Establishing a company in Dubai for foreigners

In light of the rapid growth and remarkable economic development witnessed by the Emirate of Dubai, it is emerging as one of the most prominent global centers for business and investment. The opportunities to establish a company in Dubai for foreigners here are one of the most attractive options for foreign investors. Dubai combines modern technology and advanced infrastructure with an advanced legal and legislative framework that facilitates the establishment and operation of companies effectively and smoothly.

Establishing a company in Dubai provides foreign investors with a unique opportunity to benefit from several advantages, including access to a vibrant global market and an advanced infrastructure that supports all types of businesses, whether commercial, industrial, or services. Supportive government policies and simple company registration procedures add an extra touch of appeal to Dubai as a global business hub.

In this article, we will explore more about the opportunities and challenges that await foreign investors who plan to establish their companies in this unique city, as well as the essential steps that must be taken to succeed in the business world in Dubai.

Main steps to establish a company for foreigners in Dubai

To establish a company for foreigners in Dubai , here are the main steps to follow:

1. Choosing the type of company: The foreign investor must choose the appropriate type of company for his business activity, such as a limited liability company, a branch of a foreign company, or a company in a free zone, according to his goals and requirements.
2. Choosing a company name and ensuring its availability: The investor must choose a distinctive name and ensure that it does not conflict with the names of other companies registered in Dubai. This is done by checking the database of company names in the Department of Economic Development.
3. Determine the business activity: The investor must accurately define the company’s activity, as commercial licenses and authorizations differ based on the type of activity, and a license must be obtained from the relevant authorities in Dubai.
4. Appointing a local partner (if necessary): If the company is of a type that requires a local partner (such as limited liability companies in mainland Dubai), the investor must find a local partner who owns a certain percentage of the capital.
5. Submitting the required documents: These include the personal documents of foreign shareholders and directors, in addition to the incorporation application form, company contract, lease agreement, and preliminary financial reports if necessary.
6. Submitting the application and obtaining licenses: After completing the required documents, the investor submits the application to the Department of Economic Development in Dubai or to the competent authorities in the free zone if the company will be located there. After approval, the necessary licenses are issued.
7. Opening a bank account for the company: The investor must open a bank account for the company to manage its financial operations, after obtaining the necessary licenses.
8. Registering the company with the tax and social authorities: The investor must register the company with the local tax and social insurance authorities according to local legal requirements.

The legal and regulatory system for establishing companies in Dubai for foreigners

Establishing companies in Dubai for foreigners is done under the legal and regulatory system regulated by the Dubai Economic Regulatory Authority (DED), in addition to some regulations and regulations for free zones and special economic zones in Dubai. Here are the main aspects of the legal and regulatory system for establishing companies in Dubai for foreigners:

1. Legal types of companies: Foreigners can establish companies of several types in Dubai, such as limited liability companies (LLC), public or private joint stock companies, sole proprietorships, and investment companies, under local laws and DED regulations.
2. Foreign Ownership: In some regions and types of companies, foreigners are allowed to own a full share of the company without the need for a local partner. In other cases, the law may require a certain percentage of a local partner.
3. Licenses and Permits: The process of establishing companies requires obtaining the necessary licenses and permits from the Dubai Economic Regulatory Authority (DED), and this includes general or private commercial licenses depending on the company’s activity.
4. Financial conditions: Local authorities can impose certain financial conditions on companies being established, such as minimum capital or financial responsibility required.
5. Taxes: Some areas in Dubai have a period of no taxation on profits for a limited period, and there are variable tax policies depending on the type of company and business activity.
6. Legal Procedures: All foreign companies must follow local laws and regulations related to operating and investing in Dubai, including adherence to financial disclosure and reporting requirements.
7. Regulations for free zones: If the company is established in a free zone in Dubai, there may be special regulations and systems governing the company’s activity within this zone.
8. Registration and professional licenses: Establishing companies in Dubai requires completing the registration process and obtaining the necessary professional licenses from the competent authorities, while respecting the required administrative and legal procedures.

Different types of companies that foreigners can establish in Dubai

In Dubai, foreigners can establish several types of companies according to local laws and regulations. These are some of the main types of companies that foreigners can establish in Dubai:

Limited Liability Company (LLC):

• A limited liability company is a popular company form that foreigners can establish in Dubai.
• This company requires a local partner who owns at least 51% of the capital share, with the possibility of a prior agreement between the partners to distribute profits differently.

Joint stock company:

• It allows foreigners to establish a joint stock company in Dubai, where shareholders are only liable for their losses up to a basic limit.
• There must be shareholders who own the project capital.

Individual company:

• It allows foreigners to establish a sole proprietorship in Dubai, where the owner is solely responsible for all debts and losses.
• A sole proprietorship is not required to have a local partner.

Investment company:

• It allows foreigners to establish an investment company in Dubai, which aims to invest money in assets and projects inside and outside Dubai.
• An investment company can deploy capital for multiple investments.

Free Zone Company:

• Foreigners can establish a company in one of the free zones in Dubai, such as Jebel Ali Free Zone or Dubai Investments Free Zone.
• These free zones offer advantages such as full ownership by foreigners, no taxes for a limited period, and easy registration procedures.

Subsidiary companies (Branch Office):

• It allows foreign companies to open branches in Dubai, allowing them to benefit from the local infrastructure and market.

Licenses required to establish a company in Dubai for foreigners

To establish a company in Dubai for foreigners, you need to obtain a number of necessary licenses and permits, and these licenses vary depending on the type of company and economic activity. Here is a list of the main licenses foreigners need to set up a company in Dubai:

1. Business License: All companies are required to obtain a license to conduct the specific business activity. This can include licenses for activities such as retail, construction, professional services, health services, etc.
2. Building license (if required): If your company is in the construction sector or requires any building work or building modifications, you may need a building license from the local authority.
3. Environmental permit (if required): For companies active in industries that may affect the environment, such as chemical or petrochemical industries, you may need an environmental permit from the Environmental Protection Agency.
4. Professional licenses: Some professional activities may require special licenses for the professionals who practice them, such as medicine, engineering, accounting, and law.
5. Tourism license (if required): For companies operating in the tourism and travel sector, you may need a special license from the Tourism and Commerce Marketing Authority.
6. Transportation licenses (if involved in this field): If you plan to provide transportation or shipping services, you may need a special license from the relevant transportation authorities.
7. Permit for banking or financial activities (if applicable): For companies that deal in the financial or banking services sector, a special permit must be obtained from the Financial Services Authority in the emirate.
8. Security and safety licenses (if required): For companies operating in sectors that require special safety and security standards, you may need special licenses to ensure compliance with international standards.

Costs of establishing a company in Dubai for foreigners

The costs of establishing a company in Dubai for foreigners vary based on several factors, including the type of company and the region in which it is established. Here are some key points that affect setup costs:

• Capital: The required capital depends on the type of company. On the mainland, limited liability companies (LLC) may require a certain capital, while companies in free zones can be established with less capital.
• Legal and administrative costs: These include legal consultation costs, company registration fees, and costs of preparing legal documents such as contracts and approvals.
• Government fees: These include fees paid to local authorities, such as registration fees and necessary licenses, and vary according to the type of company and region.
• Labor costs: If a company intends to hire employees, additional payroll and benefits costs must be taken into consideration.
• Rental costs: If a company needs an office or work space, annual or monthly rental costs must be calculated.
• Additional costs: These may include marketing and promotional costs for the company, relocation and travel costs, and any additional costs that arise during the incorporation process.

At the conclusion of this article, it is clear that establishing a company in Dubai is considered an attractive investment option for foreigners, given the stable economic environment and advanced investment laws provided by the Emirate of Dubai. Dubai offers vast opportunities in various sectors such as retail, technology, real estate, and financial services, allowing investors to benefit from Dubai’s diverse and evolving economy.

One of the positive aspects of establishing companies in Dubai is the facilities for obtaining licenses and tax exemptions that encourage foreign direct investment. Dubai also provides advanced infrastructure and world-class facilities, making it an ideal destination for starting and expanding businesses in the region.

Despite the challenges that foreign investors may face, such as language and culture, cooperation with local experts and legal consultants can help to successfully overcome these obstacles. Therefore, foreign investors should take advantage of available resources and professional advice before embarking on any company formation process in Dubai.

The most important frequently asked questions about establishing a company in Dubai for foreigners