How to Start an AI Company in the UAE?

Starting an AI business in the UAE offers numerous opportunities to scale and transform into a global business. However, the company registration process can be a little complicated for first-time entrepreneurs or even for long-term players. 

Currently, Dubai is one of the leading regions of artificial intelligence (AI) development.  It is attracting a lot of foreigners due to its ideal location, infrastructure, and laws favouring technological advancements. 

The UAE’s AI market size is already close to US$1 billion in 2024 and is expected to reach US$4.285 by 2030. On top of that, the UAE Strategy for Artificial Intelligence reflects the government’s aim to lead in AI adoption. This opens new opportunities for businesses in the AI sector. 

If you are looking to start an AI company in the UAE, this is the perfect time. You will get support and benefits that are not available anywhere else. Therefore, to help you start your AI company in Dubai, we have created this guide. 

It will tell you the exact steps required for starting an AI business.  

Steps to Start an AI Company in Dubai, UAE

To set up an artificial intelligence (AI) Company in Dubai, UAE, careful planning is mandatory, and you also need proper guidance. The process consists of many steps that were designed to ensure legal compliance and set a strong foundation for your business.

Choose Business Activity

The first step is to select your specific AI business activity. The UAE offers diverse opportunities in AI, including software development, consulting, data analysis, product development, and research. Carefully assess your expertise, market demand, and potential impact. Consider conducting market research to identify niche areas where your AI solutions can provide unique value in sectors like healthcare, finance, transportation, or government services.

Select Legal Structure

The UAE provides multiple legal structures for business registration. Options include Sole Proprietorship, Limited Liability Company (LLC), and Free Zone Entity. Each structure offers different benefits in terms of ownership, taxation, and operational flexibility. LLC in Dubai allow for greater market access and fewer liabilities. Whereas Free Zone entities can be basically LLCs but with added benefits, such as tax exemptions and 100% foreign ownership.

Trade Name Selection

Choosing your trade business name is one of the most important steps, as it will become your business’s identity. However, you will have to carefully consider UAE’s naming conventions and cultural sensitivities. Apart from that, the name must be unique, meaningful, and compliant with local regulations. Avoid using names that could be considered offensive or controversial. The name should reflect your business’s core activities. Also, it must be easily memorable for potential clients and partners.

Initial Approval Process

The initial approval process involves submitting an application to the Department of Economy and Tourism Development (DET) or relevant free zone authority. You’ll need to provide passport copies of owners and managers, a comprehensive business plan, and specify your chosen business activities. This step is critical in obtaining official recognition for your AI company.

Draft Memorandum of Association

For Limited Liability Companies, drafting a Memorandum of Association is mandatory. This document outlines the company’s ownership structure, operational guidelines, and key business principles. It must be notarized and attested to meet legal requirements. It should be able to provide a clear framework for your company’s governance and operations.

Office Space Requirements

Another critical step in your journey of starting an AI company in the UAE is to secure an appropriate office space. Mainland businesses specifically require mandatory commercial office space. However, if you are in a UAE free zone, you can opt for more flexible solutions like co-working spaces. Consider factors such as location, accessibility, infrastructure, and proximity to potential clients and tech ecosystems before renting a corporate space.

Documentation Submission

You must prepare all the important documents for submission, including 

• Initial approval receipt 
• Notarized Memorandum of Association 
• Lease agreement 
• Trade name certificate 
• Passport copies of shareholders and managers

Make sure that all the documents are in place without any errors. Arrange for any documents that you are missing to avoid any further delays and get them reviewed before submission. 

Obtain Necessary Permits

Apply for appropriate business licenses, which may include professional, technology, e-commerce, or innovation licenses, depending on your specific AI activities. Some sectors might require additional specialized approvals from regulatory bodies. Your business consultant will inform you about all the required licences to avoid any legal complications throughout the process. 

Register with Relevant Authorities

Complete registration with key authorities of the jurisdiction. For example, in Dubai, you might need to register with the: 

• Dubai Chamber of Commerce and Industry 
• Dubai Municipality 
• Telecommunications Regulatory Authority 

Once these steps are fulfilled, you can open a corporate bank account and legally commence business operations.

Why Choose Dubai for an AI Business

Dubai offers multiple benefits to AI entrepreneurs and techpreneurs who want to start an AI company in the UAE. Let’s look at some of those benefits. 

Economic Potential

As per a report, the Middle East’s AI market is projected to contribute significantly to the global economy. It is expected to reach US$320 billion by 2030, showing a consistent compound annual growth rate of 20-34% every year. UAE is expected to be one of the leading countries in this growth, which opens the door to tremendous growth opportunities for AI businesses.

Technology-Friendly Ecosystem

Big cities like Dubai in the UAE have a strong technological infrastructure backed by supportive government policies and a culture of innovation. The country actively promotes technological advancement through various initiatives, grants, and support programs, which are designed to attract tech startups and provide them with a good platform to grow.

Free Zone Advantages

Free zones in Dubai offer remarkable benefits, including 100% foreign ownership, tax exemptions, simplified business setup procedures, and access to a world-class infrastructure. These zones provide an attractive environment for AI companies to establish and scale their operations.

Jurisdictions for AI Company Setup

Entrepreneurs have multiple jurisdictions to choose from for their AI business setup in the UAE. Each of these jurisdictions offers various benefits you can choose from based on your business goals and requirements.

Mainland vs Free Zone Options

Mainland registration allows direct market access within the UAE, offering greater operational flexibility. Free zones provide specialized environments for tech companies with additional incentives like tax benefits and simplified regulatory processes.

Best Free Zones Suitable for AI Company Formation in UAE

Free Zones offers unique advantages if you want to start your AI company in Dubai. However, the following three free zones are specifically the best choices:

• RAK DAO – RAK DAO Free Zone offers blockchain and AI-friendly regulations with streamlined setup processes
• DIFC – DIFC Freezone provides a sophisticated financial technology ecosystem with advanced regulatory frameworks
• DMCC – DMCC Freezone Supports diverse business activities with flexible licensing options

AI Business Support Ecosystem in Dubai, UAE

Dubai’s government actively favours AI innovation by offering grants, subsidies, and resources to budding entrepreneurs. They have introduced initiatives, such as the Dubai Future Foundation and Dubai 10X. These initiatives and support is helping develop the city as a global AI hub.

Incubators and accelerators in Dubai, such as in5 and Area 2071, provide startups with mentorship, funding, and networking opportunities. They taught AI businesses the requisites to gain traction, secure investments, and scale effectively.

Dubai also offers an extensive range of networking events like AI conferences, summits, and industry meetups. These events offer a stage to innovators, helping them connect with investors and industry leaders, which provide collaboration and even partnership opportunities in the AI sector.  

• Dubai Technology Entrepreneur Campus (DTEC) – DTEC is a premier platform for AI startups that offers cost-effective coworking spaces, mentorship programs, and access to a growing entrepreneurial community. It supports startups in scaling their operations with world-class resources.
• Dubai Centre for Artificial Intelligence (DCAI) – The DCAI drives AI innovation in Dubai by offering R&D facilities, training programs, and collaboration opportunities. It empowers businesses to integrate AI solutions and contribute to Dubai’s AI-driven economy.

Types of AI Business Licences

Starting an AI business in Dubai means you can choose from a number of various activities that require specific business licences. Here are some of the most common AI business licences you would need to register an AI company in the UAE.

AI and Web 3.0 Licence 

The AI & Web 3.0 Licence from DIFC provides AI and Web 3.0 firms with cost benefits and growth opportunities. At USD 1,500 annually, it includes access to the AI & Web 3.0 Campus, featuring R&D facilities, accelerators, and coworking spaces. It is one of the best business licences for startups targeting the MEASA region.

Professional Licence

A professional licence allows individuals and firms to offer AI consulting and development services legally. It is essential for establishing credibility, showcasing expertise, and attracting clients in Dubai’s competitive AI market.

Technology Licence

The technology licence enables businesses to develop, distribute, and implement AI-based technological solutions. It supports companies by encouraging innovation and aligning with Dubai’s smart city initiatives.

Freelance Permit

A freelance permit is perfect for independent AI professionals offering services like data analysis, AI software development, and consulting. It provides flexibility while granting access to Dubai’s lucrative AI business ecosystem.

Potential AI Business Activities

AI businesses in Dubai can specialize in diverse areas. Here are some of the key activities:

• AI Software Development
• AI Consulting Services
• Data Analysis and Management
• AI Product Development
• AI Research and Development

How Much Does It Cost to Start an AI Company in UAE?

Starting an AI company in Dubai involves AI Company License that costs ranging between 15,000 and AED 30,000. However, cost to start a company required an investment of somewhere between AED 100,000 and AED 500,000. This initial investment includes licensing fees, the type of license required and chosen jurisdiction. Office rental expenses that can start at AED 60,000 annually, influenced by location and office size.

Other costs include legal and consultancy fees, typically between AED 10,000 and AED 30,000, which are essential for compliance and business setup. Operational costs like employee salaries and utilities add significantly to the budget. For instance, a small team’s annual salaries can exceed AED 200,000, while monthly utilities range from AED 2,000 to AED 5,000.

Dubai’s strong focus on AI innovation, advanced infrastructure, and abundant growth opportunities make it an attractive place for AI startups. While the investment required may be high, these factors create a promising environment for success.

How Avyanco Business Consultancy Can Help 

Starting an AI company in the UAE is an exciting opportunity due to its strong focus on technological advancements and helpful government initiatives. With this guide, you have a clear roadmap for setting up your AI business in Dubai.

However, there are still tons of legal complexities, and any mistake can lead to delay or, worse, rejection. Therefore, it is recommended to engage a business consultant, such as Avyanco.

Avyanco Business Setup Consultancy is your trusted partner for taking advantage of the lucrative AI industry by setting up your own company in Dubai. With extensive experience in UAE’s business landscape, we simplify the process for you, from selecting the right jurisdiction and licenses to making sure you comply with all local laws and regulations. Our team offers tailored solutions to meet your business needs so you can focus on innovation while we handle the technicalities of setting up your company.

Ready to kickstart your AI journey in Dubai? Contact Avyanco today, and let us help you bring your AI vision to life!