If you want to start a business overseas, just look at Dubai. As a renowned trading center in the Middle East and North Africa (MENA) region, Dubai offers many advantages for businesses and companies looking to thrive, thrive and connect with the rest of the world. At the start of 2019 alone, Dubai’s economy grew by 2.1%, with a total GDP of US$56.7 billion in the first 6 months of this year. In addition, a GDP growth of 3.8% is forecast for 2020. The prospect of growth is attracting more and more entrepreneurs to the city. Fortunately, the process is relatively easy if you are considering setting up a business in Dubai – especially in the form of the UAE Free Zone.
Things to Know for Setting Up a Business in Dubai
In general, there are a few things you need to understand before you start setting up your business in Dubai. Let’s look at each one.
Free Zones vs Offshore
Before setting up, you must decide whether you want to operate in free trade or offshore zone. Depending on your needs, both options have their own advantages and specifications.
If you want to own 100% of your business, you must apply for a license and a location in one of the Dubai Free Zones. The Dubai government introduced the concept of a free zone to attract foreign interest in setting up business in the city. This special economic zone allows business owners to enjoy a lot of property and 0% tax breaks.
However, one of the main limitations of running a free zone company is that you are not allowed to trade directly with the local UAE market. Currently, there are more than 30 free trade zones in Dubai. Generally, each free zone is designed around an industry category and offers licenses to companies within that category.
Offshore companies can also be registered in the free zone and enjoy many of the same benefits. However, this is not a substitute for a free zone company. The main difference between a free zone company and an offshore company is the type of business. Offshore companies are allowed to operate outside the UAE, not inside. They also do not have a minimum capital requirement that was put forward before incorporation. However, unlike operating as a business in the Free Zone, sponsorship is required, limiting your foreign ownership to only 49%.
Dubai Free-Zone Company Formation Process
Free zones are very popular with foreign entrepreneurs when starting a business in Dubai. For a good reason – free zones offer 0% corporate and personal taxes, 100% corporate ownership, 100% capital and profit repatriation, and no currency restrictions. Here are some steps you need to take for company formation in the Free Zone:
Find your Business Activity
The first step to starting your business and getting a license is to determine the nature of your business. There are more than 2,100 business activities to choose from, all divided into different groups within the industrial, commercial, professional and tourism sectors. The complete list can be found on the DED website.
Decision on a Free Zone
As mentioned, there are more than 30 free zones in Dubai. The nature of your business can affect the free zone in which you reside. Generally, it often makes sense to settle around companies in the same industry. The DMCC – the world’s leading free trade zone and Dubai’s government agency for trade in goods and companies – was named the Global Free Trade Zone of the Year by FDI Financial Times magazine.
Choose a Company Name
When choosing your company name, it is essential to adhere to the UAE’s strict naming rules. Names that contain offensive language may be considered religiously offensive or refer to a political group or Mafia are prohibited. When naming someone’s business, you must prove that the person is a shareholder or owner of the business (initials or abbreviations are not allowed). Naming your business can be a complicated process. You can save time and effort by consulting an expert to help you adhere to conventions and get your name approved.
Apply for Initial Approval
You must apply for an initial permit to ensure that Dubai DED does not mind starting a business so that you can start the next steps for your license. You can make this application online, in person, or through a third party (e.g., a law firm). The documents you need to provide will depend on the nature of your business, but in general, they are:
- Business registration and licensing form
- Copy of your passport or ID
- Copy of your residence permit/ visa
- The company’s articles of association
- Feasibility study of the project
If you need assistance with the application, please contact one of the professional business consultant experts. They can guide you through the process to ensure you have submitted and prepared the documents correctly.
Open a Corporate Bank Account
Once approved and all required documents are returned, you are ready to open a corporate bank account. There are many banks in the UAE, both local and international, to choose from. These include HSBC, Citibank, Barclays, Abu Dhabi Commercial Bank, Commercial Bank of Dubai and many others.
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