“UAE is a Pro-business country and it is one of the main attractions for entrepreneurs and HNWI customers as it is also known to be a Tax-free country.”
Setting up a business in Dubai is less complex as compared to many other countries offering onshore or offshore company set up. UAE has one of the best infrastructures to support businessmen and individuals to work, live and take the maximum benefit out of it.
UAE Is recognized as beingone of the best in terms of its offerings in Health Care, Education, Security, Transportation, and banking supports.
This makes UAE the best place to live and operate the business. In terms of connectivity with the rest part of the world, UAE is connected to all top destinations in the world. It has a total of 9 airports.
UAE consists of 7 Emirates. All the emirates have their Licensing Authorities. Dubai and Abu Dhabi are considered to be the most popular of all. Sharjah, Ajman, Ras Al Khaima, UAQ, Al Ain are few other Emirates.
In UAE we have different options to choose from like
- 1. Mainland,
- 2. Free Zone, and
- 3. Offshore.
To understand the right authority for your business plan you need to give due consideration to few things.
Things to consider before starting a company in Dubai?
1. Identifying the Right Activity & Location
Further, each emirate in UAE is authorized to issue licenses. There are different jurisdictions withineach emirate – All these different authorities have their own approved list of activities.
So, the business activity has to be finalized as the first stepSo, as to check the availability of the desired license.
Mainland authorities generally have a broader range of commercial & service activity offerings as compared to free zones. Few activities are subject to the approval of the ministerial authority, such as educational activities are monitored by the KHDA- “Knowledge and Human Development Authority” and Ministry of Education. All Hospitals and Clinics are monitored and approved by DHA- Dubai Health Authority. Similarly, dedicated governing bodies in the UAE keep a check on the quality and development of a specific sector.
There is also a cost associated with the approval of the activity. Which need to be considered?
2. Allocating Budget
Allocation of the budget is one of the major factors as this is also one of the major factors which help us decide which authority to start our business in. There are approx. 40 specialty Free zones authorities in Dubai providing different value adds to each business.
Depending on the nature of the activity the ownership rules & guidelines and the need to use the services of a UAE National vary. Typically many regulated licenses require the involvement of UAE Nationals. However, with the opening up of the economy to allow more FDI many mainland licenses in manufacturing & trading sectors are 100% allowed to ex-pats.Hence in such approved activities, there is no requirement for the UAE National. But in some of the service-related activities like the restaurant business, salon or consultancy services, etc. require to have a UAE National be appointed as the Local Service Agent in the license.In such a case, the UAE national has fixed annual fees to be paid to him to become a Local Service Agent in the license.
- Additional Approval
Certain regulated licenses require external government/ministerial approval before its issuance. There is an associated fee to be paid to the authority for these approvals to be taken from the authority. Few activities also require a deposit to be kept. The fees differ from authority to authority depending on the activity Chosen.
- Licensing Authority
Different licensing authorities have different value propositions. For example, Dubai-based free zones are a bit expensive than the other available options. However, they offer state-of-the-art infrastructure & eco-system.The location, infrastructure, accessibility, and reputation are few factors that make free zones unique from each other.
Certain activities have Pre-requirements to be fulfilled before the authority can issue the same, This could range from educational requirements or staffing requirements e.g. Legal, Medical, Financial contracting, Real Estate etc.
- Visa Requirement
Depending on the requirement, the business may have the requirement to recruit staff. The employee has to be on a company visa or must have a valid part time contract with the company and each visa is an additional cost to the license. Each employment visa cost depends on the designation, qualification, and company category.
3. Identifying The Target Audience
One has to identify the target market as this is the deciding factor to select between Mainland and Free zone license. The two factors that need to be considered:-
- Local Market Are you planning to provide your product or services to the people living in Dubai – If yes then Mainland is the right option for you. Setting up your company in the mainland gives you the eligibility to execute your business activity without any restriction. You can have the benefit to provide your product or services within UAE or to Free zones or internationally.
- International Clients If all your clients are based outside UAE and you are not planning to provide any product or services within UAE. Then you have the option to start a company in the Free Zone. This allows you to have residency and a company bank account.
4. Selecting Right Location
Depending on the nature of business identifying the right location is one of the major factors. A few companies which do not require any staff and the owner who does not need to use the office much can opt for a Flexi desk or a similar facility available with the business center. At the same time Companies which plan to have multiple employees or perceive to have walking clients need to consider accessibility to public transport for the staff to commute on daily basis.
5. Finding The Right Authority
Depending on the activity and the nature of your business you need to be able to identify &select the right authority for your business. There are many specialty-free zones that attract similar talents or businesses. Gold and Diamond-related import-export DMCC and Dubai Mainland are considered to be the best authorities. For Healthcare service providers, Dubai Healthcare City and Dubai Mainland are considered to be the appropriate authorities to startup under.
6. Residency Permit
After obtaining the license one can apply & process a residency visa/permit. If the owner or manager (company representative) holds the residency visa then they can immediately apply for the company bank account.However, if the person is on a visit visa then they will have to get a residency permit and then apply for a bank account.
7. Bank Account
In UAE there isa range of banking solutions from large local commercial banks to new-age digital banking options. It is always recommended to apply in multiple banks. as the bank account opening depends on the Clients profile and background
8. Consult with Professional
It is always recommended to take the help of a professional advisor who can correctly advise based on needs and take care of the complete application &compliance.
Depending on the nature of work and the authority you choose one has to maintain proper books of accounts, Few authorities have the mandatory requirement of the accounts to be audited.
The company owners also need to consider other local regulatory reporting & filings such as ESR, UBO, and VAT
At Hexagon “We understand clients requirements and concerns. We believe in going the extra mile to achieve the desired requirement and provide a turnkey solution that will best suit each need.