Dubai – a former small fishing village on the Persian Gulf, today is one of the most cosmopolitan cities in the world with almost 200 nationalities. The UAE is recognized as an oasis of innovation and boundless opportunities. Dubai is one of the seven emirates, often referred to as a record holder in this regard.
If you are looking for exclusive hotels, the largest shopping centers, expensive and luxurious restaurants with exquisite dishes, or large man-made islands, then all of this is here.
Foreign investors are attracted not only by tourist attractions. In this article, you will learn how to register a company in Dubai, UAE, and do business here.
Why is it worth doing business in the UAE?
The United Arab Emirates is a progressive country. The authorities understand that to attract business, it is necessary to simplify the procedures for opening companies and reduce their costs. There is a myth that a local partner is required when opening a business. Currently, it is only necessary in strategic sectors, for example, in the field of national defense.
The advantages of creating a company in Dubai can be divided into main categories:
Simplified tax system
Dubai has an advantageous tax system that has no analogs in European countries.
The tax legislation provides for a mandatory threshold for VAT registration at the annual income level of 375,000 dirhams. Although it was envisaged that the threshold would be 3.75 million dirhams when the legislation was developed.
If desired, companies can decide to pay VAT on annual income ranging from 175,000 to 375,000 dirhams. Companies required to pay VAT must issue invoices for services or goods sold within 14 days of the transaction. Tax payments and refunds are made electronically.
With the correct application of legal mechanisms, it is possible to avoid double taxation. Thus, an entrepreneur can be sure that the taxes paid in Dubai will be the only ones he incurs.
Stable banking system
The Emirates has an efficient banking system tailored to serve different companies. The UAE maintains high financial reserves and a stable banking sector, making the country safe for investment.
There are 6 state investment funds operating in the UAE. The Abu Dhabi Investment Authority is the largest investment fund in the Middle East and the second largest in the world with $683 billion. Different forms of doing business allow to effectively protect the confidentiality and other rights of investors.
Huge business market
The UAE, as one of the richest and fastest-growing countries in the Middle East region, creates opportunities for international cooperation, including for Russian entrepreneurs. Due to the need to import food products, semi-finished products, metal, and spare parts, e-commerce sales channels are dynamically developing.
Registering a company in Dubai should be accompanied by a corresponding analysis to choose the optimal legal form for a specific type of business.
Stages of Business Registration in the UAE
The two most famous emirates – Abu Dhabi, the capital of the federation, and Dubai. Both are at the forefront of the country’s development, as most technological companies are located on their territory. The Emirates are among the best cities in the Middle East in terms of quality of life, which is important for business. The dynamically growing demand and purchasing power of the local community are clear signals that one can thrive economically in this part of the world.
Business in the Arab Emirates is divided into three types of companies depending on the registration requirements, prices for such services, and business opportunities.
International Offshore Company
According to international law, you do not need a visa to stay in a specific country to open an offshore company. The company is considered a non-resident company, but a virtual company.
But you cannot conduct business in the country. The client owns 100% of the company’s shares. You can only open an account in a bank that provides online banking services.
To open a company in Dubai as a non-resident, it is not necessary to come in person – you can hire professional intermediaries who will act on your behalf. Presence is only required to open a bank account.
Offshore companies are established in the emirates of Dubai and Ajman. Both of these jurisdictions require the client’s participation in the company registration process and the signing of relevant documents. Every year, you need to provide a report prepared by a resident expert to renew the business license, which is an additional expense for the client.
Free Zone Company
Free economic zones, like offshore companies, are 100% owned by the client.
Opening a company in Dubai in a free zone means getting a visa for living and working in the UAE for 3 years. However, during this time, you cannot stay outside the country for more than 6 months. You can open a bank account for the company with a checkbook, a debit card, and access to online banking.
The entrepreneur will have to come to the UAE to establish the company and open a bank account. After creating the company, you can apply for a visa.
The cost of one residency visa is approximately 7500 dirhams (approximately 700 US dollars). This price includes the application, migration card, medical card, UAE identity card, fingerprint photograph, visa stamp in the passport, etc.
Mainland Company
A mainland company, equivalent to a Russian limited liability company, is established in collaboration with local residents. The local partner will own 51% of the company’s shares, and the entrepreneur will own the remaining 49% of the shares. In practice, this is only on paper.
You can negotiate and pay an agreed amount to conduct business using a portion of the local partner’s shares. With this form of company, it is possible to do business not only in the UAE but also in other countries. To open a company, you need to come to Dubai for about 7 days.
The cost of opening a mainland company in the UAE is approximately 75,000 dirhams (approximately 21,000 US dollars), and this price includes a subscription fee, sponsorship fees, administrative fees, professional agent fees, documents in Arabic, etc. You organize office space according to your preferences.
Although federal law prevails throughout the UAE, each emirate has its own legal system — legalizing residence and business activity in one emirate does not automatically grant full rights in others. The best first step is to consider which emirates have favorable rules in terms of business form and type.
As for how to start a business in Dubai for a foreigner: registering a company can take up to 1 month. Residents of the Arab Emirates can register a business through a single online platform, while others will have to act on their own or with the help of business specialists.
Choosing a Trade Name
You will need to choose a trade name for your company. This task requires careful consideration due to legal restrictions, cultural peculiarities, and the complexity of finding a name that resonates in multiple languages and jurisdictions. In Dubai, there are strict rules regarding company names, especially regarding specific social and religious aspects.
Development of Memorandum and Articles of Association
The Memorandum of Association (MOA) is an important document that defines the scope of activities of the company registration. It sets boundaries and describes in detail the rights and powers of the company.
The MOA should include the company name, registered office and address, object, liability, capital, and association provisions. It is important to note that a minor cannot sign the MOA.
On behalf of a minor, their guardian can sign the MOA. In this case, the signature is considered to be in the personal capacity of the minor.
Business Licensing Procedures in Dubai
Obtaining the necessary permits to conduct business is crucial. For a mainland company, you need to apply for a license from the Dubai Department of Economic Development (DED).
To establish a free zone, you must first obtain a license from the relevant authority. Depending on the type of activity, additional licenses and permits may be required.
There are 4 main types of business licenses:
- Commercial for general trading businesses;
- Professional for firms related to services;
- Industrial for trading companies producing goods;
- Tourism for the travel and tour industry.
The license depends on the industry, business activity, company structure, and region where the trade license or business is registered.
Once you have figured out how to open a business in Dubai, the next step is to prepare the documents:
- Copies of passports of all business partners and managers;
- No Objection Certificate (NOC) from the sponsor company;
- Residence visa for foreign investors or foreign partners;
- Copies of residence visas for all business partners;
- Reservation of the trade name of the company’s license;
- Initial approval from DED and external approvals as needed.
You will need a lease agreement for office space and Ejari to obtain a business license in Dubai. These licenses need to be renewed annually, and late renewal incurs fines.
Characteristics of the Emirates Market
- 80% of the population of the Emirates is middle class.
- The UAE is home to a large and dynamic Russian community in the Arab world. About 150,000 Russian citizens live and work in the UAE.
- Deciding to register a company in the Arab Emirates opens up opportunities for expansion into the markets of neighboring countries in the region, Asia, Africa, and the Middle East.
- Competitiveness and market saturation indicators in the UAE are high. Therefore, the key issue is an appropriate marketing strategy. In the Emirates, the positions of influential individuals are strong. One post by an influential person on social media, with around 20 million followers, can cost up to 50,000 dirhams.
- Presence in the UAE is crucial for getting to know the market and people. You need to appear at fairs and meetings to actively maintain relationships with your partner in the Emirates.
- LinkedIn is very well established in the Emirates and is an excellent tool for finding contacts. Most decision-makers have accounts there and are ready to cooperate.
- The season in the UAE lasts from September to March until Ramadan. Ramadan is a slow period for business: working hours are reduced, and shops open late in the evening. It is best to organize your stay in the Emirates in autumn and winter.
A company in Dubai is intended for people considering obtaining residency there. Annual financial reports must be submitted through a local auditor. Opening a company takes an average of 1-2 weeks, but changing the share structure requires a lot of time.
How much does it cost to start a business in Dubai?
In Dubai, individuals and companies are not taxed on income. In the case of business activities, tax obligations depend on:
- the nature of the company;
- the scale of the activity;
- forms of remuneration.
The prices for opening a company in a free zone in Dubai start from just 4000 dirhams. A trade, service, or industrial license costs between 10,000 and 50,000 dirhams per year.
The cost of a license for a small business is not fixed and depends on the number of company partners, required permits and sanctions, and the cost of renting office space, which can increase the cost of a business license by 2.5%.
Additional expenses, such as office space rental, the need to obtain trade licenses in free zones, visa fees for hiring staff, can significantly increase the initial costs of a business idea. Those who do business in this country have wide access to cheap labor—mostly workers from India and the Philippines.
To clearly understand how much it costs to open a company in Dubai, UAE, it is best to request an interpretation of the rules for a specific case.
What kind of business to start in Dubai: in-demand spheres
The financial sector, modern technologies, and tourism are the industries that largely define the wealth of the UAE. What kind of business is profitable to start in the UAE in other promising industries?
Food industry – more than 90% of supplies are imported, meaning there is demand for competitive products. Multicultural society – demand for goods at different price levels.
Dietary supplements – high popularity and requirements due to the climate and lifestyle (for example, high demand for vitamin D3).
Pharmaceuticals – lack of local production and high demand for over-the-counter drugs.
Conclusion
The defining factors of the modern economy’s development are investments in technology, the service sector, and the pursuit of higher education standards. Thanks to its strategic location, Dubai quickly became a contender for the title of the world’s trade and financial center. The hot climate, attractive landscapes, and large investment projects have led to an influx of tourists, contributing to the construction boom.
The Alira agency will help you select and purchase various types of real estate, and advise you on investment opportunities in real estate in the UAE. We will tell you how to open a company in the Emirates, how much it costs, and which business sectors are relevant today. Call us at +971 (588) 337 903 et +7 (986) 927-73-77. ou envoyez-nous un e-mail à info@alirarealestate.com.
FAQ
No, an offshore company cannot conduct business in the UAE or hire employees under a labor contract.
On average, about 1-2 weeks.
There are no minimum capital requirements, although a minimum capital of AED 250,000 is recommended.
Companies are exempt from VAT, corporate income tax, and income tax.
Maintaining accounting records is mandatory, especially after the introduction of VAT in 2018.
100% foreign ownership, the possibility of obtaining a residency visa, and conducting large-scale business.
For some forms of companies, residency is recommended but not always required.
Documents depend on the type of company, but typically include: memorandum of association, company articles, shareholder ID, and relevant licenses.
