To expand the company’s reach internationally, a business setup in Dubai is a lucrative opportunity. The formation of business in Dubai is trending because of its strategic location, infrastructure, and great connectivity. The city is always up to date on the latest trends and developments as entrepreneurs across the globe make up the population of Dubai. The country exempts its residents and business people from paying personal income tax. This blog presents all that should be known about business setup in Dubai and company setup in UAE.
Types of Business Entities in Dubai
To register a company in Dubai, there are seven different categories of organizations. Out of the seven, the first is the general partnership. It is established by two or more partners and is available to UAE nationals. They are responsible for the company’s profit or loss and are liable for the debts of the company. In the event of withdrawal, bankruptcy, insanity, or death of the partner, a general partnership may dissolve.
In a sole proprietor company, an individual is in full control of the company’s operations and is fully liable for the debts or obligations of the company. They may carry out technical or commercial activities and completely bears the profits and losses. Limited Liability Company is widely used in the UAE and can be set not more than 50 persons. Except for banking, insurance, and activities involving money investment, they are allowed to undertake any legal activity.
The joint venture may be formed by two or more legal entities carried under the name of one of the partners who is a UAE national. To conduct the desired business activities, a joint venture company is an agreement between a global party and a regional party. However, the most number of participants are allowed in a public shareholding company. The company must have no less than 10 founders and the business capital is split into equal shares.
In UAE, a non-governmental organization owns a private shareholding company. In this setup, the shares are not offered to the general public and its minimum capital is set at AED 2 million. Lastly, one or more general partners comprise a partnership firm in Dubai. There are liable for the debts, profits, and obligations of the firm. The joint partners in Dubai require UAE nationals because of the financial commitments involved in a limited partnership.
Advantages of Business Setup in Dubai
Dubai has made itself very appealing to foreign trade and investment because of its numerous advantages of establishing a company. The government of Dubai was confident that foreign trade would benefit themselves and the outsiders and has opened doors to various types of business setups for all types of people across the world. One of the greatest advantages of business setup in Dubai is its ease of setting up a company. Starting a company in Dubai is easier than ever due to the evolving tech facilities and cooperative government.
It requires less paperwork and is easy to follow in the process of business setup in Dubai. Entrepreneurs around the world desire to do business in Dubai as it is one of the most popular business hubs globally. Moreover, the UAE allows private companies to recruit expatriate employees while offering a good number of employment opportunities.
The entrepreneur does not have to pay any tax by opening a company in Dubai is one of the most prominent benefits of all. Be it personal, income, or corporate tax, Dubai offers total exemption from all kinds of taxes. The entrepreneur can start a business in UAE’s free zone or mainland. Dubai offers more than 20 free zones to choose from because it is considered beneficial for the business person.
In the free zone, the business person can enjoy complete ownership without the help of a UAE sponsor. Also, there is complete repatriation of capital and freedom from personal income tax and capital gain tax. Entrepreneurs get an opportunity to collaborate with others in the same industry if they set up a company in the free zone. There is zero percent corporate tax and single window clearances for managerial services.
Dubai provides advanced digital facilities and is on the way to becoming the world’s digital hub. Also, UAE has the world’s best infrastructure that evolves with time and attracts a lot of business people. Starting a business in Dubai offers a comfortable lifestyle for its people as the population in Dubai has a keen interest in shopping and prime services.
Most importantly, the person can get employment and a residential visa if they are planning to start a business in Dubai. To ensure quality, advancements, and increasing business opportunities, the government of Dubai keeps on modifying its rules and regulations in the hope of conducting business more successfully.
Process of Company Setup in UAE
The UAE is an investor-friendly country among entrepreneurs and the ease of doing business there has helped strengthen its position as a business hub in the Middle East. Starting a company in the UAE involves proper planning, research, budgeting, conceptualizing, and decision-making to become successful among the vast varieties of businesses.
The following are the steps to start a business in the UAE:
Choose a Business Activity
Entrepreneurs must first determine the type of business that they wish to conduct. They must keep in mind the practicality of the chosen activity when selecting a business activity with the UAE market. They must also do thorough research on the profitability of the activity before they open a company in UAE. Based on the type of license they have and the activities they like to employ, Dubai has specific requirements.
Select the Jurisdiction
Mainland, Freezone, and Offshore are the three types of economic zones that the UAE market is divided into. Of the company formation in UAE, each of the economic zones has its own set of rules and regulations. Depending on the business activity and the business requirements, the business person can select any jurisdiction as each of them cater to different business needs.
Finalize the Legal Form
When starting a business in the UAE, choosing the legal form is the most important decision that is to be made by the investor. During the initial stages of the planning, the entrepreneur must decide on the company structure. Unless they decide on the company’s legal form, they cannot apply for the license as it would provide a layout for their company.
Choose a Company Name
Entrepreneurs keep certain things in mind while choosing a name for their company. They must make sure that the name is available to register and it must be unique. The entrepreneur must avoid using offensive or blasphemous language and the name must not refer to any political group or religion. They must also prove that the person is the owner or partner of the company if they are naming the business after a person. They must keep the person’s name in full and avoid using initials and abbreviations.
Get the Initial Approval and Apply for the Trade License
The trade name of the company must be approved by the Department of Economic Development. Also, during this stage, the business activity selected by the entrepreneur goes through approval. They can submit relevant documents to acquire the trade license once they receive approval from the DED. They can then begin by opening the company.
If an individual plans to start a business in the UAE mainland, they can apply for either commercial, professional, industrial, or tourism license. The licensing structure is dependent on the type of business activity if they plan to set up in the UAE free zone.
Open a Corporate Bank Account
To operate a business in the UAE, a bank account is mandatory. There are several factors to consider if an entrepreneur plans to open a corporate account in the UAE. It is not quite simple and they can take the advice of a business setup consultant if needed.
A business setup consultant provides all the necessary details regarding company setup in Dubai. They help the entrepreneur acquire all the necessary documents and approval from the relevant authorities.