Dubai is quickly becoming a global hub for entrepreneurs, attracting Entrepreneurs from around the world with its business-friendly environment and promising opportunities. With the introduction of long-term visas, foreign investors now have the chance to not only establish their businesses in the UAE but also stay for extended periods, potentially making Dubai their home for the long haul. This opens up a world of possibilities for those seeking to tap into the emirate’s growing economy.
The exciting part is that you don’t need to be a resident to launch and manage your business in Dubai. Whether you’re living abroad or want to manage your business remotely, the right support and legal structures make it possible for non-residents to run successful enterprises from anywhere. If you’re curious about how to start your business journey in Dubai, keep reading to find out the answer to the question to can a foreigner open a company in Dubai.
Is It Possible for a Foreigner to Launch a Business in Dubai?
Yes, foreigners can absolutely start their own business in Dubai, and many do. With 80% of the city’s residents being expatriates, it’s clear that Dubai thrives on the contributions of foreign entrepreneurs. The emirate is not only courteous but also has a wealth of resources, including company formation specialists and setup agents, to guide you through the process of obtaining licenses, visas, and handling all the necessary steps to establish your business.
There are many benefits of investing in Dubai for foreign investors such as tax exemptions, streamlined business registration procedures, a booming economy, and political stability. The great news is that recent legal changes now allow expatriates to fully own their businesses in Dubai, offering them complete control.
This has made Dubai an even better place for international entrepreneurs to invest into innovation and improving the economic growth of the country. Whether you’re looking to tap into the trade, finance, or commerce industry, the opportunities are abundant. With the help of expert consultants, starting and managing your business in Dubai has never been easier.
Things to Know Before Starting a Business in Dubai as a Non-Resident or Foreigner
Dubai has become a hub for global entrepreneurs due to its strategic location, excellent infrastructure, and tax-friendly policies. It connects key markets in the Gulf, Asia, and Africa, while being home to a population that’s 90% expatriates. The city’s safe living environment, visionary leadership supporting innovation, and diverse business opportunities make it an attractive destination for foreign business owners.
Corporate Structure
Before launching a business in Dubai, one of the first decisions you’ll need to make is the type of corporate structure that best fits your needs. The two main options are a Limited Liability Company (LLC) and Sole Establishment. An LLC is called for business that involve more than one person in the ownership since liability is shared, and a Sole Establishment is good for individual business without any partner’s interference.
Jurisdiction
In Dubai, you must choose whether to establish your business on the mainland or in one of the free zones. Mainland setups allow businesses to trade both locally and internationally, while expediting free zones characterized by 100% international ownership, less firm establishment costs, and tax liberality. But, free zone establishments may engage in operation only in the free zone or on the international level; they cannot operate in the domestic market.
Market Research
Conducting market research is crucial before starting a business in Dubai. Researching the local market will enable you to gain insight of the consumers and their purchasing trends in the market, opportunities that your business can capture. In light of this, this research is also useful to understand the competitor’s tactics, and develop competent market strategies in the Dubai setting.
Taxation
Dubai offers a tax-friendly environment with several benefits for foreign entrepreneurs. VAT standard rate is at 5%, while corporate tax applies at 9% on profits exceeding AED 375,000. Most notably, businesses can avoid any personal income tax in the country, which makes the country favourable for investors and new startups. Financial planning should therefore involve a tax expert who will help in the compliance with these regulations.
Networking
Building a strong network is vital for success in Dubai’s business ecosystem. The business environment of the city is diverse and the companies are interconnected. Networking opportunities can be found through industry events, trade shows, and local business associations. Engaging on social media platforms like LinkedIn and partnership with local business advisors can help you make right contacts with necessary parties as well as to expand and join in Dubai.
Types of Trade Licenses for Foreigners in Dubai
When starting a business, foreign entrepreneurs need to select the appropriate trade license within Dubai, issued by the Department of Economic Development (DED). There are four main types of trade licenses you need to obtain, based on the nature of your business:
Commercial License
This license is required for businesses involved in trading goods or services. If your business is involved in the buying, selling, or importing/exporting of products, the commercial license is essential for the legal operation in Dubai.
Professional License
A professional license is needed for service-oriented businesses. This license is generally used by individuals or companies offering professional services, such as consultants, accountants, designers, and healthcare providers.
Industrial License
If your business involves manufacturing or packaging, you will need an industrial license. This license is required for any company involved in manufacturing, assembling or processing related business in the UAE.
Tourism License
For businesses operating in the tourism sector, a tourism license is essential. This license is jointly reviewed and issued by the DED and the Department of Tourism and Commerce Marketing (DTCM). It applies to businesses involved in travel, tour operations, hotel services, and related tourism activities.
Steps to Start a Business in Dubai as a Foreigner or Expat
The process of starting a business in Dubai as a foreigner requires careful planning and adhering to local regulations. Below are the essential steps you need to follow to ensure a smooth and successful business formation process in Dubai:
Apply for a Visa
Before you begin setting up your business, apply for a visa to avoid any complications. It is also important to know that without the visa it is impossible to enter the city. You’ll need to submit the following documents at the Immigration Department:
- Business plan
- Visa application form
- Passport or a copy of your passport
- Personal statement of bank account
- Ticket details and photos
- Purpose of visit
Choose Your Business Activity
Deciding on the business activity is crucial as it will determine the company structure and type of license required. New businesses could take the form of a trading company, service company, manufacturing company, or tourism business, depending on market needs and the niche that best suits your business.
Decide on a Business Structure
Once you’ve chosen the business activity, you must decide on the legal structure of your business. You can opt for a sole proprietorship (sole ownership) or a Limited Liability Company (LLC). LLCs are popular as they offer liability protection and a clear separation between personal and business assets.
Choose a Business Name
Your business name must be unique and align with your business activity. It should also adhere to local guidelines, such as:
- Not violating public morals or religious beliefs
- Not using the names of external authorities or religious figures
- Check the name availability and compatibility with the company’s activities and laws of the country.
Find a Local Sponsor (Mainland Business)
If you are looking to start a business on Dubai Mainland, partnering with a local sponsor, a UAE national is required who will hold 51% of the business ownership. The same requirement does not apply if you open your business in a free zone, where foreign ownership of the business may be as high as 100%.
Obtain Initial Approval
Once you have your business name and sponsor (if required), you need to submit your application to the Department of Economic Development (DED) or the relevant free zone authority for initial approval. This is a necessary step before registering your business officially within Dubai.
Draft the Memorandum of Association (MoA)
The MoA is a critical document outlining your company’s structure, operations, and shareholding details. It must be notarized in the Dubai court. This step is inevitably necessary, and the choice should be made according to the legal framework within which your company operates.
Submit Fees and Clear Payments
Once your application and required documents are reviewed, you will receive a payment voucher. Ensure that you pay the license fees within 30 days to proceed with obtaining your business license. The cost varies depending on the type of business and its location.
Register Your Business
After clearing the payments, your business must be registered with the Dubai Chamber of Commerce and Industry. This official registration legalizes your firm’s existence in the United Arab Emirates and is considered as the final step of the company formation process.
Rent Office Space
You may need to lease office space depending on your business activity and location. If you plan to operate in Dubai Mainland, office space is a must. This is not always the case in free zones, however having office space remains important for your business establishment.
Apply for a Business Visa
Once your business is registered, you and your staff (if applicable) will need to get business visas which will allow you to legally live and work in Dubai. The business visa is a requirement for foreign businessmen and their families.
Documents Required to Start a Business in Dubai as Non-Residents
When applying to set up a business in Dubai, non-residents must submit a range of documents to ensure compliance with local regulations. Here are the key documents required:
- Filled Out Application Form
- NOC from Local Sponsor (for Startup Founders)
- Existing Trade Registration Certificate or License (if applicable)
- Passport Copies of Director, Manager, and Shareholders
- Bank Reference Certificate or Audited Financial Reports
- Signatures of Director, Manager, and Shareholders
- Business Plan
- Articles of Incorporation (if applicable)
Cost of Starting a Business in Dubai as a Foreigner
The cost of establishing a business in Dubai particularly for foreigners may vary anywhere between AED 15,000 to AED 25,000 , depending on various factors such as business type, location, and required documentation. Key expenses include:
- Registration and Licensing Fees
- Office Rent
- Visa Fees
- Employee Salaries
- Marketing Costs
- Legal Fees
Moreover, if the client chooses a name other than Arabic, an additional cost of AED 2,000 will be incorporated. Some commercial activities might also need other types of approvals for instance and food hygiene approvals on eating joint or specific space approvals for industrial activities. Adhering to local laws should be a general rule of thumb to prevent possible legal suits.
Benefits of Starting a Business in Dubai as a Foreigner
100% Foreign Ownership
Recent legal reforms in Dubai in the field of business allow foreigners starting a business to have 100% ownership, giving them full authority to manage the business, revenue, and other decisions.
Low Corporate Tax Rate
Dubai offers a low 9% corporate tax, with some Free Zones providing a 0% tax rate on qualifying business activities. Thus, there stand lower taxes that make it possible for the existing business to retain a majority of their profits for reinvestment.
Government Support for Entrepreneurship
The Dubai government actively fosters entrepreneurship through various initiatives and supportive laws that simplify the process of starting and growing a business.
Excellent Healthcare and Education
Dubai offers world-class healthcare services and medical facilities. Additionally, the city has many international schools, ensuring high-quality education for children.
Multicultural Environment
Dubai’s population is diverse, with residents from all over the world. Such multicultural environments foster the foreigners to feel comfortable and at ease to adapt to the environment and blend up with them.
Safe and Secure City
Dubai is known for its low crime rates and high safety standards. It actively encourages foreign investment, enabling non-residents to start and own businesses. This secure environment guarantees a safe living experience and a stable business climate.
Conclusion
Dubai offers a world of opportunities for foreign entrepreneurs. Whether you’re seeking the flexibility of a mainland company, the tax perks of a free zone, or the global reach of an offshore setup, there’s a perfect path to success tailored to your business vision. Choose wisely, and unlock the potential of one of the world’s most dynamic business hubs.
FAQs
1. Can foreigners fully own a business in the UAE?
Yes. Foreign entrepreneurs can retain full ownership of their businesses in Dubai and the UAE free zones, since June 2021, in mainland companies across over 1,000 activities without requiring a local partner.
2. What’s the main difference between mainland and free zone companies?
Mainland companies can operate anywhere in the UAE and the Gulf, while free zone companies are limited to their respective zones or international operations but offer 100% foreign ownership and tax benefits.
3. Are offshore companies allowed to do business in the UAE?
No, offshore companies are restricted to international operations and cannot conduct business within the UAE, lease office space, or provide business visas.
4. Which type of UAE company is best for international trade?
Free zone companies are ideal for international trade as they offer tax benefits, 100% ownership, and streamlined procedures for major business operations.
