Incorporation of Companies in Dubai
The first step to incorporating a company in Dubai, is to choose the legal form of the company, this will determine the structure of the company and the type of business you can acquire, Dubai Economic Department provides more than 2,000 businesses available for use.
Establishing a trading company in Dubai
Company incorporation
Entrepreneurs and investors prefer Dubai for their company formation because of its investment versatility and strategic market location. A mainland company is a legal entity registered under the Dubai Economic Department (DED) and governed by the UAE commercial company law (Federal Law No. 2 of 2015). Dubai is a rapidly developing global marketplace with tons of promising investment opportunities. This has greatly contributed to the challenges encountered in forming a mainland company in Dubai.
Dubai mainland presents better advantages in terms of company expansion and investment opportunities as against the free zones in UAE. Mainland companies are permitted to trade anywhere in UAE or wider Gulf Cooperation Council (GCC) states.
How to set up a company in Dubai?
Establishing a company in Dubai consist as follows:
- Choose the appropriate company activity – which will determine the type of license to be obtained.
- Choosing a citizen partner for a limited liability company or a service agent for sole proprietorships
- Issuance of initial approval and selection of the trade name which is a must to contain the same activity
- Preparing memorandum of association or service agent contract and authenticate by a notary public in Dubai
- Obtaining a lease contract after finding a suitable office
- Obtaining external approvals from the relevant government agencies
- Submit the final documents to DED and issue the trade license
Types of licenses can be obtained in Dubai?
Most common types of licensing in Dubai are:
Commercial license
The Commercial license is the most common trade license in Dubai, it includes all kinds of commercial activities, it can also include some professional activities, if approved by the Dubai Economic Department, the activities must be linked to each other, most investors choose the general trading activity, this allows them to practice multiple direct trading activities in one license, and enables them to import and export almost any product to Dubai, except trading of some products which requires approvals from other government departments such as jewelry, magazines and newspapers trading, the legal form can be sole establishment for locals and GCC nationals or LLC.
Professional license
This license type is the easiest to do, it must include professional activities only, usually new investors go for this type because of the cost, it’s cheaper from the other types and you can quickly issue the license, all consultancy activities must take a form of a professional license, the legal form can be either a sole establishment or a civil company in case of more than one investor, this license type is easy to form, amend and cancel, some professional activities include: Consulting, typing, drawing, and designing.
Industrial license
This license is issued for industrial and manufacturing activities, it usually takes a form of an LLC, the location of the license must be a warehouse or a factory, the location can be an office for the first year if approved by DED, most of the industrial activities require external approvals that include: ministry of economy, civil defense, municipality, and other departments, some industrial activities include: manufacturing, packaging, filling and producing of many products.
Tourism license
This license type is issued for tourism activities only, the form is usually an LLC, it requires the approval of The Department of Tourism & Commerce Marketing (DTCM), for the most activities, the requirements include an insurance policy, you should rent an office in Dubai mainland, the minimum space is usually 300 square feet, some tourism activities include: inbound and outbound tours, hotel and travel agency.
What are the legal forms of companies in Dubai?
The most common legal forms are:
A sole establishment is owned by a single person mostly referred to as a sole proprietor. The sole proprietor owns 100% of the sole establishment. A corporate body or a group of individuals cannot set up a sole establishment. A sole establishment is permitted to carry out a number of activities in the commercial, industrial and professional sector in Dubai. If the sole proprietor happens not to be a national of UAE or GCC, a UAE national will be appointed on contract as a Local Agent for the establishment. This local agent will be paid an annual fee for representing the company in liaising with the government for licenses and labor card, the sole establishment can appoint one manager only as per DED business regulations, but it can have multiple branched inside Dubai.
Advantages:
- Easy setup and closure
- Sole risk bearer and profit recipient
- Absolute control
- No personal income taxes
- No capital
- Low cost
Disadvantages:
- Unlimited Liability
- Lack of sufficient Resources
- Lack of sufficient managerial skills
- Lack of business continuity
- No Separate entity
The one-person limited liability company is owned by one natural or one corporate body, it consists of one person only. It is similar to the sole establishment but it differs in some provisions, the most important of which is that its liability is limited to the single partner’s share, whereas in the sole-proprietorship the liability is unlimited, a local a GCC national can establish and own a one-person company (LLC), the trade name of this company should be: Shareholder’s name + the activity + the legal form+ LLC, it can have up to 11 managers, the manager can be of any nationality.
Advantages:
- Easy setup and closure
- Sole risk bearer and profit recipient
- Absolute control
- No personal income taxes
- Limited Liability
- Low cost
Disadvantages:
- Lack of sufficient Resources
- Lack of sufficient managerial skills
- Lack of business continuity
Dubai’s flourishing economy provides excellent investment opportunities for Professional investors looking to establish a civil company in UAE. A civil company is a business partnership for professionals. The shareholders of a civil company can be of any nationality. If the owners are nationals of a country other than the UAE or the GCC, they require a Local Service Agent (LSA). The Local Service Agent will help in the obtaining of a professional license, visas, labor card and various other documents from concerned authorities. There is no minimum capital requirement for the setup of a civil company in Dubai, a civil company can practice consultancy activities but must be 100% owned by professional partners, it can appoint one manager only as per the DED business regulations.
Advantages:
- Easy formation and closure
- Sole risk bearer and profit recipient on the partners
- Absolute control
- Medium Cost
- No personal income taxes
Disadvantages:
- Unlimited Liability
- Lack of business continuity
- No Separate entity
The Limited Liability Company is the most common legal form in Dubai due to the various option of trading activity it provides. LLC is licensed to carry out industrial, commercial, professional and even tourism activities in Dubai. LLC must have between 2-50 shareholders. 51% share volume of a Limited Liability Company should mandatorily be owned by a local sponsor or partner who is a UAE national. The shareholder’s liability is limited to their extent of share in the company’s capital although investors retain maximum legal ownership of LLC in Dubai, LLCs can practice any industrial, commercial, professional or tourism activity.
Advantages:
- Unlimited visa quota.
- Easy expansion of business.
- The absence of business interruption by the sponsor or the partners.
- Properties and assets would belong to the company, not the partners.
- Investors are permitted to have credit cards and bank accounts in Dubai
- Full repatriation of capital and profits
- No personal and capital taxes
- No corporate taxation
Disadvantages:
- Sponsors are required most of the time for financial activities since they own 51% of the company shares.
- Sponsors are somehow liable for the company management the investor leaves the UAE.
Many foreign organizations seek to open branch offices in Dubai because of its numerous trade benefits. A branch of a foreign company can practice professional activities including some commercial and industrial activities with a special permit from the Ministry of Economy. The company branch basically provide a branding service for the parent company and can also be involved in the provision of service and products in Dubai. The branch company must operate under the name of the parent company and provide the same services as the parent company. Foreign companies require the service of a local agent for the formation of a branch office in Dubai. The Local Agent will liaise with the government for the issuance of trade licenses and labor permits.
Benefits of A Branch Company:
- No personal and capital taxes
- No corporate taxation
- Full repatriation of capital and profits
- No restriction on currency
- Competitive import duties (5% with many exemptions)
- Considered as and an offshore company in Dubai
- An easy staff recruitment process
Foreign companies establish representative offices in Dubai for the sole purpose of promoting their activities. A representative office is not a business structure in its own, but rather a business activity that a foreign branch can conduct in the promotion of its products and services. A Local Service Agent is required in the formation of the representative office in Dubai. The contracted Local Service Agents represents the company in liaising with the government for obtaining licenses. Dubai government offers a 100% foreign ownership of this type of establishment. Foreign investors do not require local sponsor or partners in the formation of a representative office in Dubai.
Representative offices in Dubai are allowed to carry out commercial activities of the parent company only after due registrations and permit issuance from the following government authorities;
- Dubai Economic Department
- Ministry of Economic and Commerce.
- Chamber of Commerce.
Representative office formation in Dubai requires serious paper works and important decision-making processes. With our full support and assistance, your representative office will be up and running in no time. Our many years of experience in Dubai mainland business setup will help us provide you with the best representative office setup strategy.
Documents required to establish a company in Dubai
For individual partners
- A copy of the passport + a copy of the Emirates ID for all shareholders
- No objection certificate from the current employer for all nationalities except UAE nationals and GCC nationals
- In case the partner arrives with a visit visa, a copy of the visa + entry stamp
For corporate partners
- A copy of the license or registration certificate
- The decision of the company’s board of directors to buy the shares
- All documents must be attested by the Ministry of Foreign Affairs and translated into Arabic
- Copy of the manager’s passport and a copy of the visa
Note: Some nationalities may require a security approval at the time of submission, for these nationalities the partner is required to be present, additionally it’s a must to bring the original passport and 6 month bank statement from the resident country.
Steps to establish a trading company in Dubai
When you decide to start a branch or setup a new company, picking the best business setup consultant in Dubai is just as important as any other process involved. Our business setup consultancy is a highly positioned company with many years of experience and skilled experts who are well abreast with the company formation procedures. The business setup in Dubai follows a number of steps which can be achieved in the shortest time frame with the proper assistance. The setup process includes:
This is a very important aspect of the business setup process. The quality of the name chosen will go a long way in telling your potential customers about your company and the services you render. This stage must be undertaken with patience as most good trade names have been taken or reserved. Picking out a trade name is an important aspect of the general guidelines necessary for the issuance authority.
One of the most important aspects when you decide to start a company in Dubai is finding a suitable company local sponsor who is professional and trusted to act as a nominee partner or local service agent.
This stage ensures the authorities awareness of your business and the verification of all required documents. All paper documents including passports copies, visa copies and NOC’s are submitted for verification. This stage also entails the signing and submission of application form for approval.
Finding an office space after the issuance of the initial approval is important for the company setup in Dubai. Depending on the type of license obtained, the office location and options available might vary. In a case where your license is a mainland license, more options such as the business bay and Sheikh Zayed road are available for the taking. The business centers in Dubai provide furnished offices with a rent including all utility bills.
This stage of the process requires all partners involved to sign a partnership agreement which includes a declaration of the company’s capital, shares and the profit of each partner. This agreement would be attested at the notary public. This procedure might differ depending on the type of license acquired.
After thoroughly vetting all submitted documents and fulfillment of all requirements, the DED issues the final payment voucher. After payments are made, your official business license will be issued and your company can legally operate in Dubai.
The Company Incorporation Department of Excellence Awards Academy provides full assistance in setting up your business and provides entrepreneurs with outstanding professional advice, accelerating the process of company formation in Dubai.