How to establish a business in Dubai?

Dubai, commonly referred to as the city of gold, has numerous business opportunities, thanks to its international exposure and population diversity. The city is the business capital of the UAE.

How to establish a business in Dubai

Apart from having innovative commercial modules for all, the government is also quite welcoming to investors worldwide. These and other beneficial perks, such as tax benefits, are the reasons why Dubai remains one of the best cities to establish a business in the world.

However, how to make business in dubai is not always easy, regardless of the region you aspire to invest in. Therefore, whether you’re a foreigner or a local, you will need guidance to set up a business in Dubai. Here are important details you need to know about the Dubai business ecosystem.

Understand Economic Zones

In Dubai, business is conducted slightly differently from other countries. There are two economic zones to operate your business: Free Zones and the mainland. Each area has its own set of rules and is beneficial in different ways.

Free Zones

Free zones are geographically defined regions within the UAE that aren’t necessarily gated or fenced. In these free zones, investors are allowed 100% ownership of their businesses. This means that foreigners do not need to have partners to legally own and operate their businesses.

Businesses operating in a particular free zone are dedicated to a specific industry and have licenses related to that industry. In these free trade zones in Dubai, all companies running in them are free from paying all sorts of taxes, including Value Added Tax (VAT), Corporate Tax, Income Tax, and Customs.

Dubai’s government initiated the idea of setting up free trade zones in a bid to spark foreign investment in the city. Today, there are more than 25 operational free zones in Dubai. The only limitation to setting up your business in Dubai free zone is that you won’t be authorized to trade directly with the UAE local market.

Mainland zone

Any business formed in Dubai’s mainland is an inland company and can trade freely with the UAE local market. However, an investor will require to partner with a local sponsor who owns a 51 percent share of the business. The good thing is that the local partner does not make decisions on the daily activities of the company — the foreign investor retains full control of operations.

Also, since a business in the mainland can conduct business in the local market, it becomes easy to open branches in UAE and across the world. Suppose you are looking for investment without restrictions on the type of business activities. In that case, the Dubai mainland is the way to go.

License categories

Obtaining the right licenses should be one of the first things when establishing a business in Dubai. There are three types of licenses you can get from the Department of Economic Development (DED), which is tasked with granting licenses and registration of businesses.

Professional license

This license is given to companies that offer specialized services. Categories of businesses that fit into this category include healthcare providers and repair services providers. With this license, an investor can have full ownership of their business.

Industrial license

In Dubai, this license requires the company to have a physical warehouse. It is only allocated to companies that take part in production, segregation, assemblage, and packaging.

Commercial license

A commercial license is in Dubai is handed out to companies involved in commercial trading activities. This license works as both the regulation and protection for trading companies and covers real estate, travel & tourism, sales, logistics, and general stores.

Business Setup in Dubai

When setting up a business in Dubai, following the correct legal steps as detailed below will keep you on the right track.

Settle on an ideal business activity

Before setting up your business, you first have to make up your mind about exactly what you want to do. After deciding what your business will focus on, you can get the appropriate licenses and approvals.

In Dubai alone, there is an excess of 2,000 business activities ​to choose from, and they all fall into various categories. The DED website can help you identify the industry your business falls into.

Pick a suitable economic zone

In Dubai, the nature of your business often determines its location. Free zone businesses in the same industry are usually located in the same location. Offshore businesses, on the other hand, are located on the mainland. However, they operate under different rules from free zone businesses.

Select an ideal company name

In business, your company’s name can sometimes determine your success or failure. Lucky for you, the UAE has strict naming conventions that serve to ensure you do not offend a given religion, political party, or any other group.

Also, the name you choose should not disregard the country’s public morals. With so many things to consider, you should take your time before deciding on an appropriate name for your business.

Get an initial approval

Before applying for a business license, you’ll have to get initial approval from the Dubai DED. Approval is another way of showing that your business is legitimate and approved by the state.

After you’ve completed this process, apply for a business license based on the nature of the business you’d like to set up. The documents you’ll need to provide will depend on your business nature, but generally are:

  • Business registration and licensing form
  • Business plan
  • Copy of your passport or ID
  • Copy of your residence permit/ visa
  • The business’s articles of association
  • A letter of Intent

Create a business bank account

Every business has to have a separate bank account from the owner’s account. Upon completion process, you can proceed to open a corporate bank account. Being a major economic city, Dubai boasts numerous banks that you can choose from.

These include Barclays, Citibank, Emirates NBD, HSBC, Abu Dhabi Commercial Bank, Dubai Islamic Bank, and Commercial Bank of Dubai. This is just but to name a few.

Select an ideal office location

What good is a business without office space located strategically? When it comes to office space, you can either rent or lease. The size of your office space will be dependent on the nature of the business you have, and the number of employees needed.

In Dubai, all businesses must have a physical address. If you want to set up your business in the free zone, you don’t have to struggle much since office space is readily available.

The last step of setting up a business in Dubai involves submitting all your documents for final approval. For this to happen, you will be required to have your licenses, location addresses, and legal information with you. You can only get the final approval if you’ve paid all the licenses and registration fees. The cost depends on your type of business activity.

Online Business Opportunity in Dubai

Dubai is ideal for setting up an online business, especially in today’s digital world, where almost everyone has embraced online buying. Some of the businesses you can start to include;

Social media marketing business

With digital marketing, businesses worldwide can easily reach more potential customers and make plenty of profit. Luckily, Dubai is a metropolitan city with a greatly diversified population, including tourists who would rather buy something online and avoid the hustle of going around looking for something. Therefore, many businesses that want to spread their message to more customers will need your services as a digital marketer.

Translation business

Like in most countries, some documents are printed in the local language. Given that the local language is Arabic, some people may have a hard time reading the contents of a document. You could capitalize on this and set up an online translation business and translate user guides and technical manuals for foreigners, among other documents.

Trading business

One of the reasons trading is a good business to start in Dubai is that it has no relationship bias. This means that you can buy or sell online without knowing or building a rapport with the buyer or seller. Dubai’s business sector offers an opportunity for anyone to set up a trading business.

Trading businesses involve buying and selling currencies, equities, and indices. Setting up a trading business can be quite rewarding with multiple blue-chip companies already existing in Dubai.

Food delivery business

As Dubai’s tourism industry continues to boom, multiple hotels and restaurants are continuously setting up businesses in the city. Given that most people today prefer ordering food online rather than cooking, you can easily profit in a busy city like Dubai by setting up an online food delivery business.

Online Consultancy business

The consultancy has for the longest time been profitable in Dubai. Unlike in the past, where you had to have a physical office, you can now set up your consulting business online. Consultants often avail solutions to help businesses grow by implementing beneficial strategic plans. Dubai has very many businesses to which you can render consulting services.

Tutoring business

With thousands of people moving to Dubai either for work or business, the education sector thrives. Today, Dubai’s population has increased significantly, and so has the student population. Starting an online tutoring business could see you reap huge benefits. School children are not the only people you can focus on.

Dubai is full of foreigners looking to either learn a new language or add a new skill. With proper knowledge of various academic disciplines, you could easily establish business in Dubai as an online tutoring.

Web design business

To generate more revenue and give a good impression to customers, it needs a high-quality website. A business’s website is sometimes its number one promotional tool. With Dubai’s competitive business environment, one can easily make a lot of money by setting up a good web design business.

Business Etiquette in Dubai

As a businessperson, it is important to grasp the importance of business etiquette in a country like the UAE. In Dubai, the majority of the population is made up of Muslims.

As such, it is important to understand the law of the land. With regards to language, most people in Dubai are of Arabic accent. If you would like to set up your business in the city, it is wise to consider learning Arabic, even if you start from basic. You will relate better with stakeholders.

All religions have different customs, and Muslims are no exception. For Muslims, dressing modestly is a given requirement. Emirati males prefer dressing in kanduras while women prefer dressing in a black garment covering most of their bodies. Expats are free to wear whatever they want, although women are not supposed to be too revealing.

In Dubai, most business meetings take place physically. Before the coronavirus pandemic, face-to-face meetings were preferred to video and phone calls. When it comes to appointments, all meetings are supposed to be scheduled at least two weeks in advance.

It is also important to understand the working days in Dubai. Unlike most countries, working days in Dubai are between Sunday and Thursday. Fridays and Saturdays are prayer days, and it is not wise to set meetings on these days.

Greetings are a common part of the business. Typically, it is normal to shake hands when meeting a business partner. In Dubai, however, the rules are slightly different. When greeting people in Dubai, you ought to greet each other with the right hand and then proceed to put your hand on your chest as a token of respect.

For men, it is not right to shake a woman’s hand unless they initiate the greeting. Also, men and women are not supposed to touch each other excessively in public.

As a business person in today’s competitive environment, not having a business card with you at all times could result in you losing clients. When exchanging business cards, it is wise to print one of the sides in Arabic since that’s the local language.

Best Business to Do in Dubai

If you’re unsure about which business to start in Dubai, you can consider the following:

Consultancy Service

With many businesses having already been set up in Dubai, starting a consultancy business would be a wise thing to do. The primary objective of consulting businesses is to evaluate and work out dilemmas a client’s company faces that hamper its growth.

Suppose you are qualified enough to offer such services. In that case, you can establish a consultancy business and offer your services in specific fields. Before starting any business in the UAE, it is important to ensure that you’re equipped with the necessary approvals.

E-Commerce Solutions

With revenues from e-commerce in the UAE at record levels, it is safe to say that starting an e-commerce business in Dubai is a good idea. The UAE has an excess of 9 million Internet users and an Internet penetration rate of over 90%.

Furthermore, the government launched an E-commerce strategy to solidify the city’s stand as a major e-commerce hub in the middle east. If you’re thinking of starting an e-commerce business in Dubai, then the time is now.

Travel and Tourism business

Dubai is a recognized tourism hotspot thanks to its amazing beaches, modern architecture, and civilization, unlike most middle-eastern countries. Additionally, the city underwent numerous beneficial changes over the past few years. It arguably holds the title of the most “business-friendly” city in the middle east.

With thousands of people visiting Dubai every year, investing in Tourism can yield plenty of profit. To successfully start a tourism business, you first ought to decide the nature of the activity since the industry is huge and then apply for the right business license.

Real Estate business

When it comes to investing in real estate, the percentage of returns often determines whether a location offers an attractive proposition for investors or not. Cities like London and New York offer average returns below 5%, whereas Dubai can generate yields exceeding 6%.

The main advantage of venturing into real estate in a thriving city like Dubai is the fact that there is a huge demand for other related services like property management and brokerage. You can even opt to start a real estate agency as an investor.

Construction Sector

In the past decade alone, Dubai has seen an unmatched development of buildings and infrastructure. Even today, Dubai is proceeding with further construction projects. There doesn’t seem to be any stop to construction in the foreseeable future.

What is particularly interesting is that the governing bodies in the construction industry are quite supportive. They assist investors and other entrepreneurs in obtaining the relevant resources and authorizations required to start a construction business.

Restaurant Business

Why wouldn’t you start a restaurant business in a city where thousands of visitors come every year? Today, Dubai is one of the world’s fastest emerging food destinations. This is partly because of the favorable business environment and a wide market.

It is worth noting that Dubai has a diverse population comprising people from different backgrounds. With such diversity, opening a restaurant in the city can yield plenty of profits.

To successfully establish a business in Dubai, arm yourself with the right information and comply with all legal and business requirements. The good thing is that whether you choose the free zone or mainland, online or offline business, Dubai is a business hub that will not disappoint.

Questions & Answer

Steps to Setup a Business in Dubai

  1. Settle on an ideal business activity
  2. Pick a suitable economic zone
  3. Select an ideal company name
  4. Get an initial approval
  5. Create a business bank account
  6. Select an ideal office location

What types of licenses are available for setting up a business in Dubai?

Obtaining the right licenses should be one of the first things when establishing a business in Dubai. There are three types of licenses you can get from the Department of Economic Development (DED), which is tasked with granting licenses and registration of businesses. These include Professional license, Industrial license, and Commercial license.

What documents do I need to provide when setting up a business in Dubai?

Generally, the documents you’ll need to provide when setting up a business in Dubai are: Business registration and licensing form, Business plan, Copy of your passport or ID, Copy of your residence permit/ visa, The business’s articles of association, and A letter of Intent.

What business etiquette should I be aware of when setting up a business in Dubai?

When setting up a business in Dubai, it is important to understand the law of the land and the local culture. This includes understanding the working days in Dubai (Monday – Friday), dressing modestly, greeting people with the right hand and putting your hand on your chest as a token of respect, and exchanging business cards with one side printed in Arabic.

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