08 Feb Establishing companies in Dubai
Dubai is considered one of the most prominent global destinations for business and investment, thanks to its vibrant and distinguished economic environment. Dubai is distinguished by its strategic geographical location that links the Asian, European and African markets, making it a global commercial center. In addition, Dubai offers advanced infrastructure, a flexible legal system, and a wide range of tax and regulatory incentives that encourage foreign investment.
Establishing a company in Dubai can be an important strategic step to achieve growth and expansion into regional and international markets. Whether you are an entrepreneur aspiring to start a new project or an existing company wishing to expand its activities, Dubai offers diverse opportunities that meet different needs. In this article, we will discuss the types of companies available in Dubai, the legal requirements for establishing a company, and the basic steps that must be followed to successfully achieve this goal.
By understanding these fundamental aspects, investors and entrepreneurs can make informed decisions based on a full knowledge of the business environment in Dubai, ensuring that they make the most of the opportunities available in this dynamic city.
Establishing companies in Dubai
Types of companies in Dubai
Dubai is considered one of the most attractive global destinations for investment, thanks to its thriving economic environment and advanced infrastructure. The company system in Dubai includes three main types, which are onshore companies, free companies, and offshore companies. This diversity allows investors to choose the type that best suits their trading objectives and investment strategies.
- Onshore companies
Onshore companies are the traditional choice for investors who want to establish a business within the city limits of Dubai. These companies are distinguished by the fact that they are subject to local laws and regulations, and allow investors to benefit from the vast local market. Establishing an onshore company requires obtaining a local partner who owns a certain percentage of shares, according to the UAE Companies Law.
- Free companies
Free companies are another type of company that can be established in Dubai, and they are found in the free zones spread throughout the emirate. These companies offer multiple advantages such as full foreign ownership, tax exemptions, and easy repatriation of profits. Free zones such as Jebel Ali, Dubai Internet and Dubai Media offer customized environments that meet the needs of various industries, making them an attractive option for international companies.
- External companies
Offshore companies are companies that are registered in Dubai but do not conduct commercial activity within the Emirates. These companies are typically used for tax planning, asset protection and wealth management purposes. It is characterized by great flexibility in financial operations and registration procedures, in addition to complete confidentiality in information related to ownership and management.
By understanding the different types of companies in Dubai, investors can make informed decisions about the most appropriate legal form for their business activity, contributing to the success and sustainability of their business in this dynamic economic environment.
Legal requirements for establishing companies in Dubai
Establishing a company in Dubai requires compliance with a range of legal requirements aimed at regulating business activities and ensuring compliance with local laws. These requirements include several essential aspects such as licenses and permits, required documents, and compliance with local laws.
- Licenses and permits
To start any commercial activity in Dubai, you must obtain the necessary licenses and permits from the relevant government authorities. The type of licenses required varies based on the type of company and nature of business activity. For example, onshore companies need licenses from the Dubai Economic Development Department (DED), while freehold companies need licenses from the relevant free zone authority. Foreign companies need a permit from the Ministry of Economy. Obtaining licenses and permits is a crucial step to ensure the legality of the business and avoid any legal violations.
- The required documents
There are a set of documents that must be submitted when establishing a company in Dubai. These documents vary based on the type of company but usually include:
- Copy of passport: for all partners and shareholders in the company.
- Business plan: It explains the company’s goals and future plans.
- A copy of the lease contract: If the company will rent an office or commercial location.
- No objection certificate: from the local sponsor in the case of onshore companies.
- Financial documents: such as bank statements and financial reports.
Submitting these documents correctly and completely contributes to facilitating the registration process and obtaining the required licenses.
- Comply with local laws
Compliance with local laws is essential to ensure the continuity and success of the company in Dubai. Businesses must comply with all local laws and regulations regulating business activities, including labor laws, tax laws, and health and safety laws. Onshore companies need to comply with the laws of the Department of Economic Development, while free companies need to comply with the laws of the Free Zone Authority. Offshore companies must adhere to the federal laws of the UAE.
Compliance with these laws and regulations helps avoid penalties and fines, and enhances the company’s reputation in the local and international market.
Steps to establish a company in Dubai
The process of establishing a company in Dubai is one of the important steps that requires careful planning and implementation to ensure success and continuity. In this section, we will review the basic steps that must be followed to establish a company in Dubai.
- Choose the company type
The first step in establishing a company is to determine the type of company that suits your investment goals and the activities you intend to carry out. As we mentioned previously, there are several types of companies that can be established in Dubai, such as onshore companies, free companies, and offshore companies. Each of these types has advantages and disadvantages that vary depending on the needs and circumstances of the investor. Therefore, you should carefully study each type and choose the most suitable for your future plans.
- Registration and obtaining a license
After choosing the appropriate type of company, comes the step of registering and obtaining a license. This step requires submitting a request to the relevant authorities, such as the Department of Economic Development in the case of onshore companies or the Free Zone Authority in the case of free companies. This application includes submitting a set of documents such as:
- A copy of the passport of the founders and shareholders.
- Detailed business plan.
- The company’s articles of incorporation and articles of association.
Upon submission of the application, the documents will be studied and verified, and upon approval, the relevant authority will issue the necessary license to start the business activity.
- Choose location and facilities
After obtaining the license, you must choose the appropriate location for your company’s activity. The choice of location depends on the type of business you intend to undertake. For example, if you intend to establish an industrial company, you will need a location in an industrial area equipped with the necessary facilities such as electricity, water, and proper roads for transporting goods.
You should also equip the site with offices and facilities necessary for daily work, such as furniture, office equipment, and communications systems. Ensure that the site complies with local safety and environmental standards.
- Recruitment and registration of employees
After preparing the site, comes the step of hiring the employees necessary to operate the company. In Dubai, all employees must be registered with the Ministry of Human Resources and Emiratisation and obtain work cards and health insurance. Ensure that all employees have the necessary skills and experience to work for the company.
- Opening a bank account for the company
Another important step is opening a bank account for the company. Opening an account requires submitting a set of documents such as:
- Company license
- Memorandum of Association
- Passports of founders and shareholders
This account will enable you to conduct daily financial operations and manage money efficiently.
- Comply with local laws
Finally, you must ensure that the company adheres to all local laws and regulations. This includes compliance with taxes, customs duties, labor laws, and health and safety laws. Complying with these laws will ensure that you avoid legal problems and maintain a good reputation for your company in the market.
By carefully following these steps, you can establish a successful and sustainable business in Dubai.
Establishing a company in Dubai is considered one of the important strategic decisions for any businessman or investor looking for a prosperous and supportive economic environment for growth. Dubai features advanced infrastructure, flexible trade laws, and a wide range of options for onshore, offshore and offshore businesses. These features make it a favorite destination for businesses from all over the world.
In this article, we have reviewed the different types of companies in Dubai, the legal requirements necessary to establish them, in addition to the practical steps that must be followed to achieve this. Choosing the right type of company for your needs and future plans is the first step towards success. Next comes registration and obtaining the necessary licenses, which require compliance with a range of local laws and regulations. Choosing a strategic location and appropriate facilities plays a crucial role in achieving your business goals.
Ultimately, the process of setting up a company in Dubai requires careful planning and a deep understanding of the legal procedures and requirements. Therefore, it is important to use specialized legal and financial advisors to ensure that the process runs smoothly and effectively. By following the right steps and complying with local laws, new businesses can take advantage of the many opportunities that Dubai has to offer and achieve growth and success in this dynamic market.
With God’s grace, any business project can find in Dubai the ideal environment to achieve its goals and expand the scope of its work, which contributes to strengthening its position as one of the most prominent commercial centers in the world.
The most important frequently asked questions about establishing companies in Dubai
Do foreign investors need a local partner to set up a company in Dubai?
In free zones, foreign investors can own 100% of the company. In areas outside free zones, they usually need a local partner who owns 51% of the company’s shares, unless the business allows full foreign ownership.
What advantages does Dubai provide to investors?
Among the advantages: tax exemptions in free zones, ease of procedures, advanced infrastructure, access to global markets, and facilities for transferring profits. Dubai also provides a supportive business environment for investors.
What are the costs associated with setting up a company in Dubai?
Costs include registration and licensing fees, rental fees, documentation costs, and sometimes legal consulting costs. Costs vary based on the type of company and type of business.
How long does it take to establish a company in Dubai?
The process of establishing a company in Dubai usually takes from several days to several weeks, depending on how quickly documents are submitted and legal requirements are met.
Is it possible to modify the company’s activity after incorporation?
Yes, the company’s activity can be modified after incorporation, but this requires submitting an application to amend the commercial license, updating the relevant documents, and paying the prescribed fees.