How easy is it to set up a business in Dubai?

As a global business hub, Dubai attracts entrepreneurs and investors from all over the world. With its strategic location between Asia, Africa, and Europe, and its world-class infrastructure and government-based initiatives, setting up a business in Dubai is a smooth process. 

The city offers multiple pathways for entrepreneurs, including mainland, free zone, and offshore company formations, each catering to different business needs. The combination of tax incentives, business-friendly regulations, and easy access to international markets makes Dubai an ideal destination for new businesses. Find out more about how easy it is to set up a business in the city with haus & haus.

Benefits of setting up a business in Dubai

Dubai’s business environment is designed to support growth and innovation in various industries. Some of the biggest benefits of setting up a business in Dubai include:

• Tax-free policies: The absence of personal and corporate income taxes (except for select industries and businesses that exceed AED 375,000 in annual profits, which are subject to a 9% corporate tax) is one of the biggest advantages. At 5%, VAT is also relatively low.
• Strategic location: Dubai’s geographical position provides unrivalled access to major markets across the Middle East, Africa, Asia, and Europe, making it a prime gateway for international trade.
• Free zones with 100% foreign ownership: Setting up a business in Dubai’s free zones, of which there are more than 40, offers full ownership, zero import/export duties, and streamlined administrative processes.

The city is home to a vibrant business landscape, with industries such as real estate, finance, technology, and tourism experiencing significant growth. The government’s vision for economic diversification ensures there are always opportunities for new ventures.

Step-by-step guide to setting up a business in Dubai

Choose your business structure

There are three primary options for business setup in Dubai. If you set up a mainland company, your business can operate anywhere in the UAE and enter government contracts, although you may require a local service agent in some sectors. 

A free zone business allows for 100% foreign ownership and offers tax benefits while restricting direct trade within the UAE market if you do not have a local distributor. An offshore company setup is suitable for businesses looking for tax efficiency, asset protection, and international operations, but does not allow operations within the UAE. Setting up a business in a Dubai free zone is the best option based on ownership, taxation, and operational flexibility.

Select a business activity and legal form

The Department of Economy and Tourism (DET) provides a list of permitted business activities, including the commercial, industrial, and professional sectors. The business activity you select must be among those permitted by the DET. 

Depending on the nature of your business, you can choose from different legal structures, such as sole proprietorship, limited liability company (LLC), public or private shareholding company, or branch office.

Register your business name

Your business name must comply with Dubai’s strict naming regulations, such as those prohibiting offensive, geopolitical, or religiously sensitive terms. The DET oversees the process of name reservation and registration.

To reserve and register a name with the DET when setting up a business in Dubai, you should choose a suitable name, check its availability and reserve it through the DED website, and pay the reservation fee. You can then continue with the full registration process.

Obtain the necessary licenses

Businesses in Dubai require a trade license, which falls under one of three categories. These include commercial licenses for trading and retail businesses, professional licenses for service-based businesses such as consultancy firms, and industrial licenses for manufacturing and production companies.

If you want to set up your business in mainland Dubai, you’ll need to obtain initial approval from the DET, draft a Memorandum of Association (MOA), secure business premises, and obtain the necessary external approvals before receiving your license.

Knowing how to apply for a license is a key part of learning how to set up a business in a Dubai free zone. After selecting a zone, determining your business activities, and choosing a company structure, you should submit an application along with any required documents to the free zone authority and lease office space, if required. 

Secure office space or a virtual office

If you’re setting up a business in Dubai mainland, you must have a physical office. To meet the criteria, you can either rent office space or you can opt for co-working spaces or virtual offices, depending on the zone’s regulations. 

Both are popular options in the city. Co-working spaces are shared physical office environments, while virtual offices provide a business address and related services such as phone answering and mail handling but don’t provide physical office space.

Open a business bank account

Your business needs a corporate bank account to operate legally in Dubai. To do this, you’ll need to apply at a bank, submitting your business license, shareholder and director documents (if applicable), and proof of your office address. You may also need to submit a board resolution authorising the account opening. Please note that each bank has different requirements, so it’s best to research these beforehand.

What is the cost of setting up a business in Dubai?

Mainland vs free zone vs offshore costs

The cost of setting up a business in Dubai varies depending on location. Mainland businesses have higher registration and office space costs but offer more flexibility in operations. Free zones offer lower registration costs, visa packages, and business friendly incentives. Offshore companies have minimal costs but limited scope. 

On average, the setup costs for a mainland company range from AED 15,000 to AED 50,000, while free zone companies may start from AED 10,000.

Cost of setting up a real estate business in Dubai

If you’re looking to establish a real estate business in Dubai, you’ll need to factor in several additional costs. These include:

• Brokerage license: AED 10,000 to AED 20,000.
• Office space rent: AED 20,000 to AED 50,000 annually.
• Employee visas: AED 3,000 to AED 7,000 per visa.
• RERA approval: Required to operate legally as a real estate agent in Dubai.

For more details, watch this video on obtaining a real estate agent license in Dubai.

Setting up a business in a Dubai free zone

Many entrepreneurs learn how to set up a business in a Dubai free zone due to various appealing factors. These include the allowance of 100% foreign ownership, no customs duties, and full repatriation of profits. 

Choosing the right free zone depends on your business activity. Some of the most popular of these zones for startups and SMEs include:

• Dubai Multi Commodities Centre (DMCC): Ideal for trading and commodities businesses.
• Dubai Internet City (DIC): Focused on tech startups and IT firms.
• Jebel Ali Free Zone (JAFZA): Created for industrial and logistics businesses.

Challenges and solutions for new businesses in Dubai

While Dubai is pro-business, entrepreneurs may face challenges such as visa and immigration processes, banking delays, and cultural differences. Thankfully, there are solutions to these challenges.

Working with professional service providers can help streamline residency and employment visa applications. Opening a business bank account can be time consuming, but consulting an expert can simplify the process. Understanding local business etiquette and legal frameworks is essential to ensure smooth operations.

Get expert assistance for your business setup

Setting up a business in Dubai offers incredible opportunities, but navigating the legal and administrative processes involved can be complex. Our team of experts can guide you through the setup process and help ensure that you comply with the various requirements. Contact the haus & haus team to get started with making your dream of doing business in Dubai a reality.