Success tips when doing business in Dubai in 2021
Know the business environment in Dubai
- The week commences on Sunday and extend through Thursday. Government offices are closed on Friday and Saturday;
- Your joint venture partner or Dubai shareholder must not merely be a nominee for the sake of meeting the rules of foreign company incorporation. You should choose a partner that actually brings a lot to the table, including local knowledge your business would need in Dubai;
- To optimize the success of your new business in the UAE, Healy Consultants recommends every company to i) complete a feasibility study, ii) prepare a detailed business plan, iii) communicate with the Dubai Chamber of Commerce, iv) speak to your local UAE embassy and v) communicate with Healy Consultants Clients who have successfully launched their business in Dubai;
- Foreign companies should be aware that i) Dubai statistics and market data are usually imprecise, ii) transactions tend to take longer than expected, iii) more frequent and long market visits are required, at least initially, iv) complex business procedures are common;
- An essential factor in Dubai company registration is to thoroughly research the business sector you are planning to invest in. Healy Consultants recommends our Clients prepare a detailed business plan including an extensive market study and evaluation of competitors.
It is important to understand the business culture in Dubai
- During business meetings, Arabs spends a lot of time discussing things in general and then once they are comfortable, they will talk business with you. Expecting them to directly come to the point and discuss business is seen as rude and must be avoided;
- Foreign entrepreneurs need to be aware of how they must treat woman in the workplace. Examples include:
- Not all UAE woman are comfortable shaking hands with foreign men. You need to wait for a woman to put her hand out first before putting forth your own hand;
- Also it is not acceptable to touch a woman even in a friendly manner on the shoulder or other places at any time in the office;
- It is common for men and woman to sit at different areas of the office. What this means is that you need to designate part of your office where all men would sit and another part of your office where the women would sit.
Other etiquette to be aware of
- If invited to the home of an Arab, you should always accept and take every opportunity to become acquainted with local people. Your Arab host will be generous and interested in you. However, you should avoid debating politics and religion as your opinions might be regarded as ill-informed or even offensive, even if they seem acceptable to you from a western perspective;
- Learn enough Arabic to communicate the pleasantries, greetings and responses. You will enjoy peoples’ reactions. However, it is important to use the Arabic language respectfully because the Arabs believe it is designed to carry the word of God;
- Arabs are hospitable and place a great deal of emphasis on an outward expression of politeness and quiet demeanor. Arabs rarely say a direct ‘no’ to a proposition, so you must listen and observe carefully. If the response is ‘leave it with me’ or ‘I’ll think about it’, there’s a good chance the project will go nowhere;
- Avoid putting an Arab in a position where he might suffer ‘a loss of face’ in front of other Arabs. He will especially appreciate this, if he notices your action;
- While Dubai is considered a cosmopolitan city, it is still an Islamic state and follows the Islamic culture. It is important for foreign companies to respect this and make themselves aware of the Islamic traditions in business.
Interesting facts about Dubai
- The word “Dubai” may have evolved from the word “Daba”, referring to the creeping pace of Dubai river flowing inland. Today, the city’s rapid growth could be anything but a creep. In 1991, there was one skyscraper taller than 100 meters. Today there are over 400, making it the fastest growing city in the world;
- Since 1833, the reigning Al Maktoum family ruled Dubai. Since oil was discovered in 1966, the city has prospered. Today, oil revenue contributes a mere 20% of the economy’s income. The majority of emirates income is from the financial sector, tourism, real estate and ports. Dubai is the world’s third-largest import and export hub after Hong Kong and Singapore;
- The population of Dubai is two million. Expatriates make up 82% of the population. Arabic is the official language and English is the dominant language in business;
- Cigarettes are subject to a 100% customs tax and the alcohol a 50% customs tax;
- The UAE became a member of the United Nations and the Arab league in 1971. It is a member of the International Monetary Fund, the Organization of Petroleum Exporting Countries, World Trade Organization and other international and Arab organizations;
- The Burj Khalifa is the world’s tallest skyscraper at 828 meters, took 6 years to build at a cost of US$1.5 billion. Burj Khalifa comprises 163 floors, 900 apartments, 304 hotel rooms, 35 office floors, 9000 parking lots and 57 elevators.
Frequently asked questions
What does a free zone Dubai company incorporation entail?A Dubai Free Trade Zone company registered is considered an offshore company. The Dubai free trade zones are tax-free and provide purpose-built facilities for offices and related activities.
What is meant by a Dubai Offshore LLC?An offshore company formation in Dubai allows investors to open a wholly foreign-owned tax exempt entity. However, a Dubai offshore company can not conduct business within the UAE. A Dubai offshore company comes with several benefits as well as few disbenefits. To have a deeper insight regarding setting up an offshore company in Dubai, you can visit our Dubai offshore company page.
What are the advantages and disadvantages of onshore Dubai company incorporation?Onshore Dubai company incorporation allows trade within and outside the city. However, a UAE national must hold a minimum of 51% of the company’s shares in an onshore entity. This would be strictly a nominee role and Healy Consultants can provide this support service, if required.
What type of documentation is required for setting up a company in Dubai?This depends on the type of company you wish to establish. Healy Consultants will provide you with a detailed list of requirements to minimize this burden.
How long will it take to incorporate a company in Dubai?The length of time varies greatly from one Dubai business registration to another. Healy Consultants will provide you with a detailed project plan upon business registration engagement.
Is there a public register of shareholders and directors in Dubai?Yes. Details of the directors and shareholders will be available for public viewing through the Dubai company register.
Is a Dubai company required to prepare financial statements?Yes. Financial statements need to be submitted to the Dubai government annually.
Can a Dubai offshore company trade within the UAE?No. Export/import through an offshore company can only be outside the UAE
What are the different Dubai entities?There are 6 types of Dubai entities, as described below:
- Limited Liability Company in the Mainland (LLC)
A limited liability company can take the form of any of these businesses: a Trading LLC, Professional Services LLC, Fast solution LLC, Offshore LLC, and Free zone LLC. It is a form of entity that can be registered by a minimum of 1 and a maximum of 50 shareholders, whose liability is only pertaining to their shares in the capital of all the business run by the company. Specifically, for an LLC in the Dubai mainland, the foreign investor needs to form a joint venture with a UAE national, who must hold 51% of the shares of the entity;
- Free Zone Company
The free zone company is a legally tax-exempt entity either registered by a resident or a foreign investor wishing to use Dubai as a gateway to their worldwide consumer markets. It is especially a great gate into the African and the Middle Eastern countries. This is one of the most popular Dubai registered entities, as there is no requirement of forming a joint venture with a local partner and can be fully foreign-owned;
- Branch Office
A branch of a foreign company can conduct professional activities and commercial and industrial activities. It is mandatory for a Branch Office to acquire an approval from the Ministry of Economy if the Branch Office intends to conduct commercial and industrial activities. A Branch Company is required to keep i) a manager and ii) local service agent (LSA) also known as the sponsor. The LSA must be either a UAE national or a company that is 100% owned by the nationals of UAE. Additionally, you can refer to the Department of Economic Development, Dubai for more information regarding Branch Office setup in Dubai;
- Representative Office
Representative offices can only engage in i) research and ii) promotional activities on behalf of the mother company. These offices are a good investment for foreign businesses who want to invite and secure more Clients from the UAE market, without running any form of commercial operations;
- Offshore Company
An offshore company registered in Dubai is not allowed to trade in the mainland of UAE and it generally has only overseas customers and no staff in Dubai;
- Limited Liability Partnerships (LLPs)
An LLP cannot be wholly owned by a foreign investor, and a 1% local partner share is required for registration purposes. This form of partnership is best suited for Professional services industry.
- Limited Liability Company in the Mainland (LLC)
What are the differences between Dubai Offshore company and Onshore company?Some of the main differences between a Dubai Offshore company and Onshore company are described in the below comparison table, which also includes registration requirements. More information you can find in the main comparison table.
Factors Offshore Company Onshore (mainland) Company How easy is to register a company? Easy Difficult Shareholders and directors Our Client 51% of the shares of the entity are to be owned by a UAE national Can conduct business throughout UAE? No Yes Disclosure of finances required? No Compulsory financial checks are carried out Registered office address required? Yes Yes Mandatory to have office space? No Yes Can hire employees? No Yes Can secure work visas? No Yes Sample engagement fee invoice View invoice PDF View invoice PDF
Do I have to travel to Dubai to open a corporate bank account?Yes, the Clients generally need to travel to Dubai to open a corporate bank account for their company and attend a face-to-face interview with the bank officer. However, the bank will make their decision on a case-to-case basis. In some exceptional cases this requirement is waived off due to excellent relationship between the Healy Consultants Group PLC with the banks in Dubai. Ultimately, the banks have the final power of approval for corporate bank account applications.
Can I get UAE residency visa after incorporating Dubai company?Yes, you can expect to obtain a UAE residency visa together with incorporating either a free zone company or an onshore company, as an investor or through an employment visa. An offshore company incorporation in Dubai would not allow the investor to apply for a residency visa of any kind.
Can the Dubai LLC be 100% foreign owned?
Generally, a Dubai mainland LLC can be 100% foreign owned only when foreign investors want to render professional services. These services can include consultancy services in legal and accounting, IT, management and marketing. In these industries, a company can be 100% foreign owned, however, a resident partner is compulsory for registration purposes.
In all other industries, the Dubai law requires the foreign investor to appoint an UAE national who would hold at least 51% of the shares of the mainland entity.
Otherwise, investors can register their fully foreign owned companies in Dubai in any of its free zones, where local requirements do not apply.
How to register a branch company in Dubai?
Foreign investors who want to i) wholly own their business ii) set up direct subsidiaries and can iii) provide consolidated financial statements in Dubai can easily register a branch company.
The main steps to register a branch company in Dubai are:
- Confirm a Dubai-based local sponsor and secure physical office premises required for branch license issuance;
- Thereafter, confirm their desired business activities with the Department of Economic Development and finalise it;
- Prepare a complete company incorporation package of the company documents i) notarised, ii) translated and iii) attested in the mother company registration home country and at the Dubai Embassy of the country or region;
- Submit the complete company incorporation package to the DED.
The preliminary mandatory list of documents would look like below:
- Certificate of incorporation, MOA, and a certificate of good standing to be obtained from the mother company country;
- A board resolution allowing the opening of a branch in Dubai;
- Audited accounts of the mother company for the past 2 years;
- A statement stating the company’s key roles and responsibilities;
- Certified passport copies, proof of address, resume, and bank reference letter from the General Manager.
- DED reviews the documents and approves the branch registration application and issues a pre-approval Certificate for the intended company setup;
- Subsequently, a bank guarantee of US$13,612 must be deposited to the Ministry of Economy and Planning as a bank guarantee;
- Thereafter, prepare, sign and attest i) Memorandum of Association (MOA), ii) Lease agreement and iii) Board of Resolution and submit the full set of documents to the DED for approval;
- After successful approval from the DED, a branch certificate of registration and business license is issues for the company to commence its business.
What is a free zone company and what activities are allowed in a free zone?A free zone company is a legally tax-exempt entity incorporated by an investor who wishes to use the free zone as a i) manufacturing base or as ii) a trading gateway to surrounding jurisdictions or iii) to avoid the local ownership requirement. A Dubai Free Zone can be a 100% foreign owned entity.
Two kinds of legal entities can be setup in a Free Zone: i) Free Zone Company and ii) Free Zone Establishment. Both are limited liability companies. The sole difference between them is that an FZE requires a single shareholder whereas, an FZC can have two to five shareholders; There is a wide range of free zones in Dubai which allow almost all activities, both general such as import/export, logistics and also sector specific, such as financial services, consultancy etc;
- Dubai free zones dedicated to import/export, trade, manufacturing and logistics:
- Dubai free zones dedicated to financial services:
- Dubai free zones dedicated to education, research and healthcare:
What regulations govern a Dubai free zone?All entrepreneurs who register their companies in a Dubai free zone are obliged to obey the governing laws of i) that specific free zone and the ii) general Federal Law No. 8 of 2004 Concerning Financial Free Zones, Cabinet Resolution No. 28 of 2007 on Implementing Regulations of Federal Law No. 8 of 2004 Concerning Financial Free Zones.
Generally, all free zones will request the companies registered within their space to:
- Properly administer their business and respect the regulations laid out by the authority of the free zone and, in some cases, it is also governed by an additional government body;
- Safeguard the rights of labourers, consumers, and the intellectual property;
- Safeguard health and environment and ensure safety.
There are also other general and complementary laws relating to free zone business administration such as:
- Electronic Transactions and Commerce Law;
- Commercial Transactions Law;
- Federal Law No. 4 of 1979 on Combating Commercial Fraud;
- Business laws in the UAE – Abu Dhabi government portal;
- Business offences law – Abu Dhabi government portal;
- Common Customs Law for the GCC States.
NOTE: Every Free Zone imposes their own rules and regulations to govern the Free Zone companies. Some of the above laws may not apply to all the FZ companies.
The table below compares the different Free Zones in UAE, giving a clearer insight regarding all the Free Zone entities:
Factors RAK UAQ DMCC JEBEL HAMRIYAH Categories of available Licenses Industrial, Commercial, Consulting and services, Commercial- General Trading Trading, Consultancy, Service, FreeLancer Permit, Industrial Trading, Service, Industrial Trading, Industrial, Service, E-Commerce, National Industrial, Innovation, Offshore Registration Industrial, Services, Commercial Activities forbidden Retail trading inside the FZ, manufacture & marketing of unlawful items Any activity that pollutes the FZ, offensive activities, storage of combustible substances without prior consent Activities which breach any of the terms & conditions listed on the license An Offshore company can not conduct any business within UAE Activities which breach any of the terms & conditions listed on the license Minimum Capital requirement US$40,480 No paid-up share capital US$ 13,700 None US$41,000 Requirements for Directors & or others 1 Shareholder, 1 Director 1 Director, 1 Shareholder 1 Director, 1 Shareholder At least 1 Director, At least 1 Secretary and at most 1 Shareholder 2 Directors, 1 Secretary
Lastly, the following main things must be taken into consideration prior to incorporating a business in a Dubai FZ:
- Dubai FZ company can be setup using the following 3 entities: i) Free Zone Establishment (FZE), ii) Free Zone Company (FZ LLC) or iii) branch. While the FZE and the FZ LLC enjoy limited liability, the branch will present unlimited liability for the parent company;
- All three entities allow i) 100% foreign ownership, ii) appointment of corporate director(s) and iii) visa applications for foreign employees. An FZE is equivalent to a one-person company (OPC) allowing only 1 shareholder and 1 director. A FZ LLC however, requires a minimum of 2 shareholders (maximum up to 5 shareholders) and 2 directors;
- Dubai Free Zone entities are obliged to i) rent office premises in the zone, ii) appoint a resident company secretary, iii) submit annual audited financial statements and iv) annually renew the business license;
- Additionally, a branch is required to maintain a security deposit with the Dubai government until it is formally deregistered.
How many free zones are open for business in Dubai?
There is a total of 30 free trade zones open for business in Dubai. They cater to every imaginable industrial sector. The most popular free trade zones include Dubai Multi Commodities Center (DMCC-JLT), Dubai Airport Free Zone, Jebel Ali Free Zone, Dubai Internet City, Dubai Media City, and Dubai International Financial Centre.
Due to the availability of a multiple number of FZs in Dubai, we would recommend you compare all the free zones and select the one that is most suitable to achieve your business goals;
Multiple world-class free zones operate all around the UAE as well, making the country a booming industrial, maritime activity and transportation hub. Altogether, there are more than 35 operational FZs in the UAE including 25 in Dubai, 7 in Abu Dhabi and 8 in the Emirate of Sharjah and the Northern Emirates;
The main Free Zones in the UAE (other than Dubai FZs) are: i) RAK (cheapest), ii) Hamriyah, iii) Ajman, iv) Umm Al Quwain (UAQ) and v) Abu Dhabi FTZ among many others. FZs i) to iv) are the closest to Dubai.
Do I need to have a local address to register a company?Yes, you need to have a local address to register a company in Dubai and the same applies for every country in the world. Specifically, in Dubai a lease agreement is required for the completion of company incorporation in Dubai. Healy Consultants Group PLC can also supply virtual office service for 6 months until our client finds their preferred business address.