Business entities in Dubai in 2023
Setting up a business in Dubai is complex and time-consuming for foreigners. Like other Emirates in the UAE, 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 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 fee page for further details on the different types of free zones available in Dubai;
- 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 Group can assist to complete such appointment if required;
- All companies registered in the UAE must i) create and maintain a register of their ultimate beneficial ownership (UBO) and ii) submit UBO data to the relevant registrar or licensing authority
- Best uses: Dubai Free Zone Company is an attractive vehicle to legally minimize international taxation. Setup company in Dubai free zone companies will allow our Clients to conduct business with international customers and suppliers as well as with other UAE free zone companies without the need of an Emirati partner.
The Dubai offshore company
- The Dubai offshore entity is the quickest and most cost-effective way to enter the country;
- Is suitable for those Clients looking to conduct international business only;
- This entity cannot rent office premises within UAE, sponsor employee visas, import/export products to/from UAE nor issue invoices to UAE Clients;
- For more information re the Dubai offshore entities, refer to this webpage.
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 Group usually recommends our Clients to register a company in a free zone, where such requirement does not apply;
- Before Healy Consultants Group 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;
- All companies registered in the UAE must i) create and maintain a register of their ultimate beneficial ownership (UBO) and ii) submit UBO data to the relevant registrar or licensing authority;
- Best uses: registering a Dubai LLC is suitable for those Clients i) in need to issue invoices, import and deliver products to UAE mainland customers or ii) that have a reliable joint venture partner who is an Emirati national.
Doing business in Dubai with a foreign entity
The Dubai branch office
- Establishing a Branch is one of the safest ways to enter the region as it allows our Client to retain 100% foreign company ownership in UAE. That said, the appointment of a UAE national agent (click here) is required;
- A Dubai Branch operates under the same name and is authorized to conduct the same business activity as its parent company. A branch can i) lease office premises ii) issue sales invoice to UAE and international Clients and iii) sign local legal contracts.
- A branch cannot engage in manufacturing, import nor export of products to/from the United Arab Emirates.
- Best uses: registering a branch in Dubai is advisable for service entities looking to conduct business locally.
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. The three types of business licenses in Dubai:
- 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.
- All companies registered in Dubai are required to obtain at least one operating license, even if they are registered in a free zone. The three types of business licenses in Dubai:
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 Group 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 Offshore Also known as: Dubai LLC Dubai Free Zones Dubai Branch office Dubai RO Jebel Ali Offshore How long to set the company up? 2 months 2 months 3 months 2 months 2 weeks How long to open company bank account? 5 weeks 5 weeks 5 weeks 5 weeks 6 weeks Legal liability? Limited Limited Unlimited Unlimited Limited Minimum shareholders? 1 1 Parent company Parent company 1 Wholly foreign owned? Yes, a professional service LLC Yes Yes Yes Yes Minimum share capital for registration? US$1 varies US$1 US$1 US$1 File annual tax return? Yes Yes Yes Yes No Corporate bank account options? ADIB Noor Bank Emirates Islamic ADIB Emirates NBD Does our Client need to travel? No No No No No Resident director required? No No No No Yes Local shareholder required? Yes No No No No Local sponsor required? Yes No No No No Minimum directors allowed? 1 1 1 1 2 Corporate shareholders allowed? Yes Yes Yes Yes Yes Individual shareholders allowed? Yes Yes No No Yes Dubai corporate tax rate? 0% 0% 0% 0% 0% Annual financial statements required? Yes Yes Yes Yes No Statutory audit required? Yes Yes No No No Allowed to issue sales invoices in Dubai? Yes Yes Yes No No Allowed to sign contracts with UAE entities? Yes Yes Yes Yes No Allowed to import and export goods? Yes Yes Usually no No No Can rent an office in Dubai? Yes Yes Yes Yes No Can buy UAE property? Yes Yes Yes No Yes Can own equity in other UAE companies? Yes Yes Yes No Yes Total Dubai business setup costs in Yr. 1 US$28,660 US$30,124 US$35,450 US$26,200 US$18,300 Subsequent annual costs (excl. accounting and tax fee) US$7,990 US$11,357 US$8,300 US$4,900 US$7,450 Sample engagement fee invoice View invoice PDF View invoice PDF View invoice PDF View invoice PDF View invoice PDF
External readings
External videos
Recruitment questionnaire: Dubai
