How to Start a Business as a Foreigner in Dubai…

Introduction

Dubai is a great place to start a business for foreigners. With its favorable tax environment, world-class infrastructure, and vibrant business community, it has become an attractive destination for entrepreneurs from all over the world.

The setup process for a business in Dubai can be complicated, but with the right guidance, it is possible to make the process simpler and more efficient. There are two main options available for foreigners wanting to set up a business in Dubai – Free Zones or Offshore and Mainland Company Setup. Depending on your needs and objectives, you can choose either one of these options.

It is essential to understand the types of licenses available in each option as well as the free-zone company setup process and mainland company setup process before you start your business in Dubai. You should also be aware of the costs associated with establishing a business in Dubai so that you can plan your budget accordingly.

General requirements for starting a business in Dubai as a foreigner

As a foreigner, the following are the general requirements to start a business in Dubai. It is important to note, however, that these requirements may differ depending on the type of business activity you intend to conduct and the legal entity you choose.

It is advisable to seek legal and financial advice from a local consultant or law firm to ensure that you comply with all the regulations and requirements for setting up a business in Dubai.

1. Valid passport and visa: You need a valid passport and a residency visa to set up a business in Dubai.
2. Trade name approval: Choose a unique trade name for your business and obtain approval from the Department of Economic Development.
3. Business activity approval: Obtain approval for the type of business activity you plan to carry out from the relevant government department.
4. Legal entity formation: Choose a legal entity for your business, such as a limited liability company (LLC) or a branch office.
5. Commercial license: Obtain a commercial license from the Department of Economic Development.
6. Sponsorship: In most cases, foreign investors are required to have a local sponsor. This can be an individual or a company.
7. Commercial space: Lease or rent a commercial space in Dubai.
8. Bank account: Open a corporate bank account in Dubai to manage your business finances.
9. Insurance: Obtain liability insurance for your business.
10. Chamber of Commerce registration: Register your business with the Dubai Chamber of Commerce and Industry.

Free-zone company setup process

In essence, free zones or free trade zones in Dubai are business zones in which companies operating within them are exempt from all forms of taxation, including Value Added Tax (VAT), Income Tax, Corporate Tax, and Customs. Business owners in Dubai’s free zones own their companies completely.

The goal of these zones is to attract foreign investment and boost economic activity in the city. The free zone model was first implemented in the UAE by Dubai.

There are a total of 24 free zones in Dubai. They are divided into three major categories; Dubai creative clusters authority (DCCA), Dubai multi commodities center authority (DMCC), and Other Dubai free zones.

The cost and time involved in establishing a free-zone company will vary depending on the type of business and the complexity of the setup process. The process typically takes 4 to 6 weeks to complete, with costs ranging from AED 10,000 to AED 50,000, depending on your needs.

Steps to follow while setting up your business in Dubai

To set up a free-zone company in Dubai as a foreign national, you would need to follow these steps:

1. Choose a free zone and a business activity: You must choose the type of business you want to start and a free zone that corresponds to your business activities. Dubai has over 20 free zones with different benefits and specializations.
2. Obtain pre-approval: Submit a pre-approval application to the free zone authority to determine if your business activity is eligible for establishment in the free zone.
3. Choose a trading name and have it approved: Choose a unique trade name and have it approved by the free zone authority.
4. Rent office space: Lease office space within the free zone, if required.
5. Submit all required documents: Submit the necessary documents, including a business plan, passport copies, and proof of funds, to the free zone authority.
6. Register the company: Complete the company registration process with the free zone authority. This will involve paying the required fees and obtaining the trade license and other necessary approvals.
7. Obtain a residency visa: If you plan to live and work in Dubai, you will need to apply for a residency visa.

It is important to note that the process and requirements may vary depending on the free zone and the type of business you want to set up. A local lawyer or business setup consultant should be consulted for a more detailed understanding of the process.

Mainland company setup process in Dubai

Setting up a business as a foreigner in Dubai is not easy, but it is doable with the right information and guidance. The mainland company setup process in Dubai requires knowledge of the local laws and regulations, as well as an understanding of the cost and time associated with setting up a business.

It is important to consider the visa requirements for foreign nationals, as well as any other post-business setup requirements. With the right resources and guidance, anyone can successfully set up a business in Dubai.

Steps to follow while setting up your business

As a foreigner, you would need to take the following steps to establish a mainland company in Dubai:

1. Choose a business activity and determine the legal structure: Decide on the type of business you want to set up and choose between a limited liability company (LLC), a sole proprietorship, or a free zone company.
2. Select a trading name and have it approved: Choose a unique trade name and have it approved by the Dubai Department of Economic Development (DED).
3. Obtain initial approvals and licenses: Get the necessary approvals and licenses from relevant authorities, such as the Dubai Municipality, Dubai Health Authority, or Dubai Civil Defense, depending on the type of business you are setting up.
4. Obtain a Dubai sponsor: As a foreign national, you must appoint a local sponsor who will own 51% of the company and act as a liaison between you and the government.
5. Rent commercial space: Lease a physical location for your business in Dubai, if required.
6. Register the company with the DED: Submit all necessary documents, including the trade license, lease agreement, and initial approvals, to the DED for company registration.
7. Obtain a residency visa: If you plan to live and work in Dubai, you will need to apply for a residency visa.

It is important to note that the process and requirements may vary depending on the type of business and the jurisdiction in which you plan to set up a shop local lawyer or business setup consultant should be consulted for a more detailed understanding of the process.

Types of Licenses you need while setting up your business in Dubai as a foreigner

To make sure you don’t run into any legal issues, it is important to understand the types of licenses you need to obtain before you start your venture. There are two types of licenses available depending on the kind of business you are starting: Free Zones / Offshore and Mainland company setup.

Each has its own set of requirements, costs, and time constraints. Additionally, obtaining visas for yourself and your employees may also be necessary depending on the type of license you choose.

If you are a foreign national setting up a business in Dubai, you may need the following licenses:

1.    Commercial license

A commercial license, in its most basic form, allows you to trade in goods and sell certain services.

These goods can be imported and sold in the UAE, exported for sale outside the UAE, or only traded within the UAE.

The commercial license allows you to sell almost any type of product, from jewelry and toys to packaging, food, and electronics. A commercial license also allows you to sell services such as brokerage and real estate.

A commercial license allows you to engage in the following activities, to name:

• Import/export
• General store
• Plumbing and sanitary contracting
• Radio, T.V. station, cinema theatre equipment installation, and maintenance
• Automobile trading
• Shoe trading
• Tanks and silos trading
• Cold storage
• General warehousing
• Self-storage services
• Rental services
• Restaurant management

When establishing a business in Dubai, one of the most crucial choices to make is whether to locate it in a free zone or on the Mainland.

Both have numerous advantages. Free zones provide advantages such as a simple incorporation process, ongoing business support, and financial incentives such as tax exemptions and no currency restrictions.

On the Mainland, you can also get a variety of licenses. Mainland companies can conduct direct trade with the UAE market and compete for potentially lucrative government contracts.

The cost of a permit issued in Dubai is one of many factors to consider. AED 10,000 is the approximate fee for obtaining a license. In addition, you may need to consider the cost of additional registrations, visas, premises, and other expenses. This can quickly add up to AED 30,000 or more.

2.    Industrial license

An Industrial Manufacturing License in Dubai is issued when the commercial activity is of an industrial nature, such as petrochemical manufacturing or refining.

Examples of industrial activity include:

• Paper and/or paper-based product manufacturing
• Bread production on a commercial scale
• Anything involving the large-scale production or mixing of chemicals
• Casting of metals
• Machine/equipment/engine forging and/or assembly
• Food product packaging, including carbonated beverage bottling

The cost of an industrial license depends on whether you apply on the Mainland or in a free zone. In addition to the cost of the trade license, you should consider the cost of additional permits and registrations, as well as the cost of leasing space.

On average, an industrial license costs around AED 35,000.

3.    Tourism license

A Dubai Tourism License is an official report that all establishments and companies in Dubai and the United Arab Emirates must have in order to properly operate in the Travel and Tourism sector.

The cost of a Tourism License Fee in Dubai is determined by the size of your company and the activity you intend to conduct. In general, the cost of a Travel and Tourism License in Dubai is around AED 20,000.

There are three types of licenses available in Dubai depending on the activity carried out by your Tourism Business.

The four primary licenses are as follows:

• Tourism License in Dubai for outbound tour operators
• Tourism License for inbound tour operators
• Tourism License Dubai for travel agents
• Tourism License Dubai for a Tour Guide

4.    Service license

The systems integration license is a commercial license that is restricted to specific business activities.

Obtaining a technical services license in Dubai, UAE, is extremely simple, as it is with most trade licenses.

The technical services license allows for a wide range of commercial activities. These are some examples:

• Air conditioning, ventilation, and air filtration services
• Carpentry and Flooring
• Concrete works
• Corporate cleaning services
• Electrical fitting and fixtures services
• False ceiling and light partition installation
• Floor and wall tiling works
• Installation and maintenance
• Insulation contracting
• Plaster and cladding works
• Plumbing and sanitary contracting
• Solar energy systems installation
• Technical services contracting

5.    General Trading license

A General Trading license is a popular commercial license category in the UAE that helps investors establish trading businesses.

Global investors prefer establishing a trading company in the UAE in order to easily launch international and local trade operations from the region. The Free Zones and the Mainland offer a variety of heavily discounted packages for obtaining a General trading license in the UAE.

A General Trading License costs between AED 30,000 and AED 40,000 in Dubai. This fee includes the approval fee for the trade name, the initial submission fee, and the virtual office contract fee.

In Dubai, the General Trading License is a popular trade license that investors use to trade in multiple goods under the same trade license.

6.    Freelance Permit

The freelance permit in Dubai is an annual license issued by the TECOM Group that allows you to work as an independent contractor. The freelancer permit is ideal for those on a spouse or parent’s visa, which only need a license to work as a freelancer.

There are separate fees for the establishment card, freelance permit, and freelance visa.

AED 7,500 for a one-year

• reelance permit
• AED 2,000 for a 1-year
• establishment card

Conclusion

Dubai is one of the most attractive places for foreign investors. It offers a range of opportunities to start a business in a stable and secure environment. For foreign entrepreneurs, Dubai offers the possibility to set up companies in both Free Zones and the Mainland.

The procedure of setting up a business in Dubai can be complex, but with the right guidance and resources, it can be done quickly and efficiently.

It is important to know the various types of licenses available, as well as the free-zone company setup process and the mainland company setup process. Furthermore, it is important to consider the cost, time frame, visa requirements, and other factors when setting up a business in Dubai.