Dubai - Licenses

Dubai is a global city, and the business hub of the Middle East. It is the most populous city in the UAE and is located in the north-eastern part of the country. Dubai is one of the world's fastest-growing economies, with the most significant contributors to its GDP being real estate, trade, tourism, and financial services industries. Despite the Emirate's infrastructure having built on the oil exports over three decades ago, oil and natural gas contribute to less than 5% of its GDP now.

Why Invest in Dubai?

With unabashed architecture and exciting skylines, it is easy to comprehend why Dubai remains the fastest growing metropolis in the world and the tourism hub of the UAE. Growth here has been expediential, having transformed from a tiny fishing village to a major trading hub in less than 30 years. There are many reasons why one must invest in Dubai; they are as follows-

1. Dubai Expo 2020

One of the most talked after event currently in the world is Expo 2020. Dubai got the honor of hosting the World Expo in the year 2020. With the visitor number expected to reach 25 million, it will help to boost rental demand and deliver a strong ROI for investors. Scheduled to run between October 2020 and April 2021, this six-month-long carnival will be based on the theme' Connecting minds, creating future.' For the first time, this will bring together the best of innovation, trade, and products from all over the world to the UAE

2. Travel and Tourism

The hospitality and tourism industry is accountable for about 18% of Dubai's GDP. The Emirate has several attractions and events that promote tourism. The city hosts various art and cultural festivals like Dubai International Film and Festival and Dubai Jazz Festival and sporting events like Dubai Golf Desert Classic, Formula 1 Race, Rugby 7's, Dubai World Cup of Horse Racing and International Cricket Matches

3. Trade and Investment

Dubai has developed as a Forex and Derivatives hub through initiatives of the Dubai Gold and Commodities Exchange. It is a regional hub for trade and investment of commodities such as gold and precious metals, diamonds and colored stones, energy, tea as well as pearls and fashion jewelry. They accounted for 26.5% of UAE's non-oil foreign trade in 2008

4. Ease of Doing Business

According to the Ease of Doing Business 2019 report, the UAE scored 11th rank globally and 1st rank regionally. The indices on which UAE scored these ranks are-

• Getting electricity - 1st rank
• Paying taxes - 2nd rank
• Dealing with construction permits- 5th rank
• Registering property – 7th rank
• Enforcing of contracts - 9th rank
• Protecting minority investors – 15th rank

Set up your business by availing the licenses like Industrial/Service License, Trading/Commercial License, and Professional/General Trading License). You can choose from among a free zone, mainland, or offshore company in Dubai.

1. Free Zone Company

Free zones in Dubai are the most sought-after locations for international business operations. They attract foreign direct investment due to their policies that generate employment while supporting economic reforms. Free zone company registration Dubai is a highly profitable investment option for organizations because of incentives like:

• 100% foreign ownership
• Exemption of taxes
• Customs privileges
• More significant growth potential due to the strategic location
• Well established transport network and road connectivity
• Proximity to a large customer base
• Affordable cost for high-quality labor

2. Offshore Company

Many businesses prefer to set up an offshore company, also known as the non-resident company, in Dubai, as the income obtained from a holding company (offshore company) is not taxable.

Other than tax savings, people prefer having an offshore company as a holding company so that they can hold:

• The interest of other companies in a separate jurisdiction
• Licensing of franchises
• Intellectual property rights like patent, trademark, copyright, etc.

There are many features of offshore company formation Dubai like,

• Complete tax exemption
• Virtual office facilities
• No exchange control
• Provision to open a multi-currency bank account
• Stringent privacy laws and reliable confidentiality

The Department of Economic Development (DED), Dubai is the licensing authority that issues a license for significant activities. A fundamental prerequisite for all business activity in Dubai is to apply for and procure one of the following three categories of licenses:

1. Commercial License

If an investor wants to involve in trading activities or buying and selling of goods, they have to obtain a commercial license in Dubai. The DED issues this license for the businesses.

2. Industrial License

The industrial license in Dubai is issued for those businesses which transform natural material or natural resources into their final products.

3. Professional License

A professional license in Dubai is issued to an individual or a company to practice any profession which he/she relies on talent and intellectual abilities. It is meant for artisans, craftsmen, and other professional service providers.

Apart from this, one can apply for other licenses such as-

1. Import/Export License
2. Manufacturing License
3. Spa License
4. Freelance License
5. E-commerce License

There are many terminologies that one is unaware of before new company formation in Dubai. They are as follows-

1. Local Sponsor

Local Sponsor in the UAE refers to a local service agent or a nominee shareholder in mainland companies with foreign investment. A sponsor has to be an Emirati with a family membership card. If one wants to open a business in mainland Dubai, then they must have a local sponsor. A local sponsor will own 51% of the shares in the company, while the foreign investor will own the remaining 49%.

2. PRO Services

In Dubai, setting up a business involves legal guidelines following the Department of Economic Development (DED), Dubai Immigration, the Ministry of Labour, and other public departments. PRO services can come in handy if one is new to the corporate milieu in Dubai or doesn't have considerable experience in business set up here.

3. Dubai Business Centre

To start a business in Dubai, you must have a registered office. For that, one must research the market they wish to cater to. It can be the mainland, free zone, or an offshore. The different types of office space options are-

• Serviced office
• Onshore office
• Free zone office

4. Tax Residency Certificate

Also known as the Tax Domicile Certificate, TRC is issued by the Ministry of Finance, to take advantage of the double taxation avoidance signed between the foreign jurisdictions and the UAE. It means that if you are an expat with a business in the UAE, you can avoid paying taxes in your home country by obtaining a TRC. This can be done only if your country is in agreement with the UAE.

Dubai is a commercial capital of the United Arab Emirates. The 'City of Gold' provides vast business opportunities and innovative commercial modules for enterprises from around the capital. International exposure and an investor-friendly government are just two of the factors that motivate entrepreneurs to start a business in Dubai. Don't forget about the perks on investments and tax benefits when compared to other countries.

For new company registration in Dubai, these steps may be followed:

1. Choose the Trade Name for your Business

The first step is to secure a trading name and do the necessary research to make sure that the name isn't already in use. Submit the proposed company name and registration application to the Department of Economic Development (DED)

2. Determine the Type of Business

From the list mentioned above, determine the corporate entity you wish to incorporate in Dubai. The type of business depends on the business activity that you choose. In Dubai, a Limited Liability Company is the most-preferred business entity in the Emirate

3. Choose a Business Activity

The nature of the business can have a bearing on which business jurisdictions one chooses. For example, if an investor wants to start a company in any of the Dubai free zones, the different free zone is dedicated to different business activity. And an investor can choose depending on what they want their business to be.

4. Draft a Memorandum of Association

An MoA includes the details of shareholders and the company. Minimum share capital is usually set out in the Memorandum of Association of your proposed company. Get the company's Memorandum of Association in notarized in the DED

5. Submit Required Documents

Apply for registering a Dubai business at the Dubai company register. Attach documents of the company with the DED to obtain a trade license from the Chamber of Commerce and Industry. While perhaps the most difficult of all these steps, the paperwork does not have to be too taxing providing it is undertaken with expert help. A business setup partner can advise you on the paperwork required and help you complete it.

Documents Required

• License Application
• Attested LLC agreement
• Governmental forms
• Name reservation certificate
• Initial approval certificate
• External departments approval
• Tenancy contract
• EJARI registration certificate
• Passport copies partners and NOC for partners (if any)
• Dubai Chamber of Commerce and Industry Registration

2. Open a Business Bank Account

Dubai is home to many banks, both local and international. The requirements to open a bank account in Dubai vary from bank to bank, but the process requires the presence of a director and a shareholder. For an offshore company, before Dubai business formation, they are required to open an offshore account.

3. Apply for an Establishment Card

An establishment card in Dubai is issued by the Ministry of Labor (MoL). Having this card allows a business to hire staff, obtain work permits, and apply for visas on behalf of its employees. The card verifies that the company is registered with the Ministry of Labor and has a registration number.

4. Visa Application

After obtaining the establishment card, one can apply for a visa in Dubai along with staff and dependents. This advantage is available in any of the Dubai free zones, but the number of applications to be sent depends on which free zone one chooses to set up from.

5. Register Employees with Social Security

Social security in the United Arab Emirates is the old-age pension for retired workers and employees. Once an individual reaches the official age of retirement, they are entitled to a pension. It is based on their average salary during the few years of employment and the number of years they have contributed.

Here are few booming industries in Dubai for investment.

Travel and Tourism Business

There are many significant tourist attractions in Dubai, like Burj Khalifa, Dubai Fountain, Palm Island, Dubai Creek, and Aquarium. Naturally, many tourists flock into the Emirates to see and enjoy these places. To start this business, one needs to have a tourism license in Dubai issued by the Department of Tourism and Commerce Marketing (DTCM)

Restaurant Business

Dubai's population includes people from different parts of the world, and that brings a variety of cuisines offered by the city. The food industry has the highest growth out of all the other sectors in Dubai. Increasing growth is one of the reasons to choose this industry for business in the city. The restaurant business in Dubai can be set up after getting 'Food Code' from the Food Control Department.

E-commerce Business

Dubai is not far behind to become 100% active e-commerce business. The area is known for high internet penetration and literacy rate, the e-commerce is set to achieve a market of AED 40 billion. It has become increasingly essential that companies increase their footprint to get users attention. Hence, the e-commerce business is something an investor can look forward to investing in Dubai.

Freelancing Business

Dubai has come up with different projects in all different divisions. It is on the way of getting the projects channelized through digitalization. Digitization creates a lot of opportunities for international investors to take their footsteps towards forming a business as well as individuals and experts to work as a freelancer in Dubai to meet the projects at a speedy pace.

Construction Business

There is a massive competition in GCC and the Middle-east region for skyscrapers and Dubai has the upper hand. The city is a hub to the world's highest building and has helped it to become number one in the construction business. To start this business, investors need to obtain a construction license in Dubai from the Department of Economic Development.

Import/Export Business

The import and export market contributes to a significant scale in the economy of Dubai. It is most profitable for investors and business owners to set up business in the import and export industry in Dubai. Obtaining import and export license from the registered authority is one of the most crucial steps to start a trading company.

For a foreigner, it might get difficult to understand the concept of 'free zone,' 'offshore,' and 'mainland' in Dubai. One must have complete knowledge of what each jurisdiction provides to its businesses. Hence, to clear away the confusion, a differentiation table has been prepared.