not exceed the limit of AED 3 million in any tax period.

Probably the most popular and common form of company for companies that conduct most of their business within the United Arab Emirates is the Mainland Company. There are two basic subject areas under which all companies must be classified. On the one hand there is trade and industry (Commercial) and on the other hand there is the area of service and consultancy (Professional).

SOLE OWNERSHIP - NO LOCAL PARTNER REQUIRED
Nowadays it is possible to set up an LLC (Limited Liability Company) for most of the sectors and a local partner or local agent is not a requirement anymore throughout the UAE. The company can be solely owned (100%) by a foreign national.

Activity - Trade and Industry : Commercial
The trade and industry license includes activities related to trade and industry. The license for commercial activities includes, for example, general trading and car rentals. Industrial activities include the production and processing of food. This type of license no longer requires a local partner and is the most common business model to date. The legal form can be an LLC (limited liability company). The company is 100% foreign owned.

Examples: Food and Beverage Trade, E-commerce, Car and Motorbike Rental, Business Brokerage, Food Processing, etc.

Activity - Service and Consultancy : professional
This type of license no longer requires a local partner and has been rapidly growing in popularity in recent years as part of the migration wave that hit Dubai after the Corona Pandemic. The legal form can be an LLC (limited liability company). The company is 100% foreign owned.

Examples: Beauty Salon, Restaurant, Supermarket, Architect, Construction Company, Real Estate Agents, etc.

Advantages of a Mainland Company in Dubai

1. very low corporate tax
2. 100% ownership possible
3. No income tax for UAE residents
4. No share capital deposit necessary
5. Unlimited Visa Eligibility
6. Business relationships with all Emirati and GCC companies

The shareholders can be both, private individuals and/or foreign companies and an authorized signatory manager or director is required.

Costs for a mainland company in Dubai

The following cost breakdown refers to a Mainland Company formation including the license, virtual office space, one residence visa and all other related charges. In general, all the emirates, such as Dubai or Abu Dhabi, have quite similar rules and regulations regarding the establishment of a Mainland Company.

COST BREAKDOWN 1st YEAR
License Fee: around EURO 4000*
AoA, Establishment Card and Labor Card: EURO 700
Office contract: EURO 1800 (not applicable if you rent your own office)
Residence Visa: Euro 950 (2 years validity)
Emirates Setup Service Fee: from EURO 1500
TOTAL: FROM EURO 8950

*For General Trading activity, the authorities charge an additional fee of EURO 5000

COST BREAKDOWN 2nd YEAR
License Renewal Fee: around EURO 4000*
Office contract: EURO 1800 (not applicable if you rent your own office)
Emirates Setup Service Fee: from EURO 600
TOTAL: FROM EURO 6400

* Fees are dependent on the chosen activities and the nature of the business

The cost of starting and running a business in Dubai depends on the visa eligibilities and the Freezone itself. There are significant price differences from Freezone to Freezone. There are currently almost 50 Freezones in the UAE, most of which share the same list of activities and offer similar packages. It is therefore difficult for potential owners to determine the right free zone.

Another factor that should not be underestimated is opening a company bank account. If you set up the company in one of the cheap free zones, problems are usually inevitable. It is very difficult or almost impossible to open a company bank account if you own a company in emirates like Umm Al Quwain, Ras Al Khaimah, Fujairah or Sharjah.

If you form the company with us, you benefit from our many years of experience. We know how things work around a successful company setup. We make sure that you receive a company bank account by choosing the right Freezone and activity.

DUBAI FREEZONE NOW CHEAPER

Until recently, the company set-up costs in the Freezones in Dubai were more expensive compared to other Emirates. In order to save costs, one had to switch to the Emirates of Fujairah, Ras Al Khaimah, Sharjah or Umm Al Quwain.

Most customers, however, still preferred a company address in Dubai as it is more prestigious and also the banking problem mentioned above, should not be underestimated.

Nowadays some of the Dubai Freezones have adjusted their prices and fees accordingly to be more competitive. This means that it is now possible to set up a company in Dubai at very comparable prices.

Our recommendation clearly goes into opening your company in a Freezone in Dubai, because the advantages are obvious. In addition to faster and easier processing of visa applications, opening a company bank account is easier in Dubai. The price differences between Dubai Freezones and a cheaper Emirate like Umm Al Quwain for example, are only marginal, but the advantages of a Dubai Freezone company are definitely given.

DUBAI FREEZONE - WHAT'S INCLUDED?

The prices always include the license (business license), office rental contract (flexi desk - cannot be used), establishment card, residence visa and our service costs.

The emirate in which you open your company generally has no influence on your future place of residence, since the visa is always valid for the entire emirate so if you open your company in Dubai, you can live in Abu Dhabi for example.

CAN I GET A BANK ACCOUNT WITH A FREEZONE COMPANY?

Although at the beginning of 2022 the requirements for opening a corporate bank account were tightened across the Emirates, it is still possible to do so, even with a Freezone company. Thanks to our excellent contacts and large network, we can ensure that you will get a company account. Our banking packages even come with a money-back guarantee.

However, the coveted account can only be obtained if one of the partners has a valid residence visa for the United Arab Emirates. Also the activity of the company has to be considered (we will advise you accordingly) and the nationality of the shareholder plays a role too. We will recommend a bank package to you, taking all this into consideration.

WHAT EXACTLY IS A RESIDENCE VISA?

If you want to live in the Emirates permanently or need a company bank account, then you need a so-called residence visa. This is a 2-year residency permit for the UAE. In the course of setting up the company, you acquire the corresponding eligibilities for a specified number of residence visas. Each visa eligibility costs around EUR 500 and includes the authorization to apply for a 2-year visa. In addition, the fees of the authorities have to be paid, which add up to around EUR 960.Service fee is not yet included.

The residence visa is valid for the entire Emirates and you also receive the so-called Emirates ID, comparable to an identity card from any other country worldwide. This allows you to live anywhere in the United Arab Emirates and is not limited to just one emirate. The bank account can also be opened at selected banks in the United Arab Emirates and is not limited to the emirate where your company is located.

DO I ACTUALLY HAVE TO LIVE IN DUBAI?

No, with this visa you are not obliged to live in the Emirates. It is sufficient if you enter the country every 6 months (employee Visa) or once a year (Investor Visa) so that the visa remains valid. There is also no obligation to register your place of UAE residence.

100% TAX FREE?
Dubai is a city of superlatives and offers another priceless advantage for private individuals: 100% tax exemption - there are currently no income taxes in Dubai. Only in August 2023 a low corporate tax of 9% was incorporated. However, it will not affect most of the small and medium sized businesses as there is a tolerance threshold of AED375,000 profit per year. If you stay below, you are exempt from this tax. You can also pay out employee salaries and shareholders dividends almost as you like. The corporate tax was implemented due to pressure from outside and the government is seeing this very relaxed. So it cannot be compared to the strictness of tax laws in other parts of the world! Most companies will still enjoy the freedom of not paying taxes.

VAT
There is also the value-added tax (VAT) for mainland companies, which is only 5% and is of course only a pass-through item for local companies. Companies in the free zone are not affected by the VAT unless their income generated with UAE clients exceeds AED375,000 per year.

Is a residence visa in Dubai necessary?
No, it is not mandatory to be a resident in the UAE to set up a company in Dubai. Depending on the type of company form and the respective license, there are different provisions. In principle, however, one person in the company needs residency and Emirates ID to set up a company corporate account.

Cost of starting a company?
The costs for company formation depends on the respective activity, the free zone and last but not least on the required visa authorizations. Currently, the prices for founding a Dubai company with 1 visa entitlement starts at around $5500 including all costs for the first year.

How long does it take to set up a company?
Once all the required documents and information has been collected, founding a company usually only takes 3 to 5 working days. You don't have to be physically present during the setup procedure. We are an official Freezone partner and can set up the company with your digital signature.

How long does the visa process take?
The visa process is started after the company is incorporated and the immigration card and e-permit are received and takes about 5 business days. For the issuance of the (digital) Emirates ID, you have to reckon with around 5-12 working days. After that a corporate bank account in the UAE can be opened.