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What you need to know before setting up a business

Let discuss about setting up a business in Dubai

By Lucille FrazierPublished 3 years ago 6 min read
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In general, there are a few things you need to understand before starting the process of setting up your business in Dubai. Let's take a look at each of them.

Economic Zone: Free Zones vs Offshore

Before installation, you will need to decide whether you want to operate in a free zone or offshore. Depending on your necessities, both options have their own benefits and specifications. you will need to understand this before starting the process of establishing your business in Dubai. Let's take a look at each of them.

Free zone

If you are looking for 100% ownership of your business, consider applying for a license and location in one of Dubai's free zones. The concept of a free zone was introduced by the Dubai government to generate foreign interest to establish businesses in the city. Essentially, it is a special economic area where business owners can enjoy many property benefits and 0% tax.

However, one of the key limitations of operating a business in a free zone is that it is not allowed to trade directly with the local UAE market.

Currently, there are more than 30 free zones operating in Dubai. Generally, each free zone is designed around an industry category and licenses companies within those categories. Here are some examples:

  • Dubai Commodity Center (DMCC)
  • Dubai International Financial Center (DIFC)
  • Dubai Internet City (DIC)

Offshore

Offshore companies can also register in a free zone and enjoy many of the same benefits. However, it is not a substitute for a free zone company. The main difference between a free zone company and an offshore company is the business operations. Offshore companies can conduct business outside of the UAE and not within. They also do not have minimum capital requirements deposited prior to incorporation.

However, unlike operating as a free zone business, a sponsor is required, which will restrict your foreign ownership to just 49%.

License types

In addition to deciding on a zone, you will also be asked to identify the type of license required. The Department of Economic Development (DED) is in charge of issuing licenses and there are 3 main types you can apply for:

Commercial license

To establish a business in Dubai that involves business activities or the buying and selling of goods, you must obtain a business license. This license can cover import and export business, sales, logistics, travel and tourism, general stores, and real estate.

Industrial license

This type of license is issued to companies that are engaged in manufacturing activities that transform materials and natural resources into final products, manually or mechanically. This license covers companies such as textile manufacturing, metal manufacturing, and paper manufacturing.

Professional license

The professional license is issued to companies that are service providers, artisans or artisans. Examples of companies applying for this type of license include medical services, beauty salons, and repair services.

Sponsorship

A local sponsor is not required when setting up in a free zone like DMCC. One of the main benefits of joining a free zone is that you can establish a 100% foreign owned entity without the need for an UAE citizen as a partner or sponsor.

Dubai Free Zone company setup process

When setting up a business in dubai, free zones are especially popular with foreign entrepreneurs and for good reason: they offer 0% corporate and personal taxes, 100% company ownership, 100% capital repatriation and profits, and no restrictions. monetary.

These are the 7 steps you must follow to set up your company in the free zone:

1. Find your business activity

The first step in starting your business and obtaining a license is determining the nature of your business. There are more than 2,100 business activities available to choose from, all classified into different groups within the industrial, commercial, professional and tourism space. You can find the full list on the DED website.

2. Decide on a free zone

As stated above, there are more than 30 free zones in Dubai to choose from. The nature of your business can have an effect on the free zone in which you choose to establish yourself. In general, it often makes sense to establish close to companies in the same industry.

DMCC, the world's flagship free port and Dubai Government Authority on Commodity Business and Trade, has been awarded Global free port of the Year 2019 by Financial Times fDi magazine for a record fifth year in a row.

3. Choose a company name

When choosing your business name, it is important that you adhere to the strict UAE naming conventions. Names that include offensive language, that may be perceived as offensive to religion or refer to political groups or the mafia are prohibited. If you are naming the company after a person, you will need to show that the person is a partner or owner of the company (no initials or abbreviations allowed).

Naming your business can be a complicated process. You can save time and energy by consulting an expert to assist you follow the conventions and obtain your name approved.

4. Request initial approval

You will need to apply for initial approval to make sure Dubai DED has no objection to you starting a business so you can get started with the next steps to get your license. You can request this online, in person, or through a third party (such as through a law firm). The documents you will need to provide will depend on the nature of your business, but generally they are:

  • Business license and registration form
  • Copy of your passport or ID
  • Copy of your residence permit / visa
  • The statutes of the company
  • Project feasibility study

If you need help applying, contact one of our experts who can guide you through the process to make sure you have submitted and prepared the documents correctly.

5. Open a corporate bank account

Once you have been approved and have received all the necessary documents, you can now open a corporate bank account. The UAE has many banks, both local and international, to settle on from. These include HSBC, Citibank, Barclays, Abu Dhabi full service bank , full service bank of Dubai, and lots of more.

To learn more about this, check out our latest blog, where we outline a 5-step process to successfully open your Dubai bank account.

6. Set your office location

It is mandatory that all companies in Dubai have a physical address. Fortunately, settling in a free zone will help you easily find your new office space.

At DMCC, we offer a wide range of commercial properties, office buildings and business center accommodations to rent, hire or lease to any size and type of business. All of our offices are well equipped with wi-fi, access to meeting rooms, support services and all available public services. With 68 towers around the area, you are sure to find the right office space.

7. Request final approval

You will need to prepare all your documents, location addresses, and legal information to submit for final approval. In some circumstances, you will need to request license approval from other authorities. Once you are ready, you will need to submit:

  • Receipt of initial approval and all previously submitted documents
  • The lease contract provided by the important Estate regulatory authority (RERA)
  • Duly Accredited Service Agent Contract (for civil establishments and companies that are 100% owned by non-GCC citizens), the UAE includes a local service agent
  • Approval of other interested government entities
  • Lastly, you will need to pay for the license through various approved payment channels and your business is ready to go.

Ready to start your business in Dubai?

Although seemingly a long process, the time it takes to set up your business will only take a few weeks if done correctly.

Contact us at Bizzmosis to help you establish your business in the world's # 1 Free Trade Zone and the global commodity trading hub. We'll help you every step of the way, from document writing, shipping management, assisting with translations to creating bank accounts, seeking approval, and providing general advice and consulting. Contact us today to see how we can help you!

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