Dubai’s fast-growing economy and business-friendly policies make it an attractive destination for entrepreneurs all over the world. Starting a business in Dubai as a foreigner is now much simpler, especially with 100% foreign ownership allowed in many sectors. This guide covers the essential steps, key considerations, and benefits of setting up your company in this global business hub.
Can a Foreigner Own a Business in Dubai?
Yes! A foreigner can open a business in Dubai effortlessly. However, there might be some rules and restrictions that you need to keep in mind. An expert business consultant in Dubai, like Avyanco, can assist you throughout the process and help you manage everything effectively.
Complete 100% ownership in Dubai by foreigners leads to the formation of companies that improve the overall economy. This rule allows a foreign national to be the owner of their innovation.
Dubai has been recognized as the most influential financial hub by foreign investors, attracted by the enormous opportunities offered by trade, finance, commerce, and low tax environment. Now, the business ownership law permits foreigners to 100% own the business which will increase foreign direct investment in Dubai.
How to Open a Business in Dubai as a Foreigner – Steps
1. Choose Your Business Type
You have to decide which business structure you need for your business. There are many different options, such as sole proprietorship, partnership, or a limited liability company (LLC). Carefully consider before making a choice that aligns with your business activities, goals, and operational needs.
Helpful Tip: Most foreign investors prefer LLCs for their separate legal structure.
2. Select a Trading Name
Pick a unique name that aligns with your vision and may reflect your business activities. Do a background check to ensure it
- Is not already registered
- Doesn’t offend public sentiments
- Follows local naming rules
Helpful Tip: Avoid religious references or names of governing authorities.
3. Prepare All the Necessary Documents
Arranging all the required documents is a critical step in the business setup process as a foreigner. Here’s a comprehensive list of what you’ll need:
- Completed application form
- Coloured passport copies of all directors, managers, and shareholders
- Bank reference certificate or audited financial reports for the past two years (for corporate entities)
- A detailed business plan outlining your company’s objectives and strategies
- Articles of incorporation (if applicable to your business structure)
- No Objection Certificate (NOC) from your local sponsor (required for startup founders in Mainland)
- Existing trade registration certificate or licence (if you have an established business, applicable only for local companies)
- Signatures of appointed directors/managers and all company shareholders
Helpful Tip: Double-check to ensure all documents are up-to-date and properly authenticated to avoid delays.
4. Obtain a Licence
Securing the right trade licence is crucial for operating legally in Dubai as an expat. The type of licence you need depends on your business activities. Here are the main types of business licences available:
- Commercial Licence: This is for trading businesses involved in buying and selling goods. It covers a wide range of commercial activities, from retail to import/export.
- Professional Licence: It is ideal for service-oriented companies and professionals offering expertise in various fields. This covers consultancies, freelancers, and specialised service providers.
- Industrial Licence: It is required for businesses involved in manufacturing or packaging activities. It covers all aspects of industrial production and processing.
- Tourism Licence: This one is specifically for businesses in the tourism sector. This licence also requires approval from the Department of Tourism and Commerce Marketing (DTCM).
Choose the licence that best fits your business activities to ensure compliance with local regulations.
5. Register Your Business
Submit your application and documents to the Department of Economic Development (DED) or the relevant Free Zone Authority. The registration process involves:
- Verifying your documents
- Paying necessary fees
- Receiving official approval
Once approved, your business becomes a legal entity in Dubai, ready to engage in business activities.
6. Apply for Visa/Residency
Starting a business in Dubai as a foreigner requires you to secure the right visa for you and your key employees. It is a mandatory step to live and work in Dubai. As a business owner, you can apply for long-term visas for yourself and your dependents.
Without easy travel access, it becomes hard to manage international business relationships. Hence, a business visa is necessary for a business owner to travel in and out of the UAE easily. The visa process is short and involves steps like medical checks and biometric capture.
7. Open a Corporate Bank Account
Set up a business bank account to manage your business finances. This account will be essential for receiving payments and conducting business transactions. Choose a reputable bank that offers services most suitable for your business needs and goals. Having a corporate account is crucial for separating personal and business transactions.
Key Considerations Before Starting Your Business
1. Jurisdiction (Mainland vs. Free Zones)
Choosing the right jurisdiction for your business is one of the most important decisions. It will directly affect your operations and growth potential.
Mainland:
- Allows trading within local markets and internationally without restrictions
- Offers a broader scope for business activities
- Requires a straightforward company formation process
- Process to obtain a licence is quick, usually within a week
- May require a local sponsor or service agent for certain business types
Free Zone:
- Provides a cost-effective option, beneficial for new businesses
- Offers attractive benefits like 0% corporate tax, no currency restrictions, and 100% customs tax exemption
- Allows 100% foreign ownership in all cases
- Restricts business activities mainly within the free zone but allows to operate globally
- Popular free zones include JAFZA, DAFZA, Dubai Media City, IFZA, DIFC, DHC, DMCC, and Meydan Free Zone
Helpful Tip: Consider your business model, target market, and long-term goals before reaching a decision.
2. Market Research
An in-depth market research is essential before opening a business in Dubai as a foreigner. Study the local market dynamics, understand customer needs and preferences, and analyse your potential competitors.
This research will help you:
- Identify gaps in the market that can become your company’s USP
- Understand local consumer behaviour and buying patterns
- Modify or develop your products or services to meet Dubai’s unique market demands
- Develop effective marketing strategies to enhance reach and sales
- Develop an understanding of the competitive landscape to position your business effectively
3. Taxation
Dubai is known for its tax-friendly environment. However, it is important to understand the tax structure for efficient financial planning and to remain compliant. Key tax considerations include:
- VAT (Value Added Tax): The standard rate is 5%, applicable to most goods and services
- Corporate Tax: A 9% tax on profits exceeding AED 375,000
- No personal income tax, making it attractive for individual entrepreneurs and employees
Understanding the UAE’s tax environment is necessary for pricing strategies, budget allocation, and overall business management. It is advisable to consult with a tax expert familiar with UAE regulations to avoid any errors. A reliable consultant will also ensure you take advantage of any available tax benefits or exemptions.
4. Networking
It is said that your network is your net worth. The statement holds true in Dubai, where building a strong network can be the difference between a business’s success and failure. The city has a diverse business community that is interconnected. Networking with business leaders offers opportunities for collaboration and growth in the early stages.
To effectively network:
- Attend industry-specific events, trade shows, and business conferences
- Join local business associations and chambers of commerce
- Utilise social media platforms to connect with potential partners and clients
- Participate in community events to build relationships beyond just business
- Consider working with a local business consultant to tap into established networks
What are the Benefits of Starting a Business in Dubai as a Foreigner?
Starting a company in Dubai as a foreigner grants many benefits. Some of the most notable ones are:
1. 100% Foreign Ownership
Recent law changes allow foreigners to fully own their businesses in Dubai. It provides you with complete control over the company’s operations and profits.
2. Low Corporate Tax Rate
Dubai has a fixed 9% corporate tax and 0% personal income tax rate. Free Zones even allow a 0% corporate tax rate on qualifying activities. Such negligible tax rates allow businesses to retain most of their profits for reinvestment and growth.
3. Government Support for Entrepreneurship
Dubai’s government actively supports new businesses through various initiatives. Dubai focuses on passing laws and regulations that make it easier for entrepreneurs to establish and grow their companies.
4. Excellent Healthcare and Education
Dubai is home to world-class healthcare facilities, ensuring high-quality medical care. The city also has a number of international schools, providing high-quality education to your children.
5. Multicultural Environment
Dubai’s diverse population creates a rich and multicultural atmosphere. People from different parts of the world live here peacefully, making it easy for foreigners to adapt and feel at home.
6. Safe and Secure City
Dubai is known for its low crime rates and high safety standards. Hence, you enjoy a luxurious lifestyle in a secure environment for both living and doing business.
How much does it Cost to Open a Business in Dubai as a Foreigner?
The cost of starting a business in Dubai as a foreigner varies based on factors like business type, location, and scale. Key expenses include
- registration and licensing fees,
- office rent,
- visa fees,
- employee salaries,
- marketing costs,
- legal fees
Mainland setups generally involve higher costs than Free Zone companies. To get an accurate estimate of the cost based on your business plan and requirements, consult with an expert.
“For a detailed cost breakdown and personalised advice, reach out to the experienced consultants at Avyanco Business Consultancy today.”
Why Choose Avyanco
Company registration in Dubai as a foreigner offers numerous advantages, from tax benefits to a strategic location and world-class infrastructure. While the process may seem complex, with the proper guidance, it can be straightforward and rewarding.
Avyanco Business Setup Consultancy is here to assist you throughout your journey of setting up a business in Dubai as a foreigner. Our experts can help you fulfil all the legal requirements. We will assist you in picking the right business structure and ensure a smooth setup process.
For personalised assistance and a free consultation, contact Avyanco Business Setup Consultancy at info@avyanco.com. Let us help you turn your dreams into reality with a successful venture in Dubai, UAE.
