Middle East’s business hub as well as fastest growing, Dubai is located in the north-eastern region of the United Arab Emirates. Though the foundations were laid on oil exports, GDP is contributed by sectors of real estate, tourism, trade, financial services.

Dubai is reputed for being the biggest trading hub in the U.A.E. It is mainly due to outstanding business locations and a nonrestrictive environment.

Dubai has become the first choice of all the business owners and foreign investors due to multiple reasons like attraction of foreign investment, strategic location and business-friendly government policies. This drives owners to start business in Dubai as well as entrepreneurs to invest.

• Ease of Doing Business

Earning 16th place on the Ease of Doing Business rankings, setting up a business in the U.A.E is simple and straightforward. Less processing time, high number of free zones allows 100% foreign ownership.

• The Open Market and Low Taxes

In Dubai, the government and regulatory authorities have little influence over private sector activity. Personal income is taxed at zero percent. Dubai’s economy is based on free trade. There are no significant import tariffs in place. In terms of labour policies, Dubai has enacted liberal labour rules. This permits Dubai-based businesses to hire employees from all around the world, regardless of nationality. Furthermore, Dubai has set up rigorous anti-fraud and anti-money laundering procedures. This permits international investors to invest in a safe and secure environment.

• World-Class Infrastructure

Dubai is notable for modernised and has various international-standard free zones along with extensive motorway network that facilitates mobility. The solid telecommunication infrastructure, uninterruptible power supply, and a plethora of amenities are enough to entice entrepreneurs from all over the world to establish their businesses in Dubai.

• Highly Accessible Location

Dubai is situated in the heart of Africa, as well as the Commonwealth of Independent States (CIS) and the Far East and Europe. Nearly 85 airlines offer service to more than 130 destinations throughout the world along with over 120 shipping lines. Dubai is thus the most conveniently accessible location on the planet.

• High Standard of Living

Residents of Dubai live in a pleasant environment with huge number of international citizens, making it one of the world’s most diverse cities. Dubai is the most developed city in the world in terms of real estate, housing, educational institutions, and leisure activities being one of the safest cities in the world due to its low crime rates.

In Dubai, starting a business is a quick and painless process. Before a business owner can open up shop in Dubai, several paperworks must be checked and a few approvals from government officials must be obtained.
Although the application procedure for starting a business in Dubai is simple, someone with limited awareness of how things work in Dubai may be unable to finish it.

The steps to set up a business in Dubai are following:

• If someone wants to start a business on the mainland of Dubai, they should first get a UAE citizen as local sponsor.
• After obtaining a sponsor, the next step is to secure a letter of authorization from the local sponsor.
• The company’s Memorandum of Agreement is now being prepared. The Memorandum of Association (MoA) lay forth the essential terms under which the firm will operate.
• The business owner must get first clearance from the Dubai Department of Economic Development (DED) at this stage.
• The firm must be registered under a distinctive trade name after receiving first permission from the DED.
• Once the business’s trade name has been finalised, the proprietor must hunt for a physical office location for their company.
• The business owner must apply for a trade licence after establishing a physical office.
• The business will be set up in Dubai within a week after acquiring a trading licence.

Location is the critical parameter to be kept in mind with different aspects to be considered. They are:

• You gain 100 percent ownership of your company and are eligible for tax benefits.
• The location is both handy and cost-effective.
• The location is in line with your company’s strategic objectives.

The business locations in Dubai has two major zones:

• Free Zone Company Setup
• Dubai Mainland Company Setup

Certain places in Dubai have been classified as free zones which are the finest locations for international entrepreneurs to start up business. Based on the specific area of operation, the free zones are categorised into numerous types.

Pros and Cons of Free Zones:

Ownership and taxation are the two major benefits that the free zone offers.

Cons:

• Some firms, particularly those in the service industry, do better in urban environments. Restaurants, retail businesses, and other such establishments are common examples.
• Renting space in the trade zone may be more expensive than renting space in the city market.

Dubai Free Zone Areas:

UAE has about 45 free zones and the separation of these is based on the particular area/sector of operation:

• Academics
• Automotive
• Aviation
• Energy
• Information and logistics
• Information technology(ICT)
• Investment
• Media
• Technology

Commercial businesses are targeted by the geographical jurisdiction offering exciting opportunities. Renting a space in mainland can be achieved by entrepreneurs working in

• Education
• Hospitality
• Real Estate
• Retail

Popular Business Locations in Mainland Dubai

• Al Karama
• Al Quoz
• Al Qusais
• Bur Dubai
• Business Bay
• Deira
• Jumeirah
• Shaikh Zayed Road

Selecting a Location Based on Strategic Goals

Be sure that your companys objectives are fulfilled before committing to a location. Based on the goals a location has to be designed. The goals may be:

Convenience

• Cost-Effectiveness
• Profitability
• Sustainability

For instance, office should be in reachable distance if you choose a service industry. Retail chains and other businesses should be based within the market. Investigate the nature of your company, product, and target market. You can decide whether or not the free zones will be advantageous to you after conducting an in-depth analysis.

You can start looking for places once you’ve made that decision. You’ll need a renter contract in place after you’ve decided on one. The procedures in free zones are quite easy and take less time on average.

Categories of business incorporations should be known before setting up a company. You have to fulfil certain requirements for each company type. Business establishments are of following categories:

General Partnership

Two or more partners are required to form a general partnership business. The partners must be Emirati nationals and will share responsibility for the company’s debts equally. Only the names of the partners can be part of the entity’s name if certain conditions are met. The partnership agreement might document each partner’s stake. In the following situations, the partnership will dissolve:

• The death of one member
• Bankruptcy of a partner
• Withdrawal of a partner
• Insanity of a partner

Partnership businesses may be either of the 3 namely:

• General partnership
• Simple limited partnership
• Partnerships-en-comandante

Public Shareholding Company

Public Joint Stock Companies are another name for these businesses. Equal shares of the capital are distributed. In most circumstances, at least 10 founders are required to form a Public Shareholding Company. PSCs must have a minimum capital requirement of AED 10 million. A minimum of three directors are required on the board of directors. Another requirement is that the Chairman of the Board of Directors, as well as the majority of the board of directors, be Emirati nationals. Only 35% of the share capital will be kept by the founders, with the remainder having to be sold to the general public. Each member of a PSC is exclusively responsible for the value of the shares he owns.

Private Shareholding Company

In Dubai, a private shareholding company is comparable to a public one. To form a PrSC, you must have at least three shareholders. The shares, however, are not available to the general public. If any shares will be made available to the public, it must be stated in the documentation.

Limited Liability Company

In Dubai, the most frequent type of business formation is an LLC. These businesses can be established on the Dubai mainland. An LLC licence grants you full operational rights in the United Arab Emirates. There is a minimum capital requirement for these businesses, which varies depending on the type of business. You must have actual offices in the nation to form an LLC. An LLC’s foreign owners are limited to owning no more than 49 percent of the company’s shares.

Free Zone Companies (FZC and FZE)

Free zone has two main types of companies:

• Free Zone Companies
• Free Zone Establishments

Both are similar and can be opened in any allotted free zone with single shareholder

Branch Office

These establishments can include branches of foreign organizations operating with the same name in Dubai. Branches of free zone companies, GCC companies, and civil companies also fall under the same category.

• Exemption for Personal and Corporate Taxes

Personal and corporate taxes are exemption for mainland companies. But there is no exemption for municipality and custom tax.

• No Minimum Capital Requirement

The amount of minimum share capital required is unrestricted. Most free zones have a set of minimum values that each business operating in the zone must declare.

• Flexibility of Operation

There is more flexibility and lesser restrictions for mainland companies with option to operate anywhere. But restrictions for free zone companies prevail.
Businesses on the Dubai mainland are also permitted to trade with other companies in Dubai or the United Arab Emirates. Unlike free zone companies, you won’t have to worry about legal consequences if you want to engage in any type of trade. Of course, there are criteria that must be fulfilled. However, the majorities of administrative procedures is straightforward and require little time to complete.

• Flexibility of Business Activities

Many free zones prohibit businesses from engaging in activities that are not relevant to the sector. For example, in a free zone where you can create a financial management firm, you might not be able to open a different type of business. Even if it is a possibility, you will need to follow legal procedures to obtain the necessary approvals. As a result, there will be limited company diversification inside free zones. This will not be an issue for mainland businesses. You can engage in a variety of business activities on the Dubai mainland without having to deal with any complications.

• Rent Multiple Offices

Diversification and expansion along with rental options are possible with mainland businesses.

• Employee Visas

Visa can be obtained for many employees by a mainland company owner and depends on the office space. Furthermore, the registration procedures are much more efficient. There are no limitations on currency or recruitment, and annual audits are not required. Overall, establishing a firm on the mainland of Dubai allows for greater commercial growth and easier adaptation to new markets.

• Sole Ownership for Foreign Entrepreneurs

Foreign business owners in free zones can preserve 100 percent ownership of their company. This implies you won’t have to rely on a national to sponsor or collaborate with you. You have complete control over your business decisions as a lone proprietor. A minimum capital requirement is also not imposed on single-owner enterprises.

• Tax Exemption

Import and export taxes are exempted for most free zones thereby enjoying maximum benefits.

• Awareness of Market Trends

The majority of the free zones are sector-specific. This allows you to stay informed about current business trends in the market to which your company caters. Most free zones provide the infrastructure and logistics services that your company requires to grow and thrive. Businesses in free zones benefit from collaboration and learning possibilities, as well as cost savings.

There are many advantages in setting up a business in Dubai and to enjoy the benefits one should have a license.

How to Obtain a Business License in Dubai

The document that permits you to carry out business is called business license, also as an evidence of your skill and expertise. Department of Economic Development (DED) issues licence.

Categories of Business Licenses in Dubai

The three types of licenses offered in Dubai are:

• Commercial License
• Industrial License
• Professional License

Commercial License

A commercial license has to be obtained by entrepreneurs who wish to conduct trading activities in Dubai. The business activities under this license are:

• Commercial brokerage services
• Importing & exporting goods
• Real Estate
• Rent-a-car services
• Retail stores
• Selling electronic products
• Selling of construction material

The most common type of organizations set up under a commercial license is The Legal Liability Companies (LLCs) and the license can be used either on shore or in free zone.

How to Obtain a Commercial License in Dubai?

• Firstly, list of the activities you intend to carry out has to be established to obtain a commercial license.
• The next stage is writing a Memorandum of Agreement (MOA) outlining the activities.
• The third stage is to register the business with the Department of Economic Development.
• You’ll need to pay the money and apply for a commercial licence, after you’ve completed the registration process.

Industrial License

Industries undertaking manufacture activities like Production, Segregation, Accumulation, Packaging get this type of license.

How to Obtain an Industrial License in Dubai?

Industrial license to business-owners is provided by the DED. the eligibility for license has few prerequisites like

• Local Sponsor
  The company share of 51% should be held by an Emirati.
• Office Space
  Physical office should have a space.
• Local Industrial License
  Thirdly, local license have to be obtained from the company’s area of operation.
• Minimum Capital Requirement
  The minimum requirement for the share capital is around AED 250,000.
• Number of Workers
  Lastly, there should be more than 10 workers in the company.

Procedure for Industrial License in Dubai:

• To begin, documents must be submitted to the DED for preliminary approval.
• You can apply for an industrial license after receiving clearance that could take up to three months.
• Permissions from the municipality and other authorities have to be obtained.

Professional Certification

Depending on abilities and knowledge, Individuals are granted the third and final sort of licence The most significant benefit of a professional licence is that it permits 100% foreign ownership. The only stipulation is that your service agent must be a local.

How to Obtain a Professional License in Dubai?

The professional license in Dubai is provided by the Department of Economic Development. The process for obtaining the license is includes:

• Firstly, make a list of business activities for the professional license which you will undertake.
• Service agent appointment.
• Submission of documents to the DED for initial approval.
• Trade name application and registration
• Renting office space and submission of documents.

This is a major factor where a realistic calculation will enable better planning.

Cost affecting factors are

• business license type
• The type of business you

Other charges for LLC formation in Dubai may include

• Rental charges
• DED fees
• mainland trade license fees
• Administrative fee
• One-time Contracting license fee
• Brokerage Fee

How much does it cost for Investor Visa?

The investor visa costs approximately 3200 AED including basic insurance, medical and Emirates ID.

How much does it cost for Employee Visa?

The average cost for hiring an employee is between 7000 to 7500 AED approximately including insurance, medical and residency card.