Consider these for Opening a Company in Dubai

What Should We Consider for Opening a Company in Dubai

In this article, we will discuss about how you can open a company in Dubai and the UAE.

Companies are regulated differently in Dubai and the UAE than in most other countries. Whether you are looking to open a company to obtain UAE resident visas, operate an international trading or services business, or open your local restaurant or store, with the right company setup, all of these are now possible. Until recently, most business activities were strictly limited to so-called "free zones".

This meant that as a foreigner, you were not allowed to open and operate a consulting firm or restaurant, to name two examples, in most of the country. For foreigners, these activities were restricted to free zones. You were only allowed to serve customers outside the UAE or via the internet, online only.

If you wanted to serve customers in person in Dubai or Abu Dhabi, outside of your free zone, you had to share ownership of your company with a local, with the local owning at least 51% of the company The good news is that in new year, sweeping changes to the UAE's commercial law now allow foreigners to fully own and operate companies all over the UAE, with almost no restrictions regarding the business activity.

So far so good on the history of opening a company in Dubai. Do you want to open a company in the UAE? Here are the steps to follow:

Decide your company type (and size)

This is the first point about opening a company in Dubai. Do you intend to own the company yourself fully, or with partners? Are you intending to hire employees? Do you want to open subsidiaries (e.g., in other countries)?

You cal also watch this video regarding opening a company in Dubai:

Depending on your needs, you will need to choose a different, unique company type. There are different company types depending on whether you choose to base yourself in a free zone or the mainland (more on that later). Some company types include Sole proprietorship (e.g., freelancer) General/Limited Partnership Limited Liability Company (LLC) Public or Private Joint Stock Companies (PJSC/PrJSC) Most businesses go for a limited liability company, as it allows for the issuance of multiple visas and more complex company structures if ever needed in the future.

It also comes with more legal protections for investors than sole or general partnerships. Limited Liability Companies can be set up both as free zones and mainland companies.

Decide between a free zone and a mainland company

This is another point about opening a company in Dubai. Next, you will need to decide whether you want to serve customers in the UAE, in person. If yes, you will need to open a mainland company. If you are okay with operating internationally only, or via the internet, a free zone company should suffice.

Free zone companies are preferred in most cases as their cost is lower. Decide on the location of your mainland or free zone company Once you have decided on your company type, you will have to choose your company location. There are around 50 free zones across the UAE. Each of these has unique advantages and drawbacks.

This table demonstrates the pros and cons of opening a company in Dubai:

Some free zones specialize in certain industries such as media production and provide great networking opportunities. Other free zones have port access and allow easy import, storage, and export of goods.

These allow you to work with customers 1-on-1 in person from home. There are also free zones in more remote locations that charge fractions of the other major free zones. Some of these cheaper free zones even operate "service centers" in different parts of the country so that you can apply for your visa and handle formalities without ever setting foot in your free zone!

Regarding mainland companies, you will need to choose one of the 7 emirates as your "home" jurisdiction.

Every emirate has slightly different restrictions on which business activities they allow and how to open your company. Open your company and apply for your visas Once you have decided on your company setup, it is time to apply for incorporation and your business license. Any company you set up comes with at least one business license.

This article is about the considerations for opening a company in Dubai.

A business license allows you to operate in one area of business, for example, media production. If you want to perform multiple activities, you will need to get multiple business licenses. In that case, you will operate one company with multiple business licenses. Both your company and business licenses are limited in time to usually 1-5 years and afterward need to be renewed if you want to continue your activities. Your business license will allow you to apply for a partner business visa.

These visas are valid for 2 years and afterward need to be renewed. In case you are wondering: yes, in the UAE, setting up a company automatically qualifies you for a residence visa. There are no minimum requirements on income or revenue. Depending on your business setup, you may also apply for multiple employment visas for employees.

Here is the summary of the main points to consider for opening a company in Dubai:

• Choose your business activity: Business activities permitted in Dubai are generally divided into two main categories:
• mainland and free zone. Each has its own advantages and disadvantages.
• Choose your business structure: There are various types of business structures in Dubai such as LLCs, partnerships, and branches. The right structure for you will depend on your business needs and goals.
• Obtain the necessary licenses: You will need to obtain various licenses to operate your business in Dubai, including a business license, visa licenses, and industry-specific licenses.
• Find an office: You will need to find an appropriate office or workspace for your business. This will depend on your type of business, the number of employees you have, and your budget.
• Hire your staff: You will need to hire employees who have the skills and experience necessary to run your business. You will need to comply with Dubai's employment laws.
• Open a bank account: You will need to open a local bank account to conduct your business transactions.
• Be familiar with the laws and regulations: You will need to be familiar with all applicable laws and regulations for your business in Dubai.
• Obtain business insurance: You should obtain insurance to protect your business from potential risks.
• Be prepared for taxes: While there is no corporate income tax in Dubai, you may be subject to Value Added Tax (VAT).
• Seek professional assistance: Starting a business in Dubai can be a complex process. It is advisable to seek guidance from a consultant or lawyer specializing in Dubai's business laws and regulations.

These items were the summaries of the points we would better to consider for opening a company in Dubai.

Get Your Custom Company

This is another point about opening a company in Dubai. Set-Up Strategy Apply for a bank account Your options to open a bank account depend greatly on your business type. Bare-bones free zone companies without physical offices and no verifiable operations are severely limited in their ability to bank. In the UAE, just 1-2 banks work with such free zone companies. Outside the UAE, such companies will not qualify for bank accounts.

Mainland companies or businesses with physical office space have much greater choices, including opening business bank accounts with the world's safest banks, in multiple countries. We constantly keep track of local banks and their latest policies to provide our clients with the best banking strategies available.

If you like to know more about the details of opening a company in Dubai, you can check This or This.

Maintain your company

This is another point about opening a company in Dubai. Once your company is up and running, like anywhere in the world, you need to keep track of expenses and invoices. On an annual basis, you will have to prepare financial statements. You may prepare these yourself, or hire an accountant to do so. Mainland and free zone companies have different regulations and requirements for auditing your financial statements. An audit involves hiring an auditor to check and confirm the accuracy of your financial statements. Some free zones do not require audited financial statements, while others do.

In some free zones, only certain activities require audited financial statements. Prepare your corporate income tax statement Starting from June 1, 2023, corporate incomes generated by local companies through trading activities with UAE mainland companies are taxable at a 9% rate. Due to the nature of their location, mainland companies will always be subject to this new 9% corporate income tax.

Free-zone companies are exempted from the 9% tax, as long as they fully honor their business license which restricts their operations to the free zone and international markets. Despite the introduction of the 9% corporate income tax on UAE mainland companies, there are effective strategies to reduce or avoid paying income taxes even if you operate in the mainland. First of all, keep in mind that the 9% tax only applies to profits earned by the mainland company.

As a company owner, you may increase your salary to the extent that your company makes little to no profit. Furthermore, there is a generous AED375,000 deduction before the 9% tax rate applies. This means that any company profits below AED375,000 continue to be taxed at 0%. If your mainland company is larger with many owners, there are other strategies to reduce your mainland taxes.

These include advanced multi-company, multi-country structures that take advantage of international transfer pricing regulations.

This article was about the points we should consider for opening a company in Dubai. We hope you like it. If you have any opinion regarding opening a company in Dubai, tell in in the comments.