According to new research, UK-based business owners have been expanding their businesses to the UAE increasingly. And why not? Dubai has everything to help UK entrepreneurs tap into new markets. More specifically, Dubai and its associated free zones are being seen as promising for starting a business in Dubai as a foreigner in 2024.
In the first half of 2023, Dubai witnessed a remarkable 43% increase in new business registrations. The number of new UK business registrations in Dubai has also seen a steady increase in recent years. Dubai’s geographical location as a gateway to the Middle East and Africa makes it an ideal base for UK businesses seeking to expand their reach in these markets.
Dubai Multi Commodities Centre (DMCC), one of the more well-known free zones in Dubai, has played a crucial role in developing UAE-UK trade relations. DMCC welcomed 2,692 new businesses in the last year, bringing the total number of companies in DMCC to over 24,000.
The UAE government has also made several changes to encourage foreign investors, such as allowing 100% foreign ownership in many sectors and offering special visas for entrepreneurs.
So, if starting a business in Dubai as a foreigner is on your mind, keep reading further.
Why Start Business in Dubai as a Foreigner in 2024?
Starting a business in Dubai as a foreigner in 2024 comes with numerous advantages that make it an appealing destination for entrepreneurs worldwide:
1. Tax Benefits
Dubai offers 0% personal tax and limited corporate income tax in many sectors, allowing you to maximize your profits. This tax-friendly environment is one of the biggest draws for foreign investors looking to grow their businesses.
2. Ease of Doing Business
Dubai has consistently ranked high in global indices for ease of doing business, thanks to its efficient government processes and streamlined procedures.
3. Smart City Initiatives
The emirate’s commitment to technological advancements and smart city initiatives provides a conducive environment for innovation.
4. Political Stability
The emirate’s stable political environment and strong leadership contribute to its overall attractiveness for foreign investors.
5. Expanding Economy
Dubai’s economy continues to grow at a steady pace, driven by sectors such as tourism, trade, real estate, and technology.
6. Free Trade Zones
Dubai has over 50 Free Trade Zones, where you can benefit from 100% foreign ownership, 100% repatriation of profits, and no customs duties. Each Free Zone specializes in different industries, from tech to logistics, giving you a business-friendly environment tailored to your specific needs.
Business Setup Options in Dubai as a Foreigner (Mainland, Freezone, and Offshore)
When starting a business in Dubai, foreign investors have three primary options: Mainland, Freezone, and Offshore. Each option has its distinct advantages and considerations.
1. Mainland Company
A mainland company operates within the mainland territory of Dubai and is subject to local laws and regulations.
Key Features:
- You can do business anywhere in the UAE and internationally, without limits on the geographical area.
- Businesses can be 100% foreign owned.
- Can engage in a wide range of business activities, including trade, manufacturing, services, and real estate.
- You must rent or lease physical office space (no virtual offices allowed).
- Subject to corporate tax, VAT (Value Added Tax), and other applicable taxes.
2. Free Zone Company
Dubai’s Free Zones are designed to attract foreign investment by offering a range of incentives. Each Free Zone specializes in different industries, such as technology, finance, and logistics.
Key Features:
- Operates within a designated free zone area in Dubai.
- Businesses can be 100% foreign owned.
- Restricted to activities permitted within the specific free zone.
- Generally, exempt from corporate tax and VAT.
- Trade is primarily conducted through international trade channels.
Popular Free Zones:
- International Free Zone Authority (IFZA)
- Dubai International Financial Centre (DIFC)
- Dubai Multi Commodities Centre (DMCC)
- Jebel Ali Free Zone (JAFZA)
3. Offshore Company
Offshore companies are ideal for businesses that don’t intend to operate within the UAE but want to benefit from Dubai’s favorable legal framework. These companies are often used for international trading, holding assets, or tax planning.
Key Features:
- Primarily a legal entity for holding assets and conducting international trade.
- 100% foreign owned.
- Limited to holding assets, conducting international trade, and providing certain services.
- Generally, exempt from corporate tax and VAT.
- Primarily focused on international trade.
Choosing the Right Setup
- Mainland: Ideal if you want to tap into the local UAE market or bid for government contracts.
- Free Zone: Best for international business, tax benefits, and industry-specific advantages.
- Offshore: Perfect for businesses looking for international trade, asset protection, or tax optimization without the need to operate within the UAE.
Documents Required for Starting a Business in Dubai as a Foreigner
Starting a business in Dubai as a foreigner involves a clear process, and having the necessary documentation in place is essential. The exact requirements may vary depending on whether you’re setting up a Mainland, Free Zone, or Offshore business, but here are the general documents you’ll need:
- Passport copies of all business owners and authorized signatories
- Visa copies for all individuals involved in the business
- Proof of address
- Business plan
- No Objection Certificate (NOC), if required
- Trade name reservation certificate
- Tenancy contract or office lease agreement
- Business license application form
- Bank reference letter
How to Start a Business in Dubai as a Foreigner?
As a foreigner, you must go through various steps to launch a business in Dubai. Here’s a step-by-step guide to help you understand the process and make your entrepreneurial journey smooth:
1. Choose Your Business Activity
The first step is to decide what type of business you want to start. Dubai offers a wide range of business activities, from trading and consulting to manufacturing and tech startups. Ensure your chosen activity complies with the UAE regulations
2. Select a Business Jurisdiction & Structure
Choose a Business Structure that suits your business needs:
Sole Proprietorship: Suitable for small-scale businesses, but the owner is personally liable for debts.
- Mainland Limited Liability Company (LLC): The most common choice for foreign investors, offering limited liability and flexibility.
- Public Limited Company (PLC): Suitable for large-scale enterprises requiring significant capital and public ownership.
- Free Zone Company: Offers tax benefits and 100% foreign ownership within designated free zones.
3. Pick a Trade Name
Choose a name for your business that complies with the UAE’s naming rules. The trade name must:
- Not include offensive language or references to religion.
- Be unique and not closely resemble any existing company name.
- Reflect on the nature of your business.
4. Obtain Initial Approval from DED
After selecting your business activity and trade name, apply for initial approval from the relevant authority (DED for Mainland or the respective Free Zone). This initial approval means that your business activity and trade name are accepted, and you can proceed with the next steps.
5. Lease an Office Space
Dubai mandates that every registered business has a physical office. You’ll need to sign a lease for an office space or opt for Flexi-desk (in Free Zones). For Mainland businesses, the office must be approved by the DED, and the tenancy contract must be submitted as part of the setup process.
6. Apply for Your Business License
Submit the required documents, including your business plan, passport copies, and visa details, to the relevant government department (Department of Economic Development or DED). Pay the necessary fees and obtain your business license.
Depending on your business activity, you may need additional permits or licenses from relevant government authorities.
7. Open a Corporate Bank Account
Choose a reputable bank in Dubai and provide the required documents, including your business license and passport copies. Open a corporate bank account to manage your business finances.
8. Complete Visa Process
Once your business is licensed, you can apply for a residency visa for yourself and your employees. This involves:
- Applying for an entry permit.
- Undergoing a medical test.
- Receiving a UAE resident ID (Emirates ID).
Depending on the type of business and Free Zone, the visa quota may vary, allowing you to sponsor multiple employees.
What is the Cost of Starting a Company in Dubai
The cost can range from AED 10,000 to AED 28,000 or more, for the mainland license, depending on the business activity and location. The costs associated with setting up a free zone company can vary depending on the specific free zone authority. However, they generally include a one-time setup fee and annual license fees.
Factors Affecting Costs:
- The type of business activity you choose can impact on the costs. For example, certain industries may require additional licenses or permits.
- The location of your business (mainland, free zone) can influence the costs, as different areas have varying rental rates and regulations.
- The size of your company and the number of employees will affect the costs related to visas, salaries, and office space.
Why Choose Shuraa for Your Dubai Business
Starting a business in Dubai as a foreigner in 2024 is a golden opportunity for entrepreneurs around the world. Whether you choose the Mainland or a Free Zone, you’ll enjoy benefits like 100% ownership, tax advantages, and access to great infrastructure.
If you’re thinking about starting your business, now is the perfect time to take advantage of Dubai’s favorable environment. However, the process of setting up can be tricky without the right help. That’s where Shuraa Business Setup comes in. We can assist you with everything you need, including business registration, licensing, PRO services, visa applications, and office space. With our guidance, you can focus on building your business while we handle the paperwork.
Let Shuraa make your business journey in Dubai easy and successful. Get in touch with us today, and let’s make your business dream a reality in one of the world’s best business cities.