Starting a business in Dubai – Foreign Investor’s Guide

The United Arab Emirates is one of the most developed, wealthiest, and diverse countries in the world. The export of the country’s oil and natural gas reserves accounts for around 30 percent of UAE’s GDP alone – not to mention earnings coming from services related to petroleum and petrochemicals.

Moreover, UAE has become a popular tourist destination, a city of state-of-the-art infrastructure, man-made islands, and an investment hub. But perhaps the most resounding yes for starting a business in the United Arab Emirates is its diverse population. With nearly 90 percent of the UAE being foreign nationals, the country is an incredible selling point for a variety of services and products which can all find their ideal customer.

Dubai, as UAE’s commercial capital, is probably the most fertile ground to begin your business venture. The city offers immense opportunities to both startups as well as already established companies interested in expanding their market.

If you are a foreigner interested in starting a business in Dubai, or anywhere in the United Arab Emirates, here are a few points you will need to know to set up your company hassle-free.

Find Your Local Sponsor

According to the United Arab Emirates’ laws, to establish a business in Dubai’s mainland or onshore, foreigners need to find a sponsor – a UAE local, an individual or a business, who will be involved in the process of obtaining registration and license for the company.

The local sponsor will own a minimum of 51% share of your business. However, the dividends are agreed upon between you and the sponsor, meaning you do not have to split them accordingly. Once the company’s set up process passes, the newly founded business is able to recruit employees and obtain a residency visa.

Finding a local sponsor may seem a daunting task, however, there are many business consulting companies that help foreigners discover their perfect sponsorship option. You can read through this Dubai and UAE local sponsorship guide to find out more intricacies regarding the topic of business sponsors in the United Arab Emirates, such as who can be your local sponsor, what are your obligations and rights within the sponsorship deal, and how to find a UAE business sponsor.

Choose an Adequate Company Name

The United Arab Emirates has a rather strict company naming conventions you as a foreign investor should get the grasp of before potentially risking your future business. Some of the rules your business name must adhere to are that using offensive language is forbidden, as well as names of religious, sectarian, or political groups.

Also, the name must not violate the public morals or the public order and has to be agreeable with the required type of activity and legal status. In case you want to name a company after someone, that person must be a partner or owner of the company and you will have to use their full name – no initials or abbreviations.

Finally, the name must be followed by the legal form of the company and must not have been previously registered.

These are, unfortunately, not the only rules when it comes to naming the company, so it’s for the best that you initially consult an expert who can help you come up with an appropriate company name.

Apply fora  Business License

In Dubai, there are three trade license types you can apply for: commercial, professional, and industrial. A commercial license is issued to businesses involved in trading, a professional license to those with certain skills, qualifications, or service providers, and an industrial license to manufacturing or industrial businesses.

What’s Next?

After you’ve chosen the type of legal entity and company name, you have to obtain approval from the Department of Economic Development (DED) and, depending on the business activity, the approval of the External Department. Your next step in setting up a business in Dubai is to create Memorandum & Articles of Association or Local Service Agent (LSA) agreement, buy or rent an office, and finally submit all the documents for getting a trade license.

To Wrap Up

Thanks to the United Arab Emirates already being a hub of many foreign startups and companies, starting a business in mainland Dubai or UAE as a newcomer is a relatively easy task. Preparing the required documentation does not require much time nor money, and the opportunities Dubai offers to businesses are definitely worth it.

Businesspeople just setting out into the business world of Dubai may find challenging the fact they are required to find a local sponsor. However, the entire process is smooth, clear, and foreign investors friendly. Besides, there are business consultancies ready to help you out on every step and support you in finding the right partner in this business venture.

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Interesting related article: “What is a Sponsor?“