Start a Company in Dubai as a Foreigner: A 101 Easy Guide

Dubai’s strategic location, business-friendly environment, and robust infrastructure make it an attractive destination for entrepreneurs worldwide. As a foreigner, establishing a company in Dubai involves navigating specific legal frameworks, understanding cultural nuances, and adhering to regulatory requirements. This comprehensive guide provides detailed insights into the process, complete with links to relevant government departments for necessary paperwork.

1. Understanding Dubai’s Business Landscape

Dubai’s economy is characterized by its diversification and openness to foreign investment. Key factors contributing to its appeal include:

• Strategic Location: Situated at the crossroads of Europe, Asia, and Africa, Dubai serves as a global trade hub.
• Tax Advantages: The UAE offers a favorable tax environment, including no personal income tax and, in many cases, no corporate tax.
• Free Zones: Special economic zones that offer benefits such as 100% foreign ownership, tax exemptions, and full repatriation of profits.
• World-Class Infrastructure: State-of-the-art ports, airports, and telecommunications facilitate seamless business operations.
• Political and Economic Stability: A stable government and robust legal framework provide a secure environment for business activities.

2. Legal Structures for Foreign-Owned Businesses

Selecting the appropriate legal structure is crucial for compliance and operational efficiency. The main options include:

A. Mainland Company

• Ownership: Recent legislative changes allow 100% foreign ownership in certain sectors; however, some activities may still require a local sponsor holding 51% of shares.
• Scope of Operation: Permits business activities across Dubai and the UAE without restrictions.
• Regulatory Authority: Department of Economic Development (DED).
  • DED e-Services: https://eservices.dubaided.gov.ae/

B. Free Zone Company

• Ownership: Allows 100% foreign ownership.
• Scope of Operation: Restricted to the designated free zone and international markets; direct trade within the UAE requires a local distributor.
• Benefits: Tax exemptions, simplified import/export procedures, and no currency restrictions.
• Examples of Free Zones:
  • Dubai Multi Commodities Centre (DMCC): https://www.dmcc.ae/
  • Dubai Internet City (DIC): https://dic.ae/
  • Dubai Silicon Oasis (DSO): https://www.dsoa.ae/

C. Offshore Company

• Ownership: 100% foreign ownership permitted.
• Scope of Operation: Cannot conduct business within the UAE; ideal for international trade, holding assets, or property ownership.
• Regulatory Authority: Jebel Ali Free Zone Authority (JAFZA) for offshore companies.
  • JAFZA Offshore Companies: https://jafza.ae/

3. Step-by-Step Guide to Establishing a Company

Step 1: Define Business Activity

• Importance: Determines the type of license required and influences location decisions.
• Resources: DED provides a comprehensive list of permissible activities.
  • DED Business Activities: https://eservices.dubaided.gov.ae/Pages/Activities.aspx

Step 2: Choose a Legal Structure

• Considerations: Assess ownership preferences, liability implications, and business objectives to select between mainland, free zone, or offshore structures.

Step 3: Select a Trade Name

• Guidelines:
  • Must reflect the nature of the business.
  • Avoids offensive or blasphemous language.
  • Complies with UAE naming conventions.
• Process: Submit a trade name reservation application through DED or relevant free zone authority.
  • DED Trade Name Reservation: https://eservices.dubaided.gov.ae/Pages/TradeName.aspx

Step 4: Apply for Initial Approval

• Purpose: Grants permission to proceed with company formation.
• Requirements:
  • Completed application form.
  • Shareholder passports.
  • Proposed business plan.
• Authority: DED for mainland companies; respective free zone authorities for free zone entities.

Step 5: Draft Memorandum of Association (MOA)

• Contents:
  • Company’s name and legal structure.
  • Business activities.
  • Shareholding pattern.
  • Capital investment.
• Notarization: Must be notarized by a UAE Notary Public.
• Templates and Assistance: Available through legal consultants or business setup advisors.

Step 6: Secure a Business Location

• Mainland Requirements: Mandatory to have a physical office space.
• Free Zone Options: Flexi-desk, virtual offices, or physical offices, depending on the free zone regulations.
• Lease Agreement: Obtain a tenancy contract and Ejari (tenancy registration) for mainland setups.
  • Ejari Registration: https://www.ejari.ae/