Company Formation in Dubai – A Step by Step Guide by Experts!

If you plan to extend your business abroad, Dubai can be the best bet for you and your business. Being the leading trading hub across the Middle East and Gulf, Dubai has multiple benefits for companies, enterprises, and businesses looking to thrive, succeed and connect to the world.

Despite the global pandemic & economic recession, the UAE’s economy grew rapidly, surpassing the early estimates. The economy will likely grow by 5-6% in 2023-24. Because of the ever-increasing growth prospect in Dubai, many entrepreneurs, business owners, and companies are attracted to the city. So, suppose you are also planning to set up company in Dubai or extend branches of your company. In that case, the process is relatively easy, especially when you have experts beside you.

Important Factors to Know Before Setting Up a Company in Dubai

Before you set up your company in Dubai, you must keep certain important things in mind. You have to understand them carefully before you start the process of setting up your business in the UAE.

Economic Zone – Free Zones & Offshore – Differences!

Before you form a company or business in Dubai, you have to decide where you want to operate your business – Offshore or Free Zone!

Offshore

Offshore businesses or companies can register in the free zone, but they enjoy more benefits than the companies in free zones. But these companies can’t be considered a substitute for any free zone company. Business operation is the primary difference between a free zone and an offshore company.


The offshore companies can perform business activities outside Dubai and not within UAE. The offshore companies don’t have any requirements for minimum capital deposits before setting up their company in Dubai. But, they need a sponsor to limit their foreign ownership to 49%.

Free Zone

Businesses looking for full ownership of the company must apply for a location and license to operate business across the free zones of Dubai. The government launched the free zone concept to attract foreign companies and businesses to set up their operations in the city. It is the economic area where owners are allowed to have 100% ownership of the business by paying 9% of corporate taxation and zero personal income tax.


The only drawback with the free zone companies is that they cannot trade directly with the local UAE market. There are more than 30 free zones across Dubai, each focusing on different industries and offering licenses to companies within those industries.

Types of Licenses
  • Commercial License – Businesses who want to set up their operations in Dubai to perform trade activities or buy and sell goods must apply for and secure a commercial license. Commercial license covers all the businesses involved in import & export, logistics, sales, general stores, travel & tourism, and real estate.
  • Industrial License – As the name suggests, the license is issued to industries involved in manufacturing activities, both mechanically and manually. The license covers businesses like metal, textile, and paper manufacturing.
  • Professional License – The license is issued to businesses that provide professional services, including craftsmen, artisans, repair services, beauty salons, and handypersons.
  • Sponsorship – Sponsors are not necessary when setting up a business in a free zone. The main benefit of starting a business in a free zone is that the business owner gets 100% foreign ownership without the support of a sponsor or UAE national as a partner.
    • Company Formation in Dubai – Step-by-Step Guide!
    Find a Business Activity

    The first step to Company Formation in Dubai and getting a license is to decide the nature of your venture or business. Whether you want to start a Crypto or NFT business in UAE or set up a small business in Dubai, there are over 2K business activities to choose from, falling under different categories within commercial, industrial, professional, and tourism.


    Choose a Company Name

    You have to keep the strict naming conventions of the UAE when deciding on a company name. You must avoid choosing a business name that uses offensive language, or perceived as offensive to religion, or refers to political groups. If the business name is after any person, ensure that the person is the owner or a company partner.


    Choosing a company name is complicated. But you can save your efforts and time by consulting an expert to help you with the conventions and get faster approvals.