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Business Setup in Dubai in 2020

In this article, we will look at the Seven simple steps for Business Setup in Dubai in 2020. Dubai, an emirate of the United Arab Emirates, is a vibrant economy and offers a politically stable environment for businesses to sustain and grow. As per the Annual Economic Report 2019 issued by the Ministry of Economy, the total GDP of the UAE at current prices was AED 1,521.1 billion in 2018. Dubai is located on the eastern coast of the Arabian Peninsula, in the southwest corner of the Arabian Gulf. It is the second-largest emirate of the UAE. Dubai is a commercial hub of the country offering modern infrastructure, malls, and shopping centers, hotels, restaurants, and banks to anyone starting a business in Dubai. It’s a major tourist attraction for various iconic buildings like Burj Al Arab hotel and Burj Khalifa.

UAE offers a top-notch business environment. It was ranked 16th globally for ease of doing business in 2019. Dubai is hosting Expo 2020 Due to enormous growth opportunities that are available in Dubai, a business setup in Dubai makes a sound business decision.


Seven Steps for Business Setup in Dubai in 2020

1. Identification of Business Activities

The first step towards starting a business in Dubai is the identification of business activities. Depending upon the nature of your business activities, you will need to select the license type. A trade license or a business license enables you to carry out a particular business activity you are licensed for.

You can opt for a mainland company formation if you require a license for:

  • Industrial activities
  • Commercial activities
  • Professional activities
  • Tourism activities
  • Agriculture activities
  • Occupational activities

It is also worthwhile to mention here that a business can engage in more than one business activity, and there are more than 2100 activities to choose from the list of business activities maintained by the Department of Economic Development (DED).

One can opt for a Free Zone Business Setup in Dubai if he requires a license for:

  • Commercial/Trade activities
  • Consultancy/Services related activities
  • Industrial activities
  • Educational activities
  • Media related activities
  • eCommerce related activities
  • Offshore activities
  • Freelance activities
  • Warehousing activities
  • Innovation activities
  • Manufacturing activities
  • Other activities

One also needs to evaluate the advantages and disadvantages of starting a business in Dubai mainland and free zone.

Company Formation In Dubai

2. Determination of legal structure

Once you finalize in between a mainland company and a free zone company, you need to determine the legal structure in which you want to run your business. While selecting the business structure, you need to give due consideration to business activities, business type, the number and nationality of owners, and the ownership pattern.

Options available to mainland companies:

  • One Person Company (LLC)
  • Sole Proprietorship
  • Civil Company
  • SME License
  • Limited Liability Company (LLC)
  • Private Shareholding Company
  • Public Shareholding Company
  • Partnership Company
  • Simple Limited Partnership
  • Foreign Company Branch
  • Local Company Branch
  • Free Zone Company Branch
  • GCC Company Branch
  • Holding Companies
  • Intelaq (Home-based business for UAE Nationals)

Options available to Free Zone Companies:

  • Free Zone Limited Liability Company (FZ LLC)
  • Free Zone Company (FZ Co.)
  • Free Zone Establishment (FZE)

3. Business Location Selection

Depending upon whether you are forming a mainland company or going for a free zone company formation in Dubai, you have to select a business location that is not only convenient for you but also suitable for your business. If you are forming a free zone company, then evaluate whether you want to buy out the office or go for a leased space. For a mainland company, the business place must comply with the requirements laid down by the DED and zoning regulations of the local municipalities.

Starting a Business in Dubai

4. Trade Name Registration

Another critical aspect of a company formation in Dubai is, a business needs to have a trade name representative of its business activities and legal structure. For mainland companies, the Department of Economic Development (DED) regulates the trade name registration process. DED has also laid down a detailed guideline as to Trade Name selection, and one must adhere to it. It is important to note here that one can not register a Trademark with DED. The Ministry of Economy handles trademark registration. When it comes to Free Zone Companies, respective Free Zone Authorities also follow the same general guidelines as followed by DED. Some of the Free Zones have their restrictions and guidelines in this matter.


5. Applying for initial approval

The expatriate investor must obtain prior approval from the General Director of Residency and Foreigners’ Affairs before applying for initial approval and starting a business in Dubai. The UAE Government will provide the approval if it has no objection for the proposed business intended to be established by you. However, a grant of initial approval does not mean you can start the business until you complete all the formalities.


6. Prepare MOA or LSA

Starting a business in Dubai requires one to prepare the Memorandum of Association (MOA) or a Corporate Agent Agreement with the Local Service Agent (LSA) as per the legal structure of the business. Generally, a Memorandum of Association is required for:

  • Limited Liability Company
  • Public Shareholding Company
  • Private Shareholding Company

7. Obtain additional approvals

If a company is engaged in the following activities, then it has to obtain additional approvals from appropriate authorities before starting a business in Dubai:

  • Health-related activities – Health Authority of the Emirate
  • Driving Schools, Alarm & Safety Systems, Used car dealers – Ministry of Interior
  • Telecommunications – Telecommunications Regulatory Executive Council Authority, Licensing Department
  • Travel & Tourism, Charter Trading, Ship & Maritime Agencies, Foreign Company Branches. – Executive Council
  • Food and Beverage related activities – Municipal Government of relevant Emirate, Abu Dhabi Food Control Authority
  • Legal activities, Legal Consultancy – Ministry of Justice

Once you complete the above steps for business setup in Dubai in 2020 and submit necessary documents and pay the fees, your trade licenses will be issued. A Trade license entitles you to operate your business in the UAE.


Advantages of starting a business in Dubai Mainland

  • A mainland company formation in Dubai allows one to choose from more than 2100 business activities.
  • A mainland business setup in Dubai enables one to have unlimited visas. However, the actual eligibility for visas depends on the size of the office space.
  • A mainland/onshore business has the liberty to have office premises anywhere in mainland Dubai.
  • A mainland company can do business with other mainland companies, local bodies, and government authorities.
  • There is no minimum capital requirement in the case of a mainland company formation in Dubai.

Advantages of starting a business in the Free Zone

  • Expat investor can have 100% ownership and control over his business
  • A Free Zone Company need not invest in office space. They may operate through a Flexi desk.
  • The free zone authority provides almost all necessary licenses to the Free Zone Companies. They only need to seek outside approvals if they are engaged in some specific activities.
  • Free Zone incorporation is comparatively straight forward and quick.

Thinking of a Business Setup in Dubai?

We at N R Doshi & Partners provide guidance and help in choosing the right license, jurisdiction, and emirate. We offer prompt and hassle-free Company Formation services in Dubai. Be it a mainland company formation or a free zone company formation or an offshore business setup in UAE; we help you in all steps of the way.

We also provide our services as JAFZA Business Setup Consultants and help you with offshore business setup in UAE. Moreover, we are recognized by JAFZA offshore as a ‘Top Performing Offshore Consultant’ 2013 and ‘Best Strategic Partner’ 2017 and ‘Best Strategic Consultant’ 2019.  Please get in touch with us for professional assistance. You can reach us at email enquiries@nrdoshi.ae or use the contact us form on https://www.nrdoshi.ae. The first consultation is FREE.


FAQs

What types of business can I set up in Dubai?

You can set up an onshore/mainland business, a free zone business, or an offshore business in Dubai.

What is a mainland company?

A mainland company is an onshore company or a locally registered company. The Department of Economic Development (DED) licenses such companies. A mainland company can do business locally as well as outside UAE.

What is a Free Zone Company?

A Free Zone Company is a company formed in a designated Free Trade Zone or Tax-Free Zone. It is allowed to have 100% foreign ownership in the case of a Free Zone Company.

What is an Offshore Company?

An Offshore Company is a legal entity that does not carry out any commercial activity in its country of origin. It’s a kind of non-resident company with no office space in the UAE. Investors form an Offshore Company to have better tax and wealth planning.

What is an LLC Company in Dubai, and how do I form it?

An LLC Company in Dubai is a Limited Liability Company. To form an LLC Company in Dubai, you need to follow all the steps identified in the above article.

Do the steps remain the same for all types of company formation in Dubai?

Yes, those Sevens steps for Business Setup in Dubai in 2020 remain the same for all types of company formation in Dubai. Wherever there’s a change, we have indicated the alternative process.

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