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LLC Company Formation in Dubai

LLC Company Formation in Dubai | LLC Company benefits, steps, requirements and more
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Dubai is one of the Middle East’s most cosmopolitan and affluent cities, having characteristics of both Eastern and Western countries. Giving start-ups a good revenue percentage, several business owners consider this destination as the most attractive and economical spot in the world for business.

This is exactly why several Limited Liability Companies are the most common form of business in the UAE. Let’s explore in detail the procedure of LLC Company formation in Dubai, the cost of LLC company formation, LLC company definition, LLC Licence in Dubai, and more.

What is an LLC Company in Dubai?

An LLC, or limited liability company, is one of the structures of businesses. It offers personal liability protection and flexibility regarding taxes and management. LLCs are popular among small businesses and entrepreneurs. It is designed to protect its owners/shareholders from personal liability for business debts and obligations.

The LLC also offers flexibility in management and taxation compared to other business structures. An LLC can be owned by one person or multiple members and used for legal business purposes.

You can form an LLC in Dubai with 1 minimum member and 50 maximum shareholders. Each member is liable for their share of the company’s capital. This makes stockholders fully protected from liability under Dubai’s corporate rules.

Requirements for LLC Company Formation in Dubai

The Department of Economic Development (DED) government issues an LLC license in Dubai and is accountable for categorizing and regulating the types of economic activities that may be undertaken. 

Such companies do not have any minimum share capital requirements. Such companies are an easy way to structure the business to secure your personal goods. They have a flexible management structure, offer liability protection, and have certain tax advantages as well.

Step-by-Step Guide to LLC Company Formation in Dubai

Entrepreneurs who choose to start their LLCs in Dubai can enjoy various advantages. However, the process is time-consuming. Investors have to get in touch with various departments and also prepare various documents, making it a lengthy and comprehensive process.

Here are the important steps that are required to carry out the whole procedure of LLC Company formation in Dubai.

Step 1: Decide What Activities your Business Will Do

The UAE government offers an LLC a selection of more than 2000 business activities. You can find your preferred ones easily. However, do market research before choosing an activity. 

It will help you analyze if there is a potential to grow that business idea. Making the right choice during business registration in Dubai is crucial. Avyanco helps you find and plan the best business activities.

Step 2: Find a Location For Your LLC Company

When opening an LLC company, your location affects your income and legal responsibilities. To get the most out of your office, you should choose a location accessible to your market. 

You must consider several factors when deciding the business location, such as budget, space, employees, technological requirements, etc. You need a lease or rent agreement to acquire office space. 

Decide the location and get the DED’s initial approval certificate. You won’t receive this certificate if your trade name is turned down. Many companies are registered in UAE without renting office space for the first year, which will save the cost for foreign nationals and give them the advantage of testing the water in the market.

Step 3: Reserve a Name For Your LLC Company

Pick a name for your firm after deciding the types of operations that your company will engage with. You need to reserve your business name to avoid breaching naming convention law. 

You may list potential names for your company considering its goods, services, objectives, target market, and more. Business owners must follow the UAE government’s rules for company naming. Avyanco can assist you with naming and making sure your business name is legitimate.

Step 3: Submit All Documents to DED

After choosing the name, activity, and location, submit all documents to DED to issue approval for the same. Avyanco can assist you with this process to avoid making any mistakes. 

Step 4: Make MOA to Get Approval for Business Activities

You must create a Memorandum of Association for your company that outlines its business activities. You need to include details on your company’s legal standing and rights. 

After that, you define your company’s connection with its shareholders and original objectives. You should then give your MOA to the authorities with the lease or rental agreement.

Step 5: Obtain a Trade Licence

Once the required authorities have approved your company’s activities, you can obtain MOA and other legal documents, including a trade license.

Documents Required to Open an LLC in Dubai

The Department of Economic Development (DED) requires documentation when you form an LLC in the UAE. You submit these documents directly, but you can hire an agent to make the paperwork easy.

  • Copy of the investor’s passport
  • Emirates ID copy, if any
  • Copy of the DED’s registration form
  • The lease agreement for the office space
  • Entry visa
  • Few Name choices for the company name reservation.

Advantages of LLC Company Registration in Dubai

LLCs are 100% Tax-Free

An LLC (limited liability Company) can trade anywhere in the UAE and the GCC countries, and there’s no income tax applicable or fixed capital requirement. A limited liability company registered in a free zone and doing business outside of the UAE will not have to pay taxes. 

However, companies registered in the UAE mainland and doing business in UAE local markets will have to pay the corporate tax at the rate of 9% on earned profits over and above AED 375,000/-. 

This benefits entrepreneurs and businesses looking to start a business in the UAE. They save money on taxes and keep more of their profits. LLCs also take advantage of incentives such as free zones and double taxation treaties with other countries.

Affordable and Quick Business Creation

There are no overhead application fees for LLC company setup in Dubai. You only need to pay the LLC formation cost. You get a license fast because of UAE’s Instant license initiatives. 

Registering an LLC company in Dubai takes just one and a half hours to register with the DED (Department of Economic Development). Government certifications are only one of the problems that might cause the process to be delayed.

No Minimum Share Capital Needed for LLC

You are not required to have minimum share capital to set up an LLC in the UAE. The shareholder will have to show the authorized share capital of AED 100,000, which will not be paid up.

Wide Variety of Permitted Business Activities

UAE LLC companies have a larger range of business activities to choose from. You have fewer to almost no restrictions on those business activities. Without the UAE national sponsor’s interference, your LLC firm can do lawful independent business within the UAE. 

The UAE provides more than 2,000 business activities in industrial, commercial, professional, tourist, agricultural, and occupational sectors. Moreover, you can establish an LLC firm with various business ventures if DED clearance is obtained.

Option to Apply for Multiple Visas

UAE entrepreneurs can get unlimited work visas when they form an LLC. You also get an investor visa that stays valid for two years. This allows you to get visas for your family members if you want to bring them to the UAE. 

The foreign national can get a long-term prestigious golden visa for him and his or her family after successfully completing one year of business, having equity, and retaining earnings of more than 2 million AED.

100% Foreign Ownership

Most of the business activities licensing types no longer require a UAE National Sponsor. This permits 100 percent foreign ownership of businesses outside of free zones. Due to this, several types of LLPs in Dubai are permitted by the Commercial Companies Law to have 100% foreign ownership.

Live Top-notch Infrastructure

Dubai offers a world-class infrastructure that is unrivaled anywhere else in the world. Dubai has everything from the world’s tallest buildings to the most luxurious hotels. With a growing population of millionaires and billionaires, Dubai is quickly becoming the place to be for the rich and famous.

What Are the Types of LLC Licences in Dubai?

Business owners must understand that an LLC license in Dubai is mandatory to form an LLC company in Dubai successfully. An LLC license is a corporate document that certifies a company’s legal status. 

These licenses also safeguard, organize, and categorize the firm’s legal cases. If you wish to trade lawfully, obtaining a business or trade license becomes obligatory. This certification ensures that your business activities are in line with the UAE’s Commercial Firms Act. Following are the types of licenses available for the LLCs in Dubai.

Commercial Licence

These types of licenses are granted to companies that are involved in different kinds of trade activities related to goods, services, and other commodities. Some of the activities that come under the category of commercial license include car rental, logistics, and real estate brokerage.

Professional Licence

Such licenses allow business owners and companies to engage in a specialized field. With this business license, individuals can form a business entity in which they are experts and have qualifications. 

Some common forms of activities that require a professional license include repair services, computer graphic design services, medical services, printing and publishing, beauty salons, artisanship, consultancy services, carpentry, security services, and many others.

Industrial Licence

These forms of licenses are required for establishing manufacturing or industrial activity in the UAE. Business owners can assemble and process local or imported goods using raw materials with the help of this license. 

Those entrepreneurs who are planning to form an LLC in Dubai for textile, food, petroleum products, paper, metals, equipment, and engines must obtain this industrial license.

Agriculture Licence

Business owners who are involved in cultivation activities such as trading pesticides, harvesting crops, installing greenhouses, and others are accountable for obtaining an agricultural trade license.

Tourism License

As the title implies, businesses that offer tourism activities such as tourist camps, hotel rentals, restaurants, cruise boat rentals, guest houses, and travel agencies must acquire this tourism trade license.

Challenges and Considerations for LLC Company Formation in Dubai

Here are some key challenges and considerations for forming a limited liability company (LLC) in Dubai:

1. Licensing Requirements 

Dubai has specific trade license requirements that depend on the type of your business activity. For certain activities, you require Emirati ownership or partnerships to operate. Therefore, choosing the right license is crucial. New business owners or entrepreneurs may find it difficult to select the correct license for their business.

2. Business Location 

If you register your business In Dubai Mainland, you must have an office space or commercial facility. This comes with additional operating costs. However, Free Zones relax this requirement. 

3. Share Capital Requirements 

There is no minimum share capital requirement in most cases. However, for certain activities, the minimum share capital requirement for LLC formation in Dubai ranges from AED 50,000 to 350,000. In addition to that, a UAE national must hold at least 51% ownership of the company.

4. Corporate Taxes 

FTA made 9% corporate tax mandatory for businesses with an annual taxable income exceeding AED 375,000. Also, VAT was introduced in 2018 in the UAE. Staying updated with all the tax regimes, filing returns, and claiming refunds can be complex for foreigners. However, consultancy firms like Avyanco can assist with these procedures. 

5. Compliance 

Dubai has strict compliance guidelines related to visas, trade licenses, accounting, and taxation. Staying compliant with all the regulations and remaining updated with changes can be challenging for many business owners and entrepreneurs without proper guidance.

6. Access to Funding 

For foreign investors, it may be hard to gain access to funding in the initial phase of your business. Therefore, it is often necessary to bring in capital investment. 

7. Recruiting Staff 

It can be a challenge to hire qualified staff with proper work visas. Also, rules around quotas for Emirati employees may also apply in many scenarios.

What is the Cost of LLC Company Formation in Dubai?

The process of forming an LLC in Dubai and anywhere in the world is high-priced. Multiple steps involve the costs, including business registration, investor visa, employment visa, opening up a corporate account, and other government fees and taxes.

LLC Company Registration Cost in Dubai

The LLC license cost in Dubai typically starts at AED 18,500. However, the usual cost of company registration in Dubai is between AED 25,000 and AED 27,000. The fee varies based on the industry type and services. 

Foreign commercial names that are not Arabic will incur an additional fee of AED 2,000.

Investors Visa Cost for a Dubai LLC Company

The investor visa costs for an LLC in Dubai are between AED 4500 to AED 5250.

The Employment visa cost for an LLC Company in Dubai

The fee for issuing employee visas is between AED 5000 and AED 7000, depending on the type of business and category of employee.

License Renewal Cost

Around 10,000 to 15,000 dirhams are required to renew an LLC license in Dubai.

How can Avyanco Business Setup help you in LLC Company Formation?

LLC company formation in Dubai is a complex process. You also have to remain compliant with regulations and laws in order to operate without any issues. Hence, consulting with legal professionals is mandatory to understand policies, implement proper work practices, budget for operational costs, and remain flexible to changing tax regimes.

Avyanco has a team of experienced consultants with years of industry knowledge and global reach. Our expert company formation services enable us to help our clients start their businesses with ease and remain compliant with all regulatory requirements. Team Avyanco takes a sincere approach to getting you an LLC license in Dubai and offers informed advice.

We take pride in saying that our business is founded on building strong connections by exceeding our client’s expectations. We make sure to provide superior services with the utmost care and respect to our clients. No matter if you are a startup in Dubai or a well-known worldwide brand, we will provide you with the same level of services.

Can foreigners start an LLC company in Dubai?

Yes, a foreigner can start an LLC company in Dubai.

Can I create an LLC in Dubai?

Yes, you can create an LLC in Dubai. You can register a business name, choose a business location, obtain a trade license, and follow the required steps to create an LLC in Dubai.

How much does it cost to set up an LLC in Dubai?

Setting up an LLC in Dubai, on average, costs AED 25,000-27,000. However, this cost can change depending on the nature of the business activities you choose to perform.

What is required for an LLC company in Dubai?

To form an LLC, you need a business location in Dubai, a business name, and a trade license. You must also remain compliant with Dubai’s strict laws and regulations.

How long does it take to register an LLC company in Dubai?

Setting up a business, especially an LLC in Dubai, takes up to 4 to 5 working days. However, the process can be lengthier due to several factors, let alone certification approval from the authorities.

Are there any specific restrictions on foreign ownership in an LLC company in Dubai?

The UAE recently introduced an amendment that allows 100% ownership to foreign investors. Before, the majority of stakes were required to be held by a local shareholder. However, foreign investors must comply with the regulations outlined by the UAE cabinet.

How to Get an LLC Company License in Dubai?

Individuals need to submit the required documentation and pay the fee to obtain their LLC license in Dubai from the Department of Economic Development (DED).

How do you register an LLC Company in Dubai?

Draft and notarize your company’s Memorandum and Articles of Association to register an LLC company in Dubai. Along with this, submit all the documents and business license application forms with the DED to obtain them successfully.

What is the Minimum Capital of an LLC in Dubai?

There is no minimum capital requirement for forming an LLC company in Dubai. However, the authorized capital must be AED 100,000/- minimum.

How Many Members Have to Be in an LLC Company in Dubai?

A minimum of 1 shareholder and a maximum of 50 shareholders will be possible under the LLC company.

Is a UAE National Shareholder Required to Form an LLC Company in Dubai?

No, as per the new amendment of law no. 2 of 2015 of Commercial Companies Law, a UAE national is not required to form an LLC company in Dubai.

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About the Author

jashvant-avyanco-business-setup-consultancy-ceo

Jashvantkumar Prajapati

(Founder and CEO of Avyanco Group of Companies; Business Setup Consultancy, Avyanco Tax and Accounting LLC, and Avyanco Auditing LLC.)

He keeps a varied portfolio with core expertise in investment management, corporate structuring, commercial law, business consultancy, lead management, business planning and market research. Aspire to help potential entrepreneurs and investors to come ahead and form their companies in highly emerging economies like UAE.