HOW TO START A BUSINESS IN DUBAI- THE COMPANY FORMATION PROCESS

1. Choose an industry
There are many industries in the UAE and plenty of opportunities for innovation. You might be tempted to jump ahead to the actual setup process straight away, however, we recommend that you decide on the nature of your business up front.

In Dubai and the UAE, many locations only permit specific business activities. Be careful not to start a business in Dubai, only to realize that you can’t operate in your chosen location!

For example, certain free zone locations cater to specific activities or industries, such as media, finance or tech. Let’s take a look at Dubai Media City. As its name suggests, it is a free zone dedicated to media companies, or businesses operating media-related activities. Dubai Media City is home to globally renowned media companies, such as BBC, CNN and Thomson Reuters. Another example is Dubai International Financial Centre (DIFC), where large global financial services companies like Credit Suisse AG, Goldman Sachs International and Morgan Stanley have offices.

Over the years, however, a number of sector-specific free zones have started to welcome general business activities, and not just the ones they are intended for.

Restrictions aside, there are other reasons why you may want to set up in close proximity to businesses in the same sector as you. Look at transport links too. If your business relies heavily on import and export, you should consider one of the free zones situated near an airport or port.

There are numerous business sectors thriving in the UAE. In 2022 and beyond, the commitment to diversifying beyond the oil economy means that new businesses that contribute to this vision will be looked upon favourably.

2. Choose a location
Having settled on an industry, your next big decision is whether to launch in the mainland or in a free zone. If you opt to set up in a free zone, you’ll benefit from:

·         0% corporate and personal tax

·         100% company ownership

·         100% repatriation of capital and profits

·         No currency restrictions, and

·         100% import and export tax exemption

However, if you wish to trade directly with the local market in the UAE, you’ll need to work with a mainland company who will charge a fee.

On the other hand, if you choose to set up in the mainland, you are free to trade directly with the local and international markets. However, unless your business activity falls under professional services, you will need to work with a local partner who will hold 51% of your company’s shares.

Virtuzone provides mainland businesses with a Local Corporate Nominee Shareholder who will act as their local partner. This way, the foreign business owners can retain 100% operational and financial control over their mainland company.

3. Choose your company name
The UAE has some strict naming conventions, so before you commit to a company name, make sure it is legally acceptable.

Any names that include offensive language are forbidden, as are any company names that refer to Allah, Him or any other religious, sectarian or political groups such as the FBI or Mafia. If you choose to name your business after a person, that person must be a partner or owner of the company and their full name must be used – no initials or abbreviations.

For a full rundown of how to choose a company name, visit this guide.

4. Complete the incorporation paperwork
When considering how to start a business in Dubai, if you have made it this far, you are now past the most crucial decisions. At this stage, you will want to deal with the appropriate paperwork.

You will be required to complete an application for your chosen company name and activity, to be provided along with copies of shareholders’ passports to the relevant government authorities. Some free zones will require additional documentation, such as a business plan or Non-Objection Certificate (NOC) – a letter from a current sponsor confirming that you are allowed to set up another business in the UAE.

When you come to register your company in the UAE, you have to complete an application to register your chosen company name and activity, along with copies of shareholders’ passports.

Mainland companies will be required to meet certain capital requirements, which must be stated in a Memorandum of Association.

Checking and submitting your paperwork
You need to contact the Department of Economic Development of your chosen emirate to register your business activity and trade name and then submit the required documentation. You can find links to the respective offices on the UAE government website, under Information and Services.

Once your application has been processed, you will be issued with your company licence.

Navigating the paperwork at this stage is perhaps the most arduous task you will have to tackle. While it might take you weeks to months to adequately understand and complete this stage of the process, assistance from Virtuzone at this stage of the process is often invaluable. For anyone who is averse to monotonous, difficult paperwork with lots of fine details, we strongly recommend that you utilise our expertise. The money and time saved during this phase alone more than pays for itself.

5. Apply for a licence
Once your application has been processed, the government will issue you with your company licence. Regardless of setup location, you’ll usually only require a few standard documents: a completed application form, shareholder passport copies and the like. Some free zones may also require you to provide a business plan.

6. Open a bank account
Once your paperwork has been returned, you will have all the documentation you need to open your corporate bank account. The UAE is home to many banks, both local and international, including;

·         Emirates NBD

·         Abu Dhabi Commercial Bank

·         Commercial Bank of Dubai

·         Noor Bank, Emirates Islamic, Mashreq, RAKBANK and Ajman Bank.

There are also global names such as HSBC, Citibank and Barclays. Choosing the one that’s right for you will depend on your specific requirements.

You will need a bank account before you can begin trading in the UAE.

How to open a UAE business bank account
It generally takes between two to four weeks to open a bank account in the UAE. The bank will want to know:

·         Your primary business areas

·         Your anticipated volume of currency

·         Total deposits

·         Revenue levels and

·         Your main customers and suppliers

Once your paperwork has been returned from the government you will have all the documentation you need to approach the bank of your choice.

7. Apply for a visa
Congratulations on making it this far! Applying for a visa is the final step on how to start a business in Dubai. As well as applying for your own visa, many free zones allow you to put in applications for staff and dependants. The exact number you can submit will depend on which free zone you choose to set up in.

If you are looking to obtain visas for a spouse, child, maid or driver, it is best to seek expert advice to ensure that, firstly, it is possible to do so in your chosen free zone, and secondly, that both you and anyone you are hoping to sponsor for a visa meet all of the entry criteria.

Assuming that this all checks out, the process is made up of four simple stages:

·         Entry permit

·         Status adjustment

·         Medical fitness test