Dubai is one of the states of the United Arab Emirates with a great focus on providing facilities to businesses. You can set up your business in mainland, freezone or offshore here depending upon the business requirements. For all you need to follow some legal guidelines and regulations introduced by the government.
This is what we are going to guide you in this article. Smart Ezone will discuss the complete steps of how you can start business in Dubai, what legal requirements you need to fulfill and what factors need to be considered for achieving higher profitability.
Let’s start.
Setup Your Business in Dubai: The Complete Procedure
We discussed all the steps required to establish a healthy business in Dubai. Follow each step and must fulfill the local rules and regulations of the country to avoid any issues later.
Pay focused attention below.
Business Laws and Regulations in Dubai
Firstly, it’s crucial to understand the business laws and local regulations in the state. The laws include having a license to be considered a legal business in the state. You complete the requirements and obtain licenses from the respected DED department or authorities of the particular freezone.
In Dubai, mainland business structure is fully handled by the Department of Economic Development. In contrast, Freezone businesses always obtain licenses from their respective authorities. Both provide you with different license types, while you can apply for any considering your business type.
But the procedure for mainland business setup is somehow complex that you are unable to enjoy 100% ownership. You might need to collaborate with local sponsors with higher shares. As per Dubai’s business laws, your business should be caring for employees properly.
Finalizing Your Business Structure
Now, focus on choosing an appropriate business structure. Keep in mind that business structure is the thing that decides whether you are going to lose or introduce yourself as a leading industry partner.
- Limited Liability Company (LLC): This business structure is limited to the invested capital amount while suitable for SMEs (small to medium-sized enterprises, retail, and services.
- Free Zone Company: This business structure allows 100% foreign ownership while the liability is limited to the company’s capital.
- Branch Office: Mostly adopted by international companies that wanted to operate in Dubai without introducing new assets. This structure is quiet popular in Dubai because different companies aim to establish a noticeable presence in Dubai without forming a new entity.
- Representative Office: As shown by the name, this business structure is formed to represent the parent company which is liable for all of its activities and suitable for companies looking to establish strong connections in the market without engaging commercially.
These were some famous business structures mostly adopted by the businesses in Dubai. Apart from this, structures including public shareholding companies, private shareholding companies, and others are also there. To get information about them, you can contact Smart Ezone.
Selecting A Suitable Location
Now, you need to finalize the appropriate location for your office. In various conditions, you can operate your business remotely. It also depends upon the business structure but better would be operating your company through an office for better growth and success.
Deciding the office size, layouts and everything else completely depends upon you. But consider your staff size and operational needs. And yes, don’t forget to verify whether the space you are finalizing complies with government rules and your specific industry license.
Our suggestion is to choose such a space which helps you easily access targeted customers and the market. You can avoid transportation and other expenses this way and streamline your logistics.
Establishing Your Business Plan
After all this, you must prepare a comprehensive business plan clearly defining your vision. It’s not tough if your goals are finalized – but you surely require expert guidance such as Smart Ezone. We can help you identify trends, and customer behaviors, analyze competition, and withdraw opportunities for you. This is how you actually understand the customer needs and preferences and develop an actual working plan.
Establishing a business plan requires a complete focus on budgeting and financial projections, final goals and strategy, and objectives. You calculate expected costs, and potential profits and focus on marketing, sales, and operations. Connect with us for better guidance.
Preparing Your Legal Documents
There are various documents you need to prepare and submit to the authorities/department for getting a business license. The documents include a comprehensive business plan, copies of your original passport for verification, and your proof of address. In contrast, the requirements for work permits and visas might be different. Meanwhile, you need to apply for residency visas or contact the Ministry of Human Resources and Emiratisation for your staff.
Pay attention– For trade name registration, you need to submit an application with the required documents to the DED (Department of Economic Development) or relevant freezone authority.
Taxation Systems
A business always needs to face taxation and financial obligations. Dubai is the hub for businesses because of its favorable taxation system. Some freezones cost you 0% corporate tax. In contrast, VAT is applied only 5% on most services and goods. You can avail dozens of benefits in tax exemptions and maintaining financial records for compliance with business laws in the United Arab Emirates.
Keep in mind that you must follow accounting standards to penalties because annual audits are done by certified auditors annually to maintain the financial structure of businesses in Dubai.
Pay attention– Opening a corporate account is a must to maintain your transactions and cash flow. Your bank will manage your trade finance and overall foreign exchange, so you better keep records for audits.
Plan for Market Entry
Now, you are all done. Plan for an efficient market entry. For this, you need to identify your targeted audience, their needs and preferences, and much more. You must adopt promotional channels to advertise for your goods or services to drive loyal customers.
Another best option to build authority is to promote higher networking. Connect with the leading experts in your industry, host events, and go for partnerships to boost your market reach. These are the methods to identify new opportunities and boost long-term growth.
What is Mainland, Freezone & Offshore?
You must understand the difference between them to ensure where you are going to set up your business and start operating. Let’s discuss this in detail.
Mainland
Mainland businesses have no restrictions, though they are allowed to operate throughout the United Arab Emirates and engage with international investors. For mainland business, you will get license from the Department of Economic Development.
Advantages of Establishing Business in Mainland
First and the foremost benefit is that you can work with government entities and access the whole market effectively. Plus, you can introduce additional branches anywhere in the United Arab Emirates with zero restrictions. This is how you expand your business and attract more profits.
Freezone
Dubai has introduced various freezones with advanced infrastructure and modern facilities to attract foreign investors and enhance business in the state. There are higher authorities of every freezone responsible for their proper management.
There are a number of freezones in Dubai with dozens of benefits and limitations at the same moment. Businesses in freezones are managed by their specific higher authority.
Advantages of Establishing a Business in Freezone
You can enjoy complete foreign ownership while setting up your business in a freezone. You don’t require any local sponsor or need to follow complex steps to set up your business – only follow a few registration and visa procedures and that’s all. Interestingly, you also enjoy 0% VAT exemptions and corporate tax.
Offshore
Offshore businesses have more focus on global trading rather than inside the United Arab Emirates. They are restricted to operate in the country because of their specific international trade licensing.
Advantages of Establishing Business Offshore
You can trade with countries and subcontinents without any restrictions. Complete privacy is there for you – don’t need to disclose your financial details and more. You can enjoy favorable tax rates and manage your investments globally.
Mainland vs. Freezone vs. Offshore
As mentioned above, there’s a huge difference between mainland, freezones, and offshore. But every business has its specific market and structure which decides whether it’s beneficial to go with mainland licensing, offshore, or freezone. Let’s explore more below.
Mainland: Benefits and Limitations
With mainland business registration, you can operate anywhere in the United Arab Emirates and work with government entities. There are various opportunities to expand your business such as opening branches across the UAE. Talking about the limitations, you always need a local sponsor with higher shares and follow intricate procedures and requirements.
Note: Recent changes in the ownership of business in mainland rule by the government have allowed 100% foreign ownership in most sectors.
Freezone: Benefits and Limitations
In all sectors, you don’t need any local sponsor while 100% foreign ownership is there. You can enjoy favorable or even zero corporate tax to reduce your business expenses. Unlike the mainland, no complex procedures to follow – a streamlined registration procedure and that’s it. On the other hand, you cannot make deals with the mainland directly and face limitations while performing different business activities.
Offshore: Benefits and Limitations
You can completely focus on international trade and conduct business across the globe. The government has introduced favorable corporate tax percentages for international operations and much more. But the thing is, you cannot directly operate inside the United Arab Emirates market.
Types of Business Licenses in Dubai
Depending upon the business activity and the location from where you are operating, Dubai offers various license types. Let’s discuss them below.
Licenses Mainland Offers
The mainland offers commercial licenses, tourism licenses, industrial licenses, and professional licenses for businesses engaged in providing services, and trading goods within and outside the UAE.
Licenses Freezone Offers
The freezone offers e-commerce licenses, trading licenses, service licenses, and industrial licenses to promote different business activities for different industries. You can do business within and outside the United Arab Emirates.
Offshore Licenses Available
Asset protection licenses and international business licenses are available for entities and companies conducting business activities outside the United Arab Emirates.
The Bottom Line
In the above article, we have completely discussed the steps you need to follow to establish your profitable business in Dubai. We discussed the regulatory laws and regulations introduced by the government for getting different business licenses and much more.
For more information and to get personal assistance in establishing your business in Dubai you can contact us today and get immediate responses.
