How do I set up a business in Dubai? - Part 1

12-4-2015

How do I set up a business in Dubai? This is a question our Dubai office often receives, from a very diversified crowd. From entrepreneurs, to companies already settled in the region looking to expand their business, to international operating companies who see the benefit of expanding their business to the United Arab Emirates. 

There are many different legal forms for setting up a business in Dubai, but the first step is to determine whether the intention is to do business with the local United Arab Emirates (UAE) market or not. If the former, the preferred company form is a Limited Liability Company (LLC), in which a foreign company holds an equity ownership of 49% and 51% of the equity is held by a UAE national. Therefore, if one decides to opt for setting up a company in Dubai mainlanda local sponsor must be found. A Limited Liability Company could therefore be seen as a joint-venture between the foreign entity and UAE national.

An exception to the rule is when the foreign entity is engaged in a certain profession (service providers, professionals, artisans and craftsmen). In this case it is possible to obain a "professional license" which allows 100% ownership,  and the UAE local will be considered as local service agent only and will not own any equity.

However, many foreign companies do not intend to do business directly with the UAE market. In this case a company can be set up in a so called "Free Zone". Setting up a Free Zone Limited Liability Company (FZ-LLC) or Free Zone Establishment, allows for 100% foreign ownership, and guarantees tax exemptions for at least 50 years.

Even though this sounds very attractive, it does go together with making some important choices which can be stressful. Why? Because there are more than 40 Free Zones, all with a different focus on activities and industries. In addition, the types of legal forms may vary, but also the minimum capital requirements. The most commonly used legal forms are a Free Zone Company, a LLC or a branch/representative office.

As you can see, there is plenty of choice. 

Did we spark your interest? Do you have questions? Please do not hesitate to contact us on our website www.watermillconsultants.com or send an e-mail to info@watermillconsultants.com

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