Points to Consider Before you Start your Business in Dubai

by Jayati Gadamsetty 22, Mar 2024

Dubai, a sparkling megacity throbbing with great business opportunities, invites business people with its high-tech infrastructure and tax benefits. Although guiding businesses is easy, entrepreneurs must know about the hidden difficulties and how to navigate them.

However, you should be aware of these factors before you start your business in Dubai. This guide will ensure you have complete knowledge before entering Dubai’s business world.

Factors to Keep in Mind for Start Your Business in Dubai

The following factors will make doing business in Dubai simpler.

  1. Conduct Thorough Research

The smartest option for starting your business in Dubai is to plan your business right. Study all your options carefully.

  • Dubai offers 3 jurisdictions - Mainland, Freezone and Offshore Company Setup. Understand how each jurisdiction will be beneficial for your business as well as the drawbacks.
  • The company formations that are mentioned above have different appeals and limitations. Some of the factors to consider are - location restrictions, visa options, ownership, etc.
  1. Secure a Visa

  • If international citizens want to start a business in Dubai, they must secure a visa for themselves and their employees.
  • Based on your business activity and the office size, the authorities will decide the number of visas your business is eligible for. 
  • The applicant will require a local sponsor to obtain visas for a Dubai mainland business setup.
  • To secure a visa for a free zone company formation, you need to apply at the relevant freezone authorities.
  1. Free Zone for Complete Ownership

Many entrepreneurs wish to have full ownership of their business in Dubai. How do you make this happen?

The simplest way is to form a freezone company. Dubai offers plenty of freezones to choose from. A business setup in UAE free zone will give you complete ownership, unlike the mainland. In the mainland, a local sponsor will own 51% shares of your company.

  1. Help from the Government

The UAE government has pro-business rules to support businesses in each emirate. They also provide incentives, tax benefits, global opportunities, etc. These factors pull investors towards the UAE.

  1. Choice of Licenses

Anyone doing business in Dubai needs to have the appropriate licenses.

A few of the licenses are -

Following rules set by the authority is essential for a successful business setup in Dubai. Authorities take the rules very seriously. Not adhering to these rules will result in huge fines. Always keep paperwork, approvals and licenses ready and up to date.

  1. Grasping the Tax System

You need to understand the tax system before setting up your business. The Freezone in Dubai has no taxes (no corporate or personal tax). But businesses operating within the country (mainland companies) have to pay 5% VAT.

  1. Register your Business Name

Every Dubai business needs to have a name. The name must be unique and relevant to your business activity. Register your business name with the Department of Economic Development (DED) Dubai.

  1. Costs Associated with Starting a Business in Dubai

For doing business in Dubai you should know the costs associated with starting it. The cost varies depending on the business activity, location, jurisdiction, etc.

  1. Crafting the MOA/LSA for Your Business

Crafting the Local Service Agent (LSA) or Memorandum of Association is important. The states the role of the local agent while the MOA specifies the freedom and restrictions of the partners of the company.

The LSA and MOA are legal documents that need to be drafted by the legal consultant or advisor. Ensure that these documents are translated into Arabic.

Dubai offers ample opportunities, yet understanding the details thoroughly can take some work. Consult with the team at Commitbiz to guide you through the process and handle the intricacies while you grow your business.