Business setup in Dubai
As the fastest growing economic hub in the UAE, the city of Dubai is the perfect place for setting up a business. With its growing market and highly competitive economic structure, the city is fertile ground upon which you can setup new business. But before you can start business, you must first go through the entire process of company formation and trade license acquisition.
If you do not know how to register a company locally, there is one name you can count on for expert assistance – Emirates Zone.
Your trusted company formation experts to start business in the region
The first step to setup new business is determining your corporate structure: what type of company are you looking to establish? From there, you should consider where you want to be situated. There are two general locations where investors can start up business: free zone and mainland. There are a lot of free zones located all across the city of Dubai, including but not limited to the following:
⇒ Healthcare City
⇒ Media City
⇒ International Financial Center
⇒ Knowledge Village
⇒ Multi Commodities Center
⇒ Silicon Oasis
⇒ International Media Production Zone
⇒ Jebel Ali Free Zone
⇒ Internet City
⇒ Airport Free Zone
These economic zones offer a variety of incentives to start business along with rules and regulations that are largely independent of government regulations. In these specialized trade areas, company formation grants investors with the following:
⇒ 100 per cent ownership of the company
⇒ Exemption from income and corporate tax
⇒ Exemption from customs duties
⇒ 100 per cent repatriation of profits
⇒ Independent rules and regulations
Business setup in Dubai outside free zones
For investors looking for business setup outside of these free zones, there are three corporate structures to choose from:
⇒ Representative Office – requires a local partner who will serve as a National Service Agent
⇒ Limited Liability Company – requires a local partner who will serve as a Sponsor
⇒ Foreign Branch Office – requires a local partner who will serve as a National Service Agent
If you want to know how to register the company as one of the above, contact Emirates Zone today. We can help you get off to a fast start.
Company formation outside of special zones
In mainland company formation, on the other hand, businesses may be structured as any of the following corporate entities:
⇒ Limited Liability Company
⇒ Foreign Branch Office
⇒ Representative Office
To start business as any of these entities, an investor must partner with a local entity who can stand as a Sponsor for LLC or a National Service Agent for Representative or Foreign Branch Offices.
Ready to take the first step of business setup? Get in touch with Emirates Zone today, and let us guide you through it.
Free Zone Companies
Benefits of being a free zone company include:
⇒ 100% foreign ownership
⇒ 100% corporate and income tax exemptions
⇒ 100% repatriation of profits
⇒ No Customs Duties
⇒ Independent regulations
⇒ Restrictions of being a free zone company include:
⇒ Limited to operating within the geographical zone, or overseas
⇒ To deal with mainland clients, it would be necessary to engage with an agent or distributor
⇒ To export products onto the mainland Duty would be applicable
⇒ Government tenders and contracts generally require a mainland DED license
It can also be quicker and cheaper to incorporate a free zone company. However, this is not always the case – a recent comparison for a client looking to set up in a freezone actually revealed it was cheaper for them to set up onshore and the ongoing annual fees to operate were significantly cheaper onshore due to a requirement of the free zone for a particular sized commercial premise (please note, this is a client example with a specific operating activity and would not be the same in all instances).
Mainland Companies
Local Sponsors and National Service Agents
Setting up a business onshore in Dubai, it is a requirement to engage with a local partner either as a National Service Agent (for a Rep Office or Foreign Branch) or a Sponsor (for an LLC).
National Service Agent
The Service Agent facilitates a foreign company being able to set up as a Rep Office or Foreign Branch in Dubai. They also take on liability in terms of Labour and Immigration (visas). A Service Agent does not have any shareholding in the Dubai business and they will be remunerated in the form of an annual fee.
Local Sponsor
How to choose a local sponsor or service agent
It is important to understand what you want from a sponsor before meeting with potential candidates. Here are five questions to consider:
Do you want an actively engaged sponsor or a nominee sponsor?
If you sponsor promises opened doors, contracts and introductions, how will you ensure that they follow through?
Will your busy, high profile sponsor be available for document signings upon request?
What happens to the 51% share of your Dubai business if the sponsor should die?
What is your exit strategy and is it enforceable?
Open LLC Company
Branch Company
How much does it cost to set up a company in Dubai?
Freezone setup costs
Costs will vary by freezone, structure, activity, premises, and number of visas. However, these are the costs to be aware of:
⇒ Registration Fee (one time fee)
⇒ Name reservation fee (one time fee)
⇒ Annual License Fee
⇒ Annual rental for premises
⇒ Visa per person (lasts for 3 years)
⇒ Legal templates are usually used and personalized, accordingly.
Note:
If an individual is setting up an LLC, they will be required to show share capital of AED150,000 throughout the incorporation process. Upon receipt of the Trade License, this share capital can be converted to working capital.
Mainland setup costs
Costs will vary depending on structure, activity, premises and the number of visas. However, there are the costs to be aware of:
⇒ Government and third party fees (Trade License, Notary fees, legal translations, typing centers, government department registrations – mix of one time and annual fees)
⇒ Incorporation fees (submission of documents, arrangement of approvals / inspections – one time)
⇒ Sponsor fees (annual)
⇒ Legal fees (one time)
⇒ Commercial premises (annual)
⇒ Registration of new company with Immigration and Ministry of Labor (one off, with renewal of Establishment card only, every two years)
⇒ Visa per person (usually lasts for 2 years)
Ongoing costs
There are a number of annual costs:
⇒ Annual costs to maintain a free zone entity in Dubai
⇒ License fee
⇒ Rental premises
⇒ Corporate PO BOX
⇒ Annual costs to maintain a Rep Office or Foreign Branch Office in Dubai
⇒ PRO Service fees to manage the Trade License renewal
⇒ Trade License fee
⇒ Chamber of Commerce registration
⇒ Ministry of Economy registration
⇒ Nadafa (Center of Waste Management) fee
⇒ Annual audit by a locally-registered Auditor
⇒ Rental premises
⇒ Corporate PO BOX
⇒ Annual costs to maintain an LLC in Dubai
⇒ PRO Service fees to manage the Trade License renewal
⇒ Trade License fee
⇒ Chamber of Commerce registration
⇒ Nadafa (Center of Waste Management) fee
⇒ Rental premises
⇒ Corporate PO BOX
Trade License Activities
1) The activity (ies) selected should reflect the activity (ies) of the business, 2) The activity should be reflected in the Trade Name of the company, 3) It will reflect the type of premise required
Trade License Activities
It is important to apply for the correct activity on your Trade License as it will have various impacts:
1) The activity(ies) selected should reflect the activity(ies) of the business
2) The activity should be reflected in the Trade Name of the company
3) It will reflect the type of premise required
It may trigger approvals/registrations with certain government departments, e.g. vocational training companies need to be registered and approved with ACTVET and construction and engineering companies need to be registered via a process called Classification
Companies wishing to engage directly with the National Oil & Gas companies need to obtain Supreme Petroleum Council (SPC) approval which once obtained shows as an additional activity on the Trade License
Commercial Premises in Dubai
Commercial Premises in Dubai
Every company is required to have a premise that relates to the activities on their trade license, e.g. a trading company will be required to have a store or warehouse, whilst a management consultancy will be required to have an office space. The space should be large enough to carry out the business of the company and to comfortably accommodate the number of visas required. An inspection of the premises will be conducted during the incorporation process, so they should also be fitted out appropriately. It is not allowed to operate businesses from home. A few business-types are allowed to operate from commercial villas, such as nurseries and beauty salons; but for most businesses this is not permitted. In Dubai, commercial leases need to be TAWTHEEQ leases, which means they are registered with the Dubai Municipality; however, there are exceptions such as premises in the Musaffah industrial zone.
Legal documents
Certificate of Incorporation of the parent company
Legal documents
As mentioned above, free zones generally provide legal templates.
Legal documents required to set up a Representative Office or a Foreign Branch Office in Dubai
The following parent company and signatory’s documents will be required:
Certificate of Incorporation of the parent company
Memorandum of Association (MOA) /Articles of Association (AOA) of the parent company
Board Resolution to open a Foreign Branch Office of the parent company in Dubai
Undertaking Letter from the parent company guaranteeing full financial commitment for the Dubai entity
A Power of Attorney (POA) to the General Manager giving signatory rights
All of the above documents must be:
Certified by the Notary Public in the country of origin
Legalised by the Ministry of Foreign Affairs in the country of origin
Legalised by the UAE Embassy in the country of origin
Additional documents required, which do not require the certification and legalization are:
Passport Copy of the proposed General Manager
Auditor’s appointment letter from a UAE auditor
National Service Agent identification documents
That National Service Agent Agreement will need to be drafted, legally translated into dual text and duly signed at the Notary Public.
Legal documents required to set up an LLC in Dubai
If a foreign company will be holding the 49% share of the Dubai LLC, the following documents will be required:
Certificate of Incorporation of the parent company
Memorandum of Association (MOA) / Articles of Association (AOA) of the parent company
Board Resolution to establish an LLC in Dubai
Power of Attorney to the General Manager
All of the above documents must be:
Certified by the Notary Public in the country of origin
Legalised by the Ministry of Foreign Affairs in the country of origin
Legalised by the UAE Embassy in the country of origin
If individuals will be holding the 49% share of the Dubai LLC, the following documents will be required:
Copy of passport of the foreign individual partners with either:
Visit visa copy and last entry date to UAE
Cancelled visa page, if previously held a visa in the UAE
Visa page, with accompanying NOC from current employer
In both instances, the Dubai LLC’s Memorandum of Association will need to be drafted, legally translated into dual text and duly signed at the Notary Public.
Its worth engaging a locally-based firm to either draft or at least review your company documents. They will be familiar with the local laws and regulations, as well as certain terms and words that are accepted by the Notary Public.
Timescales
When the legal documents are in executional format, the incorporation process for an LLC can be set up in approximately two to three weeks (if no special approvals are required) and a Foreign Branch Office or a Representative Office will take a little longer – approximately three weeks to obtain the Trade License and then there is a period of 30 days in which to lodge a bank guarantee and complete the registration process with the Ministry of Economy.
Now you know what is involved, are you ready to start a business in Dubai?
If so speak to EmiratesZone Group of Companies, Dubai’s company formation specialist dedicated to helping foreign companies and individuals set up their Dubai businesses correctly and cost effectively. By understanding clients’ activities and goals for doing business in Dubai, EmiratesZone helps them to understand the most suitable routes to market, including the risks, regulatory requirements, and ongoing commitments so that they can make an informed decision that is right for their business and its objectives. EmiratesZone provides a professional, dedicated corporate sponsorship platform for onshore companies with a focus on providing the foreign party with security, control and 100% of the profits. EmiratesZone can also manage the incorporation process to ensure a smooth setup. To chat to us call (+971) 508 33 4444 or email us at info@emirateszone.ae and be sure to keep up to date with regulatory changes and news affecting company formation and doing business in Dubai by following EmiratesZone across the following social media platforms.
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