Dubai has established itself as a global business hub, attracting entrepreneurs and companies worldwide. Its strategic geographic location, bridging markets between Europe, Asia, and Africa, provides an advantage for international trade. The city’s pro-business environment is supported by modern infrastructure and policies designed to facilitate commercial operations, creating a competitive landscape for new enterprises.
Choosing Your Business Jurisdiction
The first decision for any entrepreneur in Dubai is selecting the appropriate business jurisdiction. There are three primary options available: mainland, free zone, or offshore, each with a distinct regulatory framework. The choice will shape how the company can operate, its ownership structure, and its market access, and should be guided by the business’s intended activities.
A mainland company, licensed by the Department of Economy and Tourism (DET), offers the most operational flexibility within the UAE. This structure is ideal for businesses intending to trade directly with the local market or bid on government contracts. Recent legal reforms enable 100% foreign ownership for many activities, removing the previous need for a local Emirati sponsor. For certain professional services, a Local Service Agent (LSA) may still be required to facilitate licensing, though the agent holds no equity.
Free zones are a popular choice for foreign investors, offering a simplified setup and financial incentives. Dubai has over 30 free zones, many themed around specific industries like technology, media, or commodities. Companies in a free zone benefit from 100% foreign ownership, full repatriation of profits, and exemptions from import and export duties. A free zone company is restricted to doing business within its zone or internationally, and direct trade with the mainland requires a local distributor.
An offshore company is a legal entity registered in the UAE that cannot conduct business within the country. These companies are used as vehicles for international trading, managing global assets, or owning real estate. This structure provides privacy and asset protection but does not grant physical presence or eligibility for residency visas.
Selecting a Business License and Legal Structure
Once a jurisdiction is chosen, the next step is determining the business license and legal structure. The license type is linked to the company’s commercial activities, while the legal structure defines its framework for liability and ownership. These interconnected elements form the business’s legal foundation.
There are several categories of business licenses, each covering a different scope of activities.
- A Commercial License is required for any business involved in trading, including the buying, selling, import, or export of goods.
- A Professional License is for individuals or companies offering service-based expertise, such as consultancy, accounting, or design services.
- An Industrial License is necessary for businesses engaged in manufacturing, production, or assembly.
- A Tourism License is specifically for companies operating in the travel and hospitality sector.
Alongside the license, a legal structure must be selected. A Limited Liability Company (LLC) is a common form where owner liability is limited to their share in the company’s capital. An LLC can be established on the mainland or in a free zone. A Sole Establishment is owned by a single individual who is fully liable for the company’s debts, while a Civil Company is a partnership for professionals like doctors or engineers.
The Step-by-Step Registration Process
With the jurisdiction, license, and legal structure decided, the formal registration process can begin. This procedure involves obtaining approvals from government bodies and preparing legal documents. The sequence of actions is similar for both mainland and free zone authorities.
Determine Business Activity and Company Name
The process starts by selecting business activities from a pre-approved list provided by the relevant authority (e.g., DET for mainland). A unique trade name must also be chosen and reserved. The name must comply with UAE regulations, which prohibit offensive language and require it to reflect the company’s legal structure, such as ending with “LLC.”
Apply for Initial Approval
Next, apply for initial approval from the governing authority by submitting an application form with copies of the shareholders’ passports. This clearance allows the entrepreneur to proceed with registration. For certain specialized activities, additional pre-approvals from other government ministries may be required.
Prepare Legal Documents and Secure Office Space
After receiving initial approval, the company’s foundational legal documents must be prepared. For an LLC, this is the Memorandum of Association (MOA), which outlines the company’s structure and share distribution. Simultaneously, the business must secure a physical office location. Mainland companies require a registered office lease (Ejari), while many free zones offer flexible options like shared desks or virtual offices.
Submit Final Application and Receive License
The final stage is submitting all documents to the relevant authority. This includes the initial approval certificate, the notarized MOA, and the office lease agreement. Once the authorities verify the paperwork and all fees are paid, they will issue the final trade license. This license is the official document permitting the company to begin commercial operations.
Obtaining Visas and Opening a Bank Account
After the trade license is issued, the focus shifts to post-registration steps. Obtaining residency visas for owners and employees and opening a corporate bank account are immediate priorities. These processes depend on the new trade license and are handled concurrently to make the business fully operational.
The visa process begins with applying for an establishment card, which registers the company with immigration authorities. The company can then apply for investor or employee residence visas. The process involves an entry permit, a medical fitness test, an Emirates ID application, and having the visa stamped into the passport. The number of visas a company is eligible for often depends on its office size or the package chosen in a free zone.
Opening a corporate bank account is a necessary step for managing company finances, though it can be a detailed process. Banks in the UAE require a comprehensive set of documents, including the trade license, MOA, and passport and visa copies for all shareholders. Entrepreneurs should be prepared to provide a business plan and details about their intended transactions.
Understanding Costs and Ongoing Obligations
Setting up a business involves understanding both the initial financial commitments and the ongoing regulatory duties. There are one-time setup costs, but also recurring annual expenses and compliance tasks that every business owner must manage to remain in good standing.
The total cost to establish a business in Dubai varies based on the jurisdiction, license type, office space, and visa requirements. Expenses include one-time registration and license fees, annual office rent, and visa processing costs. Free zone setups can be more cost-effective initially, with packages starting from around AED 15,000, while mainland companies may have higher initial outlays.
Companies have continuous obligations beyond the initial setup. The trade license must be renewed annually, which involves paying a fee. Businesses must also comply with UAE tax regulations, including registering for Value Added Tax (VAT) if turnover exceeds the mandatory threshold. Adherence to the Corporate Tax law, which applies a 9% tax on profits above AED 375,000, is also required.