HOW TO SETUP BUSINESS IN DUBAI : Step by step guide

Registering a business in Dubai offers several strategic, financial, and operational advantages, making it one of the most attractive destinations for entrepreneurs and investors globally. Below is a list of key benefits of registering a business in Dubai:

1. 100% Foreign Ownership (in Many Sectors)

• In Free Zones and several Mainland sectors, foreigners can now own 100% of the business without a local sponsor.

2. Strategic Global Location

• Dubai is a global trade hub connecting Europe, Asia, and Africa, ideal for international business expansion.

3. Tax Advantages

• 0% personal income tax

• 0% corporate tax (except for certain sectors; 9% corporate tax introduced in 2023 for income above AED 375,000)

• No import/export duties in Free Zones

4. Business-Friendly Environment

• Quick and simple registration processes

• Digital government services

• Robust legal framework and IP protection

5. Access to Free Zones

• Over 30 Free Zones offering:

  • 100% repatriation of capital and profits

  • No customs duties

  • Fast-track licensing

6. World-Class Infrastructure

• High-tech communication and transport systems

• Top logistics, warehousing, and office facilities

7. Wide Range of Business Activities

• Diverse sectors such as trading, IT, construction, finance, crypto, tourism, and more

8. Residency Visa for Investors

• Business owners and their family members can obtain long-term UAE residency visas

9. Access to International Talent

• Easy recruitment of skilled workers from across the globe

• No labor union-related issues

10. High Quality of Life

• Safe and modern living

• Multicultural society

• World-class education, healthcare, and leisure facilities

Registering a mainland company in Dubai involves several legal and administrative steps. Below is a step-by-step guide to help you understand the process of business registration in Dubai Mainland:

Step-by-Step Process to Register a Mainland Business in Dubai (UAE)

Step 1: Determine Business Activity

• Choose your business activity from the approved list issued by the Department of Economic Development (DED).

• Your business activity determines licensing requirements and approvals.

Step 2: Choose a Legal Structure

• Select an appropriate legal form, such as:

  • Sole Proprietorship

  • Limited Liability Company (LLC) (most common)

  • Civil Company

  • Branch of Foreign Company

• LLC is ideal for most businesses with limited liability and flexibility.

Step 3: Reserve a Trade Name

• Choose a unique trade name that complies with UAE naming rules.

• Reserve it with DED (can be done online).

• Pay the trade name reservation fee.

Step 4: Get Initial Approval from DED

• Apply for an Initial Approval Certificate from the DED.

• This is a no-objection certificate to proceed with registration.

• You may need additional approvals from relevant ministries depending on the business activity (e.g., health, education, media).

Step 5: Prepare MOA and LSA Agreement

• MOA (Memorandum of Association): Drafted and notarized for LLCs.

• LSA (Local Service Agent Agreement): Required for certain activities with sole proprietorship or professional licenses.

• As of recent updates, 100% foreign ownership is allowed in many sectors; in some cases, a UAE national is no longer mandatory as a sponsor/shareholder.

Step 6: Choose Business Location and Tenancy Contract

• Rent office space or commercial premises.

• Get a Tenancy Contract and Ejari Certificate (Dubai Land Department registration).

• The physical office is mandatory for mainland companies.

Step 7: Final Submission and Payment

• Submit all documents to DED:

  • Trade name certificate

  • Initial approval

  • MOA/LSA

  • Tenancy contract + Ejari

• Pay the license fee to DED.

Step 8: Receive the Business License

• Once the documents are approved and payment is made, the Mainland Trade License is issued.

• You can now legally start your business operations.

Step 9: Apply for UAE Residency Visa & Labor Card

• After license issuance, apply for:

  • Establishment card (Ministry of Human Resources and Emiratisation – MOHRE)

  • Employer registration

  • Employee or investor visas

Documents Required:

• Passport copies of all shareholders

• Visa copy or UAE entry stamp

• NOC from current sponsor (if on existing UAE visa)

• Proposed trade name and activity

• Tenancy contract and Ejari

• MOA and other legal agreements

Sure! Here is a step-by-step guide to register a Free Zone company in Dubai (UAE) — a popular option for international entrepreneurs due to tax benefits, full ownership, and easy setup.

Step-by-Step Process to Register a Business in Dubai Free Zone

Step 1: Choose the Right Free Zone

• Dubai has over 30+ Free Zones, each catering to specific industries like:

  • Dubai Multi Commodities Centre (DMCC) – trading, commodities

  • Dubai Internet City (DIC) – tech and IT

  • Dubai International Financial Centre (DIFC) – finance

  • Dubai Media City (DMC) – media & advertising

• Choose one based on your business activity, budget, and location preferences.

Step 2: Select Business Activity

• Free Zones have a list of permitted business activities (e.g., consultancy, trading, manufacturing).

• Your activity must match the Free Zone’s focus and determine license type:

  • Trading

  • Service

  • Industrial

  • Holding, etc.

Step 3: Choose Legal Structure

• Common legal entities in Free Zones:

  • FZ-LLC (Free Zone Limited Liability Company)

  • FZE (Free Zone Establishment) – single shareholder

  • Branch of an existing company (UAE or foreign)

Step 4: Reserve Trade Name

• Choose a unique business name.

• Follow Free Zone naming rules (no offensive words, real name use, etc.).

• Submit for name reservation with the Free Zone authority.

Step 5: Apply for Initial Approval

• Submit:

  • Business plan (in some zones)

  • Passport copies of shareholders/directors

  • Shareholder info

• Initial Approval Certificate is issued by the Free Zone authority.

Step 6: Lease Office or Flexi Desk

• Choose from:

  • Flexi desk (shared space)

  • Private office

  • Warehouse (for industrial activity)

• Sign a Lease Agreement with the Free Zone authority.

Step 7: Submit Documents for Final License

Submit:

• Trade name reservation

• Initial approval

• Passport copies

• MoA/AoA (if applicable)

• Lease agreement

• Other forms (like Board Resolution for branches)

Step 8: Pay Fees and Collect License

• Pay license issuance fees, registration fees, and office rent.

• Free Zone issues your Business License (valid for 1 year, renewable).

Step 9: Apply for Residency Visa & Establishment Card

• After licensing, apply for:

  • Establishment card

  • UAE residency visa for owner(s), staff

  • Medical and Emirates ID

Documents Required

• Passport copies of shareholders/directors

• Visa copy/Entry stamp

• Passport-size photos

• Business plan (sometimes)

• NOC (if UAE resident)

• Application forms (from Free Zone)

Key Advantages of Free Zone Companies

• 100% foreign ownership

• 0% income tax and corporate tax (up to limits)

• Full repatriation of profits and capital

• No import/export duty (within Free Zone)

• No need for local sponsor

An Indian citizen can easily set up a business in Dubai, either in the Mainland or in one of the many Free Zones. The UAE government has made the process foreign-investor-friendly with full ownership in many sectors and a streamlined setup process.

Below is a complete guide for Indians to start a business in Dubai:

How an Indian Can Set Up a Business in Dubai

Step 1: Decide on the Type of Business Location

Choose between:

1. Free Zone Company

   • 100% foreign ownership

   • No import/export duties

   • Ideal for international business

   • Limited to business within the zone or outside UAE

2. Mainland Company

   • Can do business anywhere in UAE

   • 100% ownership available in many sectors

   • Required for retail, restaurants, and local services

Step 2: Choose Business Activity

• Choose from a list of licensed activities provided by:

  • Department of Economic Development (DED) for Mainland

  • Respective Free Zone Authority for Free Zone business

• Common business types for Indians:

  • Trading

  • Consulting

  • IT services

  • Construction

  • Retail & restaurants

  • Export-import

Step 3: Select Legal Structure

Options include:

• LLC (Limited Liability Company)

• Sole Proprietorship

• Free Zone Establishment (FZE)

• Free Zone Company (FZC)

• Branch of existing Indian company

Step 4: Reserve Trade Name

• Propose a unique business name (no religious, political, or offensive words)

• Get it approved by the DED or Free Zone authority

Step 5: Get Initial Approval

• Submit passport, visa, and application form

• Some Free Zones may ask for a business plan

Step 6: Office Space or Flexi Desk

• Mainland: You must rent a physical office (Ejari contract required)

• Free Zone: You can start with a Flexi Desk (shared space)

Step 7: Submit Final Documents

• Passport copy

• Trade name certificate

• Initial approval

• Lease agreement

• MoA/AoA (for LLCs)

Step 8: Pay Fees & Receive License

• Pay registration + license fees

• License is issued (valid for 1 year, renewable)

Step 9: Apply for UAE Residency Visa

• Once licensed, apply for:

  • Investor Visa (valid for 2–10 years)

  • Emirates ID

  • Medical Test

• You can sponsor family and employees too

Step 10: Open Corporate Bank Account

• Use your license and Emirates ID to open a business bank account in the UAE

Documents Required (Indian Nationals)

Additional Tips

• Hire a business consultant (optional but helpful for handling paperwork, banking, visas)

• No need to be physically present to register in many Free Zones (can be done remotely)

Setting up a business in Dubai is a strategic move for Indian entrepreneurs, but there are several important precautions to ensure compliance, financial safety, and long-term success. Here’s a list of key precautions Indians should take when starting a business in Dubai:

Precautions for Indian Citizens When Setting Up Business in Dubai

1. Choose the Right Business Structure & Location

• Mainland vs Free Zone: Understand the legal differences.

  • Mainland: Can trade across UAE; physical office required.

  • Free Zone: 100% ownership, limited to zone or exports.

• Choose based on your target market (local UAE or international).

2. Verify Business Activity Restrictions

• Not all Free Zones allow all types of business activities.

• Check if your activity needs additional approvals (e.g., education, healthcare, food).

3. Understand Ownership Rules

• As of recent reforms, 100% foreign ownership is allowed in most sectors.

• Still, check if your business requires a UAE local agent or sponsor (e.g., in some professional or strategic sectors).

4. Ensure Business Name Compliance

• Avoid religious, political, or offensive words in trade names.

• Do not use “global,” “international,” or famous brand names unless authorized.

5. Work with Licensed Consultants Only

• Many unauthorized “agents” operate in the UAE.

• Always use registered business setup consultants or law firms to avoid scams or hidden charges.

6. Know the Full Cost (No Hidden Fees)

• Clarify all fees involved:

  • Registration fees

  • License fee

  • Visa cost

  • Office rent

  • Service agent or sponsorship fees (if applicable)

• Some packages may look cheap but exclude essential components like visa quota or establishment card.

7. Check Office Space Requirements

• Mainland: Physical office (Ejari) is mandatory.

• Free Zones: May offer flexi-desks/shared spaces.

• Ensure the lease meets the licensing requirements of the authority.

8. Open Business Bank Account Carefully

• Not all banks open accounts for Free Zone companies easily.

• Choose Free Zones with good banking relationships (e.g., DMCC, IFZA, Meydan).

• Maintain a transparent business model to avoid compliance issues with banks.

9. Stay Updated on Tax Laws

• UAE introduced Corporate Tax (9%) on net profits over AED 375,000 starting June 2023.

• Free Zones may still enjoy 0% tax if they meet qualifying criteria.

• Maintain proper bookkeeping and consult a tax advisor if needed.

10. Comply with Visa and Labor Laws

• Don’t overuse investor or employment visas without actual operations.

• Follow all rules related to MOHRE (Ministry of Labor) if hiring staff.

• Ensure medical tests, Emirates ID, and labor contracts are completed on time.

11. Watch for Blacklisted Zones or Jurisdictions

• Avoid registering in unknown or less reputed Free Zones.

• Stick to well-known Free Zones with transparency, strong legal systems, and bank acceptance.

12. Avoid Misuse of Residence Visa

• Don’t apply for a visa just for UAE residence without real business activity.

• Immigration may cancel visas if there’s no real business substance.

13. Keep Personal and Business Funds Separate

• Use a separate corporate bank account.

• Avoid mixing personal remittances or Indian transactions with business funds.

14. Stay Compliant with Indian Tax Laws

• If you’re an Indian resident, your Dubai income may be taxable under Indian Income Tax Act.

• Consult a CA in India about DTAA (Double Tax Avoidance Agreement) between UAE and India.

Here is a complete explanation of Corporate Tax in Dubai (UAE) as applicable to Mainland and Free Zone companies, based on the UAE Corporate Tax Law effective from 1st June 2023.

CORPORATE TAX RATES IN DUBAI (MAINLAND & FREE ZONE)

Applicable from 1 June 2023 under Federal Decree-Law No. 47 of 2022

1. Standard Corporate Tax Rates (Mainland & Free Zone)

Applies only to multinational groups with global revenues over EUR 750 million

2. Corporate Tax for Mainland Companies

• Mandatory Corporate Tax Registration.

• Taxable on worldwide income (if UAE resident).

• Deductions allowed: business expenses, salaries, rent, depreciation, etc.

• Must file annual corporate tax return.

• Subject to transfer pricing rules for related-party transactions.

3. Corporate Tax for Free Zone Companies

To Enjoy 0% Tax as a Free Zone Company, You Must:

• Be a Qualifying Free Zone Person (QFZP).

• Maintain adequate economic substance in the Free Zone.

• Earn only Qualifying Income, such as:

  • Income from other Free Zone entities

  • Income from outside UAE

  • Passive income (dividends, interest, royalties)

• Not elect to be taxed at 9%

• Maintain audited financial statements

What Is “Non-Qualifying Income” for Free Zone Entities?

If a Free Zone company:

• Has a branch in the Mainland,

• Provides services to UAE Mainland clients,

• Does not meet QFZP conditions,

Then 9% Corporate Tax applies on that portion of income.

Corporate Tax Exemptions

• Personal income (salary, rental income, capital gains of individuals)

• Dividends and capital gains from qualifying shareholdings

• Intra-group transactions (subject to conditions)

Compliance Requirements

• Register for Corporate Tax (even if 0%)

• Obtain Tax Registration Number (TRN)

• File annual corporate tax returns electronically

• Maintain proper financial records for 7 years

Summary Table

Feature	Mainland Company	Free Zone Company
Corporate Tax Rate	0% up to AED 375K, 9%	0% (if QFZP), else 9%
Applies to UAE-source income	Yes	Yes
Applies to global income	Yes (if resident)	If income is non-qualifying
Can deal with Mainland clients	Yes	Not under 0% tax scheme
Requires Audited Accounts	Yes	Yes (for QFZP)

Here is a detailed explanation of the VAT (Value Added Tax) system in Dubai, including how it applies to Mainland and Free Zone businesses:

VAT in Dubai (UAE): Applicability for Mainland and Free Zone Businesses

Overview of VAT in UAE

• Introduced on 1st January 2018

• Administered by the Federal Tax Authority (FTA)

• Applicable across all Emirates, including Dubai

• Charged on supply of goods and services

VAT Rates in UAE

1. VAT for Mainland Companies

• VAT is fully applicable on goods and services supplied within the UAE.

• Must register for VAT if:

  • Annual taxable turnover exceeds AED 375,000 (mandatory)

  • Above AED 187,500 (voluntary registration allowed)

Mainland businesses must:

• Charge 5% VAT on invoices to customers (within UAE)

• File VAT returns quarterly/monthly

• Maintain proper invoicing and accounting records

• Can claim input VAT credit on eligible business expenses

2. VAT for Free Zone Companies

Free Zones are categorized into:

Designated Zones (DZ)

• Treated as outside UAE for VAT purposes

• Examples in Dubai: JAFZA, Dubai Airport Free Zone (DAFZA), Dubai South

• No VAT on goods moved between designated zones

• No VAT on exports outside UAE

• 5% VAT applies when:

  • Selling to Mainland

  • Providing certain services (as per FTA)

Non-Designated Zones

• Treated same as Mainland for VAT

• Must register and charge VAT like a Mainland company

Key VAT Scenarios

When Must a Business Register for VAT?

• Mandatory: If annual turnover exceeds AED 375,000

• Voluntary: If turnover or expenses exceed AED 187,500

• Applies to both Free Zone and Mainland companies

VAT Compliance Requirements

• FTA VAT registration

• Quarterly or monthly VAT returns

• Maintain books for 5 years

• Issue VAT-compliant tax invoices

• Pay VAT due before deadline (usually within 28 days after tax period ends)

Penalties for Non-Compliance

Summary

Author:  CA Irshad Khan