Master the Basics of Company Formation in Dubai: 6 Things to Consider

Business owners around the world dream of marking their presence in the MENA by having an office in the UAE.

Ever wondered why? As a country at the crossroads of Asia and Africa that can be easily accessed from all around the world, UAE is one of the global leaders in trade and business. There is no denying that capitalizing on this market must be in your bucket list if you want to expand your existing business or build an entire empire in any industry of your choice.

However, company formation in Dubai or in any Emirate can be a little bit of a hassle without proper help and guidance. Presently, to set up a company in Dubai, you have three different options to choose from depending upon the nature of your business. The UAE government allows business owners to set up either a free zone company, a local company or an offshore company depending upon the type of the business entity and the activities involved in the said business. In this blog, we will discuss the 6 different factors that need to be considered for company formation in Dubai and anywhere else in the UAE. Depending upon these factors, you can either have a free zone, mainland or offshore company in the country.


Nature of The Business

Every business needs a license to function within the UAE’s jurisdictions. And this is determined by the nature of your business. Whether it is commercial, professional, or industrial license will definitely depend upon the basis of your enterprise operations.

Further, for trading jewellery or other luxury goods and food produce, and for dedicated services like legal consultancy and veterinary activities, you will require further approvals from concerned government departments. For most company formations in Dubai, the Department of Economic Development is the government entity that controls and regulates licenses and other necessary guidelines.

The DED’s list consists of over 2100 enterprise activities from which you can choose the nature of your business. Further, each free zone has it’s own rules, regulations and approvals, which will be needed on deciding to set up a free zone company.


Type Of Ownership

If you are a foreign national looking to invest in Dubai and start your own business, you will have the option of holding 100% ownership of your enterprise by opting for a free zone license and location.

There are about 45 different free zones in the UAE, with each free zone allowing a certain category of activities or operation within their jurisdictions. If your business falls under any of these categories, then you can easily set up your office in that particular free zone. On the other hand, if you require a license to operate locally, you need to get an LLC license from the DED.

However, as a foreign national, 51% of your business must be owned by a local sponsor. LLC business license will, however, allows you to operate anywhere within the country’s mainland. A third type is the offshore company type, where your business can leverage the local banking facilities, tax exemptions and 100% foreign ownership, but without a physical office in the UAE.

In this case, your business address will be that of the registered agent and you will not be eligible for a visa, thus disallowing you to be a UAE resident under the sponsorship of an offshore company.


The Legal Structure Of Your Business

The legal structure of your business will also matter a lot when you plan for a company formation in Dubai. For instance, if you want to own and run a legal consultancy firm, it can only be done as a branch of a company or a stand-alone enterprise. In this case, a sole proprietor is not allowed to take up the ownership of the firm. By availing the services of a business consultancy firm, you can easily navigate through the difficulties of business set up legalities in the country.


Company Name

The next important step is to have a company name. The name must ideally indicate the nature of the business. All the rules and guidelines regarding this are available on the DED official website.


Enterprise Location

Once you have your documentation on the way, you must shortlist a location within your concerned free zone or anywhere on the mainland in the case of an LLC. Look into the office costs and other details like electricity, internet, water and other amenities required for your company. In most free zones, the free zone authority provides some basic assistance to find the most suitable premise for your business.


Company License And Employees

In most cases, a business owner is required to hire a manager who can oversee the operations of your enterprise. This employee must be onboard before your registration approved by the DED.

However, for Intelaq license holders, who are home-bases Emirati business owners, hiring staff is not allowed as part of their license. For DED mainland licenses, it is mandatory to have a local agent, partner or sponsor to support the foreign national for company formation in Dubai.

However, for free zones, the business owner can have complete control and ownership over their business and only need the help of a local business consultancy to help them set up the business. Interested in learning more about company formation in Dubai?

Consult with our experts today.  


UAE Setup Guide

Business Formation
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