How to start a business in Dubai [2023 Guide for foreigners]

man starting a business in Dubai

Dubai is home to entrepreneurs from every corner of the world. Year on year, increasing numbers of foreign investors and businesspeople flock to the emirate to take advantage of its prime business environment.

As well as a 0% tax rate, a strategic global location, and a simple incorporation procedure, Dubai now allows foreigners to own 100% of their business in most cases. A change that only came into effect in recent years.

This, along with the introduction of long-term visas, has further cemented Dubai’s reputation as the perfect location for overseas entrepreneurs.

While it does not have to be complicated, starting a business out here does require some local, expert knowledge, so read on to find out how to start a business in Dubai as a foreigner.

Can a foreigner start a business in Dubai?

Let’s start with the basics. Yes, a foreigner can start a business in Dubai, and many do. The local population is over 80% expatriate, with many of those owning their own businesses.

Dubai actively welcomes investors and business owners from overseas. The emirate is home to many company formation experts and setup agents, created to help guide foreign entrepreneurs through the license, visa, and business incorporation processes.

How to start a business in Dubai (as a foreigner)

As a foreign entrepreneur starting out in the UAE, your first task should be to familiarise yourself with local business customs and practices. There are several setups to the company formation process out here that will be unfamiliar to many. Gaining an early understanding of these steps will help make for a smooth process.

That’s why your first task should be to seek out a company setup agent who can guide you through each step, offering advice and support along the way.

For example, one of Dubai’s business formation idiosyncrasies is its company naming procedure. When choosing a name for your business in the UAE, your chosen name:

  • Must not violate the public morals or the public order of the country
  • Must be followed by the legal form of the company, for example (LLC, FZE, etc.)
  • Must not have been previously registered
  • Must be compatible with the required type of activity and legal status
  • Should not contain names of any religion, or governing authority, nor names or logos of any external bodies

If you wish to include your name in your company name, you must also use it in full rather than just your surname or initials.

Your chosen setup agent can help you with each step, as well as with aligning your company with one of the 2,000-plus permitted business activities.

With this early admin taken care of, you can now move on to the licensing process.

Types of business licenses in Dubai

There are several trade license types in Dubai, with the most common being commercial, industrial, and professional.

The types of businesses that fit into each license category are self-explanatory and will be determined by your business activity. If you are undertaking a commercial activity – such as buying and selling products or services – then in most cases, you’ll need a commercial license, for example.

Once you’ve determined the type of license you require, you can make your application. While 100% foreign ownership of mainland businesses is now permitted in many cases, it is usually more prudent for overseas entrepreneurs to start a free zone busines, where 100% ownership is guaranteed.

As well as allowing you to take advantage of Dubai’s 0% tax regime, free zone companies also benefit from customs tax exemption, a complete lack of currency restrictions, and the ability to repatriate all capital and profit.

To make your free zone application, simply provide your company setup agent with some basic documentation and a few details about your business, and they will take care of the rest.

Documents required to start a business in Dubai

Companies established in free zones are governed by the rules of the respective free zones. Therefore, the documentation required will depend on the free zone to which you make your application. Required documentation may include:

  • Completed application form
  • Business plan
  • Copy of existing trade licence/registration certificate (if you are an existing company, applicable for local company only)
  • Coloured passport copies of the company’s shareholder/s and the appointed Manager/Director for the new company
  • Specimen signature of the company’s shareholder/s and the appointed Manager/Director for the new company
  • Two years’ audited financial reports for corporate entity or certificate of reference from a personal bank of the individual shareholder
  • NOC from current sponsor (for individuals)

What are the Dubai company formation costs?

Another reason behind Dubai’s popularity with entrepreneurs the world over is the relatively low cost of doing business.

While there are many factors involved, you can expect a trade license to cost in the region of AED 15,000 to AED 25,000.

This is very much a ballpark figure, however. Company formation in Dubai costs vary depending on where you choose to set up, whether you take on premises, how many employees you have – and much more.

Company formation in Dubai free zone costs, for example, are often much lower than when setting up in the mainland. Equally, if you opt to use a co-working space rather than a permanent office, your setup costs will likely be lower.

The easy way to start a business in Dubai

The company formation process in the UAE has been designed with simplicity in mind – and is very much open to all. That said, it does take some in-depth knowledge of the region and its many customs and regulations.

That’s why it’s always advisable to acquire the services of a business setup company who can not only advise on the process but also seek out the most suitable license and setup type for your business, based on your needs and your budget.

When you use business setup services, you also gain peace of mind that your license and visa applications are free from errors and omissions – both of which can lead to delays and rejection.

When you work with a UAE company formation specialist, all you need to provide is some basic documentation and a little information about the nature of your business. Then, sit back and let the experts take care of the rest – managing your license and visa applications, communicating with all relevant departments and authorities, and reporting back when you’re ready to start trading. It really is that simple.

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