Business entities in Dubai
Doing business in Dubai is complex and time-consuming for foreigners. Like other United Arab Emirates, Dubai indeed implements restrictions on foreign-ownership except in the free zones. Foreigners are additionally required to find local sponsors, appoint local lawyers and secure costly licenses when registering a local company. For these reasons, we usually recommend our Clients to form Dubai free zone companies or to use alternative expansion strategies such as appointing a local distributor.
Doing business in Dubai with a locally registered entity
The Dubai free zone company
- The best strategy to legally avoid the requirement to form a joint venture in Dubai is to register a company in a Dubai free zone. Such entity can be registered with i) only one shareholder, ii) one director, who can be a foreigner and does not need to be resident in Dubai and iii) a lease agreement for office, warehousing or industrial space within the free zone;
- Healy Consultants Group PLC will assist our Clients to find the optimal Dubai free zone corresponding to the nature of their business and to the type and size of their operations. Kindly refer to our fees page for further details on the different types of free zones available in Dubai and our corresponding fees to complete registration of our Client’s company;
- Dubai business entities are legally exempt from corporate income tax, which does not exist in Dubai on both local and foreign sourced income. However, our Clients willing to trade with Dubai residents will be required to appoint a local sponsor before being allowed to do so. Healy Consultants can assist to complete such appointment if required;
- Best uses: Dubai Free Zone Company is an attractive vehicle to legally minimize international taxation. Incorporation of Dubai free zone company will allow our Clients to conduct international business from the United Arab Emirates without the need for a joint venture partner.
The Dubai offshore company
The Dubai offshore company is exactly the same entity as a free zone company. They usually trade only with overseas customers and do not have staff in Dubai. The Jebel Ali offshore company is most commonly the type of business entity referred as a Dubai offshore company.
The Dubai limited liability company
- Foreign investors can form a local limited liability company in Dubai to provide professional services including legal and accounting consultancy, IT and management consultancy, and marketing consultancy. In such industries, the company can be wholly-foreign owned (but still require appointing a local sponsor);
- In other industries, the Dubai authorities require foreigners to form a joint venture with a UAE national, who must hold at least 51% of the shares of the entity. For this reason, Healy Consultants usually recommends our Clients to register a company in a free zone, where such requirement does not apply;
- Before Healy Consultants can complete incorporation of the company, our Clients must also sign a lease agreement for physical office space within Dubai. We can assist our Clients to find a quality office (for example shared office space) whenever required;
- Best uses: registering a company in Dubai outside of the free zones is advisable only if our Client is planning to offer consulting services or already has a reliable joint venture partner who is an Emirati national.
Doing business in Dubai with a foreign entity
The Dubai branch
- Branch office is limited i) to hire up to three employees ii) cannot import products within Dubai and iii) business operation within Dubai, which requires approval from the Ministry of the Economy of the UAE;
- Incorporation of a Dubai Branch office requires appointment of i) a statutory auditor and ii) a local service agent (LSA), also known as a sponsor. The LSA must be either a UAE national or a company wholly owned by UAE nationals;
- Best uses: registering a branch in Dubai is only advisable in tightly regulated industries, such as banking, insurance and finance.
The Dubai representative office
- Dubai representative office is only allowed to engage in activities such as i) promoting the business of the parent company and ii) market research. Procedures and requirements to register a representative office in Dubai is similar to those applying to a branch.
- Best uses: a representative office recommended to our Clients who are willing to prospect the UAE market, without running yet commercial operations.
Dubai licensing considerations
- All companies registered in Dubai are required to obtain at least one operating license, even if they are registered in a free zone. Three types of licenses exist:
- Commercial licenses – to conduct commercial operations and invoice customers;
- Industrial licenses – to conduct productive operations, such as manufacturing or re-packaging products;
- Professional licenses – to offer professional services, such as consultancy, accountancy or law services.
- All licenses must be renewed every year;
- Such operational licenses are not to be confused with regulatory licenses which may be required to provide/produce certain types of products and services, such as banking services for which a banking license must be granted by the Central Bank of the United Arab Emirates.
Doing business in Dubai without a local company
- To minimize business setup costs, our Client can alternatively sign an agreement with a local partner who will distribute their products, hire local staff act as their company representative in Dubai and provide other corporate services which may be required for the specific business purpose seek by our Client;
- Healy Consultants will assist our Clients to sign a quality agreement by i) sourcing different quality potential business partners who have the experience and network of contacts needed by our Client ii) conduct due diligence on the top candidates iii) draft a legal agreement protecting our Client’s interest and iv) negotiate the best possible fees for the services rendered by the local partner;
- For additional information on this alternative strategy, kindly refer to our agents, distributors and sponsor page.
Table of comparison between different Dubai entities
|LLC||Free zone||Branch||Rep office|
|Also known as:||Limited liability company||Offshore Dubai company||Branch office||Rep. Office|
|How long to set the company up?||2 months||2 months||2 months||2 months|
|How long to open company bank account?||5 weeks||5 weeks||5 weeks||5 weeks|
|Wholly foreign owned?||No, only 49%||Yes||Yes||Yes|
|Minimum share capital for registration?||US$1||US$1||US$1||US$1|
|File annual tax return?||No||No||No||No|
|Corporate bank account options?||Citibank UAE||RAK Bank||Emirates NBD||Citibank UAE|
|Does our Client need to travel?||No||No||No||No|
|Resident director required?||Yes||No||No||No|
|Local shareholder required?||Yes||No||No||No|
|Local sponsor required?||No||No||Yes||Yes|
|Minimum directors allowed?||1||1||1||1|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes|
|Individual shareholders allowed?||Yes||Yes||No||No|
|Dubai corporate tax rate?||0%||0%||0%||0%|
|Annual financial statements required?||Yes||Yes||Yes||Yes|
|Statutory audit required?||No||No||No||No|
|Allowed to issue sales invoices in Dubai?||Yes||No||Usually no||No|
|Allowed to sign contracts with UAE entities?||Yes||No||Usually no||No|
|Allowed to import and export goods?||Yes||No||Usually no||No|
|Can rent an office in Dubai?||Yes||Yes||Yes||Yes|
|Can buy UAE property?||Yes||No||No||No|
|Can own equity in other UAE companies?||Yes||Yes||Yes||No|
|Total Dubai business setup costs in Yr. 1||US$21,980||US$26,950||US$49,300||US$25,250|
|Subsequent annual costs (excl. accounting and tax fee)||US$4,900||US$6,500||US$6,400||US$4,900|
|Sample engagement fee invoice||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF|