Business Setup in Dubai: Ultimate 2021 How To GuideGoldenVisasAdmin2020-11-17T08:04:42+00:00
Business Setup in Dubai: Ultimate 2021 How To Guide
Given its ease of doing business, attractive tax options and Free Zones, companies from around the world are flocking to Dubai to set up new companies. To the uninitiated, setting up a business in Dubai can appear quite daunting at first, especially in terms of the administrative, financial and technical requirements. But providing that you choose to work with experienced company formation consultants in Dubai, the setup process can be fast and seamless. Working with our business formation experts in Dubai, you can get set up and trading tax efficiently in the shortest time possible.
Discover the basic steps required to set up a new Dubai business below, or contact us now for a free consultation.
EASE OF DOING BUSINESS: The World Bank has rated Dubai as the 16th easiest place in the world to do business out of 190 countries rated. Up until 2018, the country was rated as the 11th best place in the world in terms of this indicator. Underlying indicators to the World Bank index include how conducive the regulatory environment is in terms of facilitating business operations, as well as how well foreign and local property rights are protected. Countries ranking in the Top 20 typically have simple, straightforward business formation processes and regulations that are easy to adhere to, with very little bureaucratic red tape.
TAX BENEFITS: Economically speaking, the government of Dubai has sought to create an enabling business environment with the minimum obstacles to foreign investment and success. Some of the measures implemented to facilitate this include:
As of 2020, the Dubai VAT rate is set at only 5%, with exceptions across various food types, health, education and social services.
Dubai based employees are not required to pay personal income tax
Dubai does not charge any direct corporate taxes, except for those applicable to oil and gas companies and the branches of foreign banks.
Customs duties are exceptionally low at 4%, with many exceptions.
100% repatriation of capital and profits is permitted
Dubai has no trade quotas or trade barriers, and no foreign exchange controls are applicable.
3. COSMOPOLITAN BUSINESS HUB: Dubai is the second-largest economy after Saudi Arabia. Home to over 200 nationalities, Dubai is the world’s most cosmopolitan city. In addition to being a strategically located business destination, Dubai is a hub for financial services, hospitality, retail, healthcare, services and renewable energies, with some of the largest companies in the world headquartered in the city. The diversified economy makes the city the business location of choice for small, medium sized and multinational enterprises alike.
4. UAE FREE ZONES: In an effort to drive foreign investment and economic diversification, the government of Dubai created over 30 Free Zones, also known as Free Trade Zones. These are essentially economic areas where services and goods can be traded at preferential customs and tax rates, making them highly attractive for companies seeking to establish a business footprint in the UAE while optimizing their global tax commitments. There are currently 45 Free Zones across the UAE, however the majority of them are situated in Dubai.
Forming a new business in Dubai in 2020: The Process at a Glance
The below overview offers a high-level summary of the steps required to open a new business in Dubai in 2020:
STEP 1: Contract experienced company formation advisory firm to help guide you through the process. Working with reputable business setup consultants in Dubai will help you avoid the potential pitfalls you may not be aware of, and will speed up the company setup process considerably.
STEP 2: Select the appropriate Free Zone based on your intended business activity
Where you set up shop will be informed by the type of business you intend to establish in Dubai. The above list should help you identify the free zone best suited to your business. If your new business will be relying on imports and exports, proximity to a port or airport will factor into this decision as well.
You are able to operate various types of business activities under a single Dubai trade license, but making this decision earlier rather than later can help you avoid complexity later on in the process of establishing your business.
STEP 3: Choose a name for your new Dubai company
This may seem like a relatively trivial step, however Dubai has rather strict regulations in this regard. As a rule of thumb, avoid profanity, religious reference or anything that could be construed as suggesting potential illegality.
If your company is to be named after a person, the individual whose name is being used must be a partner or owner, and in this instance their full name must be used, i.e. no abbreviations are allowed. Confirming that your proposed name conforms to regulations prior to applying will help you avoid potential rejection on an avoidable technicality.
STEP 3: Your business setup consultant can advise you on the relevant requirements and help you compile your application and supporting documentation. Depending on which Free Zone you select to incorporate your business in, you may be required to submit additional documentation such as a business plan to the relevant governmental authorities.
STEP 4: Application review and approval / disproval: Should your application be successful, you’ll receive your license notification, and the government will issue you with a company license.
STEP 5: Open your business bank account: Once your documentation is returned, you will now have all the required documentation on hand to open your corporate bank account. Many of the world’s top international banking brands are represented in Dubai, so you can either choose your own preferred bank, or consult with your business setup expert to identify the bank offering the most convenient and predictable account application process.
STEP 6: Apply for your Dubai residency visa: Many free zones will enable you to apply for visas for staff and/or your dependents; your business setup expert can advise you on what’s possible and the process steps involved in obtaining a residency permit. You would typically need to obtain a Dubai entry permit, followed by a status adjustment step, a medical test and then by ID registration and visa issuance.