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March 30, 2020

Company Formation in Dubai [2020 edition]

Dubai has firmly established itself as a leading hub for international business. Its direct access to the world’s largest markets, state-of-the-art infrastructure and low tax regime set it apart from others in the field.

International entrepreneurs setting up here can benefit from 0% on both personal and corporate income – with the only ‘substantial’ tax being VAT at a flat 5%.

Both Dubai and the UAE in general are famed for a welcoming business environment and streamlined company incorporation process. There is all kinds of support for startups and SMEs out here – from incubators to coworking facilities and business workshops. Plus, when setting up with the help of an expert, you can be running your UAE business within days.

If you set up in one of Dubai’s free zones, you’ll gain further benefits, including 100% customs tax exemption and the ability to repatriate all capital and profits.

The UAE is also home to a number of industry-specific free zones, offering a focused workplace – along with support and guidance – to those within certain industries.

Wherever you choose to set up, it’s important to seek the right advice before starting the process. An expert eye in the beginning can save delays and complications further down the line.

Understanding company formation in Dubai

Forming a company in Dubai is a somewhat particular process. There are steps in the journey here that are specific to this part of the world. Ensuring you understand them early on will save you much time and inconvenience.

The first concept to understand is business licensing. All UAE businesses must be licensed. There are several to choose from, including:

  • Professional – for professional services companies such as marketing agencies
  • Industrial – for industrial businesses such as manufacturers
  • Commercial – for businesses involved in the trading of goods

There are other licenses available within this, such as those for tourism and e-commerce companies.

Before starting the license application process, you must first outline your business activities and align them with a license. For example, if you are planning to sell car parts, you will need to apply for a commercial license.

When making your license application, you must clearly define the type of business you undertake. For example, if you plan to sell car parts and used cars, both must be listed on your license. Failure to list any activities that you subsequently carry out could lead to fines or license revocation.

The next key part of company formation in Dubai is deciding on a company name. Here in the UAE, there are several naming conventions that you must abide by. They include:

  • Only full names allowed, no abbreviations
  • Cannot include any potentially offensive or blasphemous words
  • Must be available to register

You’ll also require a visa. You can make this application yourself or work with a free zone to obtain it along with your trade license.

Company setup in Dubai – license application

The license application process differs depending on several factors – such as your chosen license type and where you opt to set up.

If you are applying to incorporate a mainland business in Dubai, you should do so to the Department of Economic Development. In other emirates, you should apply to the equivalent body. Depending on the nature of your business, you may have to apply for additional approvals along with your trade license.

If, however, you are forming a free zone business, you can apply directly to the free zone. As free zones are self-governed, there is no need for additional approvals.

When you set up in a free zone, you can also make use of flexi desks, coworking spaces and business facilities. This often includes reception cover and access to meeting and conference rooms, as well as the use of telephones, broadband and the like.

Applying through a free zone helps to remove some of the complexity of company formation in Dubai. Free zone staff can manage the process for you, with minimal effort on your part.

When making your application, you are usually required to provide some basic documentation such as a passport copy and business plan.

Company formation in Dubai cost

It is not easy to give an indication of the cost of company setup in Dubai. There are many factors at play.

The cost of company setup in Dubai will increase if you require a furnished office, rather than a flexi desk facility, for example. The same is true if you are planning to take on employees, as you will need to cover the cost of their visa applications and renewals.

Your chosen setup type – free zone or mainland – will also have an impact on total cost.

Company formation in Dubai free zone cost

Setting up in a free zone is often the most cost-effective method of company formation in Dubai. Most free zones offer package prices, inclusive of visa applications and the use of office facilities.

The Dubai Technology Entrepreneur Campus (Dtec), for example, offers a range of license packages to suit all budgets.

The flexi desk package includes a service license, the use of a workspace in a common area and eligibility for two visas. This package starts at AED 18,000 per year.

Dtec also offers a license with fixed desks and eligibility for three visas for AED 24,200 per year, plus furnished private offices, inclusive of two visas per desk, for AED 47,820 per year.

Starting a business in Dubai, UAE

If you’re looking to start a technology business in the UAE, there’s no better base than Dtec. Apply with us, and we’ll handle every step of the process for you – helping to outline activities, register your company name, applying for your license and visas, and supporting you once you’re up and running.

For technology startups and entrepreneurs looking for flexible coworking or office space in Dubai, Dtec offers a nurturing, supportive community from which to set up your new business.

Our 10,000 sqm facility is home to an integrated ecosystem for hundreds of startups, SMEs and technology entrepreneurs from around the world.

Got a great idea you want to see realised? Everything you need can be found in Dtec. Our coworking space encourages collaboration, our accelerator programs and funding arm give a young business setup in the UAE a head start, and our networking events ensure you get your name out there and stay on top of industry trends. We take care of everything, leaving you to take care of your business.