Skip to content
en
  • There are no suggestions because the search field is empty.

Setting up a Business in Dubai: Your Step-by-Step Guide

Dubai Skyline in Daytime

Share this article

If you’re looking to start a business abroad – look no further than Dubai. As a well-known trading hub of the Middle East and North Africa (MENA) region, Dubai boasts a wealth of benefits for businesses and companies looking to succeed, thrive and connect to the rest of the world.

In the first half of 2024, Dubai’s GDP grew by 3.6%, with the Central Bank of the United Arab Emirates (CBUAE) maintaining its real GDP growth projections for 2024 at 4%. For 2024, the forecasted growth in real GDP is 4%. The UAE is considered a low-risk nation for business where EKN, a Swedish export agency, has classified the UAE with a risk category of 2 out of 7. This means that transactions processed within the UAE are assessed without special requirements or terms and conditions, and there are no predetermined restrictions for guarantees. If you are considering setting up a business in Dubai, the process is relatively simple – especially in the form of the UAE’s free zones.

Things to know before setting up your business

Generally, there are a few things you will need to understand before you start the process to set up your business in Dubai. Let’s take a look through each of them.

Mainland vs. free zones vs. offshore

Before setting up your business, you must decide whether you would like to operate on the mainland, in a free zone, or offshore. Each option has its benefits and specifications based on your business requirements.

Mainland

If you are looking to establish a business with the flexibility to trade directly with the UAE local market and internationally, setting up on the mainland is a viable option. Mainland companies can operate anywhere in the UAE and are not restricted to designated areas. Most business activities allow 100% foreign ownership. However, some strategic sectors may require an Emirati partner.

Mainland companies also have a mandatory office space requirement, having to lease an office of at least 200 square feet. Virtual offices are not allowed for mainland companies.

Benefits:
  • Trade flexibility: Mainland companies can trade directly and internationally with the UAE local market.

  • Location flexibility: Businesses can operate anywhere in the UAE.

  • Ownership: As of 2020, most business activities allow 100% foreign ownership. However, some strategic sectors may require an Emirati partner.

  • Taxation: Subject to 5% VAT and 9% corporate tax on profits above AED 375,000. No personal income tax.

Considerations:
  • Regulatory oversight: More stringent regulations and required approvals from various government entities.

  • Emiratisation

    • For companies with 50+ employees, at least 2% of the workforce must be Emiratis in skilled roles. 

    • Companies with 25-49 employees must hire at least one Emirati employee

 

Free ozne 

If you are looking for 100% ownership of your company, consider applying for a licence and location in one of Dubai’s free zones. The free zone concept was introduced by the Dubai government to generate foreign interest and set up businesses in the city. It’s a special economic area where business owners can enjoy full ownership, 0% corporate taxation up to profits over AED 375,000 (9% corporate taxation for profits above AED 375,000), and 0% personal income tax.

However, one of the key limitations of operating a company in a free zone is that you are not allowed to make direct trade with the UAE local market without a local partner or distributor.

Currently, there are over 30 free zones operating in Dubai. Generally, each free zone is designed around an industry category and offers licences to companies within those categories, with Dubai Multi Commodities Centre (DMCC) as one of the leading free zones in Dubai.

Benefits:
  • Ownership: 100% foreign ownership without the need for a UAE national sponsor.

  • Business-friendly tax environment: 0% personal tax, and specific VAT exemptions for certain transactions within designated zones.

  • Repatriation: 100% repatriation of capital and profits.

  • No currency restrictions: Freedom to transact in any currency.

  • Industry-specific: Each free zone is tailored to specific industries, providing dedicated support.

Considerations:
  • Trade limitations: You cannot trade directly with the UAE local market without a
    distributor.

  • Location restriction: Must operate within the designated free zone.

 

Offshore companies

Offshore companies can also be registered in a free zone and enjoy many of the same benefits. However, it’s not a substitute for a free zone company. The main difference between a free zone company and an offshore is the operations of the business. Offshore companies are allowed to have business activities outside the UAE and not inside. They also have no requirements for minimum capital deposited before incorporation. 

Benefits:
  • Ownership within free zones: Full foreign ownership within free zones.
  • Privacy: High level of confidentiality and asset protection.
  • No minimum capital requirement: Flexibility in financial structuring
Considerations:
  • Limited operations: Cannot conduct business within the UAE local market.
  • Sponsor requirement: Requires a local sponsor, which restricts foreign ownership to 49% for certain operations within the UAE.
  • Banking restrictions: May face challenges in opening a local corporate bank account

 

Types of licences

Besides deciding on a zone, you will also be required to identify the type of licence needed. The Department of Economic Development (DED) issues business licences, and there are 6 main types you can apply for: 

1. Commercial licence

A commercial licence allows you to set up a business in Dubai that involves trading activities or the buying and selling of goods. This licence covers businesses in import & export, sales, logistics, travel & tourism, general stores and real estate. 

2. Industrial licence

The industrial licence is issued to businesses engaged in manufacturing activities that transform natural materials and resources into final products – manually or mechanically. This licence covers businesses such as textiles manufacturing, metal manufacturing and paper manufacturing.

3. Professional licence

This licence is required for individuals or companies providing professional services such as consultancy, engineering, IT services, legal advice, and more.

4. Tourism licence

This licence is required for businesses operating in the tourism sector, such as travel agencies, hotels, resorts, restaurants catering to tourists, and more.

5. Agricultural licence

This licence is required for businesses operating in the agricultural sector, such as running a plant nursery, providing farming consultancy, or trading in fertilisers and pesticides.

6. Crafts licence

The crafts licence is required for businesses operating in specialised craft sectors that require hands-on skills and expertise, such as carpentry, printing, and blacksmithing.

 

Sponsorship

No local sponsor is required when setting up in a free zone like DMCC. One of the main benefits of incorporating in a free zone is that you can set up an entity with 100% foreign ownership without the need of a UAE national as a partner or sponsor. 

 

Dubai free-zone company setup process

When setting up a business, free zones are popular with foreign entrepreneurs as they offer: 

  • 0% personal tax
  • Low corporate tax rates
  • 100% company ownership
  • 100% repatriation of capital and profits
  • No currency restrictions. 

The 7 steps to set up your business in the free zone

1. Find your business activity 

It is key to first determine the nature of your venture when starting a business. Whether you are looking to start a small business in Dubai or a crypto business in the UAE, there are over 2,100 business activities​ available to choose from, all falling into different groups within the industrial, commercial, professional and tourism space. You can find the full list on the DED website.

2. Decide on a free zone

With over 30 free zones in Dubai to choose from, it generally makes sense to set up in close proximity to businesses in the same sector. The nature of your business can influence which free zone you decide to set up in. 

DMCC is Dubai’s premier global business hub. The free zone hosts 25,000+ companies, from start-ups to multinationals, and accounts for 15% of Dubai’s foreign direct investment.

3. Choose a company name

When choosing your business name, it’s important that it conforms to the UAE’s naming conventions. Names that include offensive language could be perceived offensive to religion. References to political groups or the mafia are forbidden. If you’re naming the business after a person, you’ll need to prove the person is a partner or owner of the company (no initials or abbreviations allowed). 

Naming your business could be a complicated process. You can save time and effort by consulting an expert to help you follow the conventions and get your name approved. 

4. Apply for initial approval

Initial approval from the Dubai DED is required so that there are no objections on starting a business. You can apply for this online, in person or through a third party (law firm). The documents you’ll need to provide will depend on your business nature, but they generally include:

  • Business registration and licensing form
  • A copy of your passport or ID
  • A copy of your residence permit/ visa
  • The company's articles of association
  • Feasibility study of the project


If you need help applying, please contact one of our experts who can guide you through the process to ensure you’ve correctly filed and prepared documents. 

5. Open a corporate bank account

Once you’ve been approved and received back all the necessary documents, you can now open a corporate bank account. The UAE has many banks, both local and international, to choose from. These include but are not limited to: 

  • HSBC
  • Citibank
  • Barclays
  • Abu Dhabi Commercial Bank
  • Commercial Bank of Dubai


 To learn more about this, check out our blog, where we outline how to set up your corporate bank account in Dubai.

6. Set up your office location

It's compulsory for all businesses in Dubai to have a physical address. Fortunately, setting up in a free zone will help you find your new office space easily.

DMCC offers a portfolio of world-class commercial districts, including Uptown Dubai and Jumeirah Lake Towers (JLT), contributing to Dubai’s growth as a global trade and business centre.

Uptown Dubai

Located inside DMCC, Uptown Dubai is positioned at the heart of global trade, giving companies access to internationally trusted trade facilities, and a network of 25,000+ companies. With twenty-two floors of Grade A fully-serviced offices to choose from, businesses across the globe are setting up at Uptown Dubai to take advantage of smart office solutions and dynamic meeting rooms.

Jumeirah Lake Towers (JLT) - Almas Towers

Almas Tower at JLT is a fully serviced, ready-to-move-in office at the centre of Jumeirah Lakes Towers, which benefits from a wide range of services and facilities. As occupants of Almas Towers, you can enjoy fully furnished offices, DEWA and service charges covered, and up to 6 visas per office for your employees.

7. Apply for final approval 

You’ll need to prepare all your documents, location addresses, and legal information to submit for final approval. In some circumstances, you’ll need to apply for licensing approval from other authorities. Once ready, you’ll need to submit:

  • Initial approval receipt and all the previously-submitted documents
  • The lease contract provided by the Real Estate Regulatory Agency (RERA)
  • Duly attested service agent contract (for civil establishments and companies that are 100% owned by non-GCC nationals), the UAE involving a local service agent
  • Approval from other government entities concerned

Finally, you will need to pay for the licence through various approved payment channels – and your business is ready to run. 

 

Ready to set up your business in Dubai?

Although seemingly a long process, the turnaround for setting up your business will only take a matter of weeks when done right. If you want to start an import and export business in Dubai, check out this essential guide to help you through the process.

Set up your business with DMCC, the nine-time winner of the Global Free Zone of the Year award. As the world’s leading business hub, we offer industry-specific facilities, access to global markets, and a seamless setup process. Our team will guide you through every step, from document preparation and regulatory approvals to banking support and expert advice. Get in touch today to get started.