A Comprehensive Guide to Forming a New Company in Dubai

Starting a company in Dubai is a strategic move for many entrepreneurs and businesses. Whether you're looking to tap into the thriving business environment of the city or seeking international growth opportunities, forming a new company here requires a clear understanding of the procedures involved. Here’s a detailed step-by-step guide to help you through the process.

Introduction to Company Formation in Dubai

Dubai offers a range of business structures to choose from, each with its own unique benefits and requirements. The primary types include mainland companies, free zone companies, and offshore companies. Each structure has its own advantages, making it essential to determine the best fit for your business needs.

Step-by-Step Guide to Starting a New Company in Dubai

Step 1: Determine the Type of Business

Before diving into the specifics, it’s crucial to understand the type of business you want to establish.

Mainland Company: Allows you to operate within Dubai without restrictions, but requires a local sponsor or service agent. Free Zone Company: Offers 100% foreign ownership, tax exemptions, and simplified import/export processes, but is limited to operating within the free zone and outside the UAE. Offshore Company: Ideal for international business asset protection and tax planning, but cannot conduct business within the UAE.

Step 2: Choose a Business Activity

Identify the nature of your business and ensure it aligns with Dubai’s permitted activities. Different activities may require specific approvals from various authorities.

Step 3: Select a Legal Structure

Common structures include:

Limited Liability Company (LLC) Free Zone Establishment (FZE) Free Zone Company (FZC) Sole Proprietorship Branch Office

Choose the structure that best suits your business needs and goals.

Step 4: Register a Trade Name

Select a unique trade name that complies with UAE naming conventions and register it with the Department of Economic Development (DED) or the relevant free zone authority.

Step 5: Obtain Initial Approval

Submit an application to the DED or the free zone authority for initial approval. Include passport copies of shareholders and managers, business activity details, and the chosen trade name.

Step 6: Draft Legal Documents

Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) for mainland companies. For free zone companies, complete the necessary incorporation documents provided by the free zone authority.

Step 7: Secure a Business Location

Lease office space in the mainland or a flexi-desk in a free zone, and obtain a tenancy contract and Ejari certificate for mainland companies.

Step 8: Apply for Licenses and Approvals

Mainland: Submit documents to the DED and pay the required fees.

Free Zone: Submit documents to the free zone authority and pay the fees.

Offshore: Follow the specific procedures of the chosen offshore jurisdiction, such as Jebel Ali Free Zone (JAFZA), Ras Al Khaimah Investment Commission (RAK ICC).

Step 9: Open a Corporate Bank Account

Choose a bank in Dubai and provide the necessary documentation, including the trade license, incorporation certificate, MOA/AOA, and passport copies.

Step 10: Obtain Visas

Apply for visas for owners, employees, and dependents through the relevant authorities. The process involves medical tests, Emirates ID registration, and visa stamping.

Step 11: Register for VAT if Applicable

If your company’s annual revenue exceeds the VAT threshold, register for VAT with the Federal Tax Authority (FTA).

Summary of Documents Required

Trade name certificate Initial approval certificate Memorandum of Association (MOA) / Articles of Association (AOA) Tenancy contract and Ejari certificate (for mainland companies) Copies of shareholders and managers’ passports Visa application forms and supporting documents Proof of paid fees

Costs Involved

Here’s a breakdown of the costs associated with forming a new company in Dubai:

Mainland Company

Trade license: AED 10,000 - AED 15,000 Local sponsor fee: AED 5,000 - AED 15,000 per year Office rent: Varies by location and size

Free Zone Company

Trade license: AED 10,000 - AED 20,000 Flexi-desk package: AED 10,000 - AED 20,000 Visa fees: AED 3,000 - AED 5,000 per visa

Offshore Company

Incorporation fee: AED 5,000 - AED 10,000 Annual renewal fee: AED 3,000 - AED 5,000

Working with Business Setup Consultants

Engaging with business setup consultants can be highly beneficial:

Expert Guidance: Consultants provide valuable advice and streamline the setup process. Documentation Handling: They assist in preparing and submitting all necessary documents. Local Sponsor Services: Consultants can help find reliable local sponsors.

By following these steps and potentially seeking assistance from business setup consultants, you can efficiently establish a new company in Dubai.