How to Start a Business in Dubai

Dubai has come a long way from its fishing origins.

Last quarter, Dubai's economic growth increased by 3.2% year-on-year. This added AED 115 billion to its GDP, according to His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai.

In 2023, the emirate welcomed 17.15 million international visitors, said Dubai's Department of Economy and Tourism.

This paints a clear picture of how bustling Dubai's economy is. It's no surprise that Dubai has become a desirable destination for foreign entrepreneurs and investors.

By the end of this article, you will learn the necessary steps to set up a business in this vibrant city.

Benefits of setting up a business in Dubai

1) Strategic location

Dubai's central location positions it as a key gateway connecting Europe, Africa, and Asia. This edge allows access to major markets, making it an ideal base for international business operations.

2) Steady political climate

Dubai boasts a politically stable environment. It promotes a secure investment landscape by developing pro-business regulations. This stability builds investor confidence and supports long-term business growth.

3) World-class infrastructure

From record-breaking skyscrapers to the vast transportation system, Dubai has all the systems in place.

4) High quality of life

Dubai is famous for its stunning infrastructure. It has iconic skyscrapers and a vast transport network. This advanced infrastructure elevates existing efficient business operations. It also enhances connectivity and access for global enterprises.

Selecting the Appropriate Business License

When setting up a business in Dubai, you need to choose the right type of license based on your activities. These are the three main types:

• Commercial License

  Purpose: For businesses involved in trading, buying, and selling goods.

  Coverage: Includes import & export, sales, logistics, travel & tourism, general stores, and real estate.

• Industrial License

  Purpose: For businesses engaged in manufacturing that turn natural materials into final products.

  Coverage: Includes textiles, metal, and paper manufacturing.

  
  

• Professional License

  Purpose: For service providers, artisans, and craftsmen.

  Coverage: Includes medical services, beauty salons, and repair services.

  
  

Step-by-Step Business Setup Process

Step #1: Identify business activity

The very first step is to determine the nature of your business. Selecting the right choice is important because it decides the licensing fees, permits, legal framework, and other restrictions.

As of today, there are over 2,100 business activities to choose from, so take the time to go through them and select the one that suits your venture.

Step #2: Choose a company name

When choosing a name for your business, ensure it complies with the country's naming conventions.

For example, it should not include any foul language. If you're naming the business after a person, you will need to provide proof stating that the person is the owner or a partner of the company.

Step #3: Apply for initial approval

Now that you have identified your business activity and finalized the name of your business, it's time to apply for initial approval.

You will need initial approval from the Dubai DED to ensure there are no objections to starting your business.

You can do this either online, in person, or through a law firm.

Step #4: Open a corporate bank account

The next step is to open a corporate bank account. Every business in the UAE must have a business bank account. Compare packages from different banks and find the one that fits the needs of your business.

Find out how to open a business bank account in the UAE.

Step #5: Secure Office Space

All UAE businesses must have a physical address, regardless of the type of business activity they perform.

Entrepreneurs can either choose to settle in the different economic zones: mainland, free zone, or offshore. Each of these caters to different operational considerations.

• Mainland
  Businesses operating in the mainland have the flexibility to issue visas and engage freely with companies in and outside the UAE. They will also have the opportunity to bid on government contracts.

  More often than not, they are more complicated and take a longer time to set up. Companies are subject to customs duties and corporate tax on profits exceeding AED 375,000. This only applies if the annual turnover of the business goes over AED 1 million.

  Businesses in the mainland are registered under the Department of Economic Development.

• Free Zone
  Businesses operating in the Free Zone cannot operate directly on the mainland. They can offer their services to the global market and within the borders of the Free Zone. There is also a limit to the number of visas they can apply for.

  They are slightly faster to set up and are exempt from customs duty, corporate tax, and sometimes even VAT, depending on the free zone.

  Businesses in free zones are registered under the Free Zone Authority.

• Offshore
  An offshore company is ideal for entrepreneurs seeking to establish a holding company in the UAE without conducting business within the country. 

  It facilitates international payments, manages trade, and benefits from a favorable tax regime.

Step #6: Apply for final approval

Get final approval by gathering all necessary documents and other requirements. In some cases, you may need additional licenses and approvals from other authorities.

Key Takeaways

• Benefits in setting up a business in Dubai include:

  1. Strategic location

  2. Steady political climate

  3. World-class infrastructure

  4. High quality of life.

     
     

• There are three main types of business license in the UAE which are commercial, industrial, and professional.

  
  

• Dubai Economic Zone has three classifications namely mainland, free zone, and offshore. Each of them has different advantages and disadvantages.