Company registration in Dubai. Step-by-step guide.

 

How to Register a Company in Dubai: Legal Entities, Requirements, and Tax Regime

Dubai, a global business hub, offers a strategic location, world-class infrastructure, and a business-friendly environment, making it an attractive destination for entrepreneurs and investors. Registering a company in Dubai involves a streamlined process, but it requires careful consideration of legal structures, regulatory requirements, and the emirate’s tax regime. This article provides a comprehensive guide to registering a company in Dubai, covering the types of legal entities, necessary requirements, tax implications, and the opportunities that await businesses in this vibrant city.

Types of Legal Entities in Dubai

When setting up a company in Dubai, choosing the right legal structure is a critical first step. The structure determines ownership rules, liability, operational scope, and tax obligations. Dubai offers three primary setups: Mainland, Free Zone, and Offshore, each with distinct legal entities tailored to different business needs. Below are the main types of legal entities available:

1. Mainland Companies
   Mainland companies operate under the UAE’s commercial laws and are regulated by the Dubai Department of Economic Development (DED). They can trade freely within the UAE and internationally, making them ideal for businesses targeting the local market.

   • Limited Liability Company (LLC): The most popular structure, suitable for businesses with 2–50 shareholders. Each shareholder’s liability is limited to their share in the capital. As of 2021, 100% foreign ownership is allowed for most activities, though certain sectors may still require a local sponsor or agent. An LLC requires a Dubai-accredited auditor and a notarized Memorandum of Association (MOA).
   • Sole Proprietorship: Suitable for single-owner businesses, often professionals or small enterprises. A local service agent (LSA) may be required for non-GCC nationals, but they have no equity or control over the business.
   • Public Joint Stock Company (PJSC): Designed for large businesses with publicly traded shares, requiring at least 10 shareholders and significant capital.
   • Private Joint Stock Company (PrJSC): Similar to a PJSC but for private share distributions, ideal for sizable private ventures.
   • Branch Office: An extension of a foreign company, not a separate legal entity. It requires a local service agent and is limited to the parent company’s activities.

2. Free Zone Companies
   Free Zone companies operate within designated Free Trade Zones (FTZs), such as Jebel Ali Free Zone (JAFZA), Dubai Multi Commodities Centre (DMCC), or International Free Zone Authority (IFZA). These zones offer tax incentives and 100% foreign ownership.

   • Free Zone Establishment (FZE): A single-shareholder entity with limited liability, ideal for solo entrepreneurs.
   • Free Zone Limited Liability Company (FZ-LLC): Similar to an LLC but based in a Free Zone, allowing 2–50 shareholders with no nationality restrictions.
   • Free Zone Branch: An extension of a foreign or UAE-based company, operating under the Free Zone’s regulations.
     Free Zone companies are restricted from trading directly in the UAE mainland unless through a local distributor, but they benefit from exemptions on import/export duties and streamlined regulations.

3. Offshore Companies
   Offshore companies are registered in Free Zones like JAFZA or Ras Al Khaimah (RAK) but are designed for international operations, not local UAE trading. They are ideal for holding companies, asset protection, or international trade.

   • Offshore Limited Liability Company (Offshore LLC): Offers limited liability and tax exemptions, with no physical presence required in the UAE.
   • International Business Company (IBC): Suitable for global trading or investment, with privacy and tax benefits.
     Offshore companies cannot apply for UAE residence visas or trade locally, but they offer confidentiality and ease of setup.

Each structure aligns with specific business goals, such as local market access (Mainland), tax benefits (Free Zone), or international operations (Offshore). The choice depends on the number of shareholders, capital requirements, and intended business activities.

Requirements for Company Registration in Dubai

Registering a company in Dubai involves a step-by-step process, with requirements varying by business structure and location (Mainland, Free Zone, or Offshore). Below is a general outline of the process and key requirements:

1. Choose a Business Activity and Structure
   Identify the nature of your business (e.g., trading, manufacturing, or professional services) and select an appropriate legal structure. The business activity determines the type of license required:

   • Commercial License: For trading activities (e.g., retail, wholesale).
   • Industrial License: For manufacturing or industrial operations.
   • Professional License: For service-based businesses (e.g., consulting, IT services).
   • Tourism License: For travel and tourism-related activities.

2. Reserve a Trade Name
   The company name must be unique, reflect the business activity, and comply with UAE cultural and legal norms. Key guidelines include:

   • Include the legal structure as a suffix (e.g., LLC, FZ-LLC).
   • Avoid offensive or inappropriate terms.
   • Exclude names of rulers, government entities, or logos.
   • Verify availability through the DED (for Mainland) or the respective Free Zone Authority.

3. Obtain Initial Approval and Licenses
   Submit an application to the DED (Mainland) or Free Zone Authority for initial approval. Required documents typically include:

   • Completed application form.
   • Passport copies and Emirates ID (if applicable) of shareholders and authorized signatories.
   • A business plan outlining activities and objectives.
   • A notarized Memorandum of Association (MOA) for LLCs or similar entities, specifying share structure and governance.
   • Proof of address (e.g., tenancy contract registered via the Dubai Land Department’s Ejari portal for Mainland companies).
     Additional approvals may be needed for specific activities (e.g., healthcare, education) from relevant government bodies.

4. Secure Office Space
   All businesses must have a physical address in Dubai. Options include:

   • Mainland: Lease or purchase office space, with the tenancy contract registered via Ejari.
   • Free Zone: Use shared or virtual office spaces provided by the Free Zone, ideal for startups.
   • Offshore: No physical office is required.
     The office size depends on the business activity, number of employees, and budget.

5. Finalize Licensing and Registration
   After initial approval, submit the MOA, lease agreement, and other documents to obtain the final trade license. Mainland companies must also register with the Dubai Chamber of Commerce and Industry for credibility and networking benefits. Free Zone companies follow the specific regulations of their respective zones.

6. Open a Corporate Bank Account
   Once the trade license is issued, open a corporate bank account with a UAE bank. Required documents include the trade license, MOA, passport copies, and proof of address. Offshore companies may face stricter compliance checks.

7. Apply for Visas
   Mainland and Free Zone companies can apply for residence visas for shareholders, employees, and dependents. The number of visas depends on the office size and license type. Offshore companies are not eligible for visas.

8. Register for Taxes
   Businesses must register with the Federal Tax Authority (FTA) for Value Added Tax (VAT) and Corporate Tax, if applicable (see tax regime below).

The process is streamlined, often completed within 3–5 days for Free Zone setups and slightly longer for Mainland companies. Professional consultants (e.g., Shuraa, Virtuzone) can simplify the process by handling documentation and approvals.

Tax Regime in Dubai

Dubai’s tax regime is one of the most competitive globally, designed to attract businesses while maintaining compliance with international standards. Key aspects include:

• Corporate Tax:
  Introduced on June 1, 2023, under Federal Decree-Law No. 47 of 2022, corporate tax applies to all businesses in the UAE, including Mainland and Free Zone entities.

  • Rates: 0% on taxable income up to AED 375,000 (~$102,000) and 9% on income above this threshold.
  • Free Zone Incentives: Qualifying Free Zone Persons (QFZPs) may enjoy a 0% tax rate on income derived within the Free Zone, provided they meet specific criteria (e.g., no mainland trading). Mainland income earned by Free Zone entities is subject to the 9% rate.
  • Exemptions: Businesses engaged in natural resource extraction are exempt from federal corporate tax but subject to emirate-level taxes. Small businesses with revenues below AED 3 million may qualify for relief until December 31, 2026.
  • Registration: Mandatory for all businesses via the FTA’s EmaraTax portal, requiring a Tax Registration Number (TRN). Deadlines depend on the license issuance date (e.g., licenses issued before June 2023 must register by May 31, 2024). Failure to register incurs a AED 10,000 penalty.
  • Filing: Tax returns must be filed within nine months of the financial year-end (e.g., September 30, 2025, for a December 31, 2024, year-end). Records must be maintained for seven years.

• Value Added Tax (VAT):
  Introduced in 2018, VAT is applied at a standard rate of 5% on most goods and services.

  • Registration: Mandatory for businesses with annual supplies exceeding AED 375,000. Voluntary registration is possible for supplies above AED 187,500.
  • Free Zone Exemption: Transactions within Free Zones are often exempt from VAT, but mainland transactions are taxable.
  • Compliance: Businesses must file VAT returns quarterly or monthly, depending on revenue, via the FTA portal.

• Personal Income Tax:
  There is no personal income tax in the UAE, including Dubai, enhancing profitability for business owners and employees.

• Other Taxes:

  • No withholding taxes or capital gains taxes for businesses (except for specific sectors like oil and banking).
  • Import/export duties are waived in Free Zones, while Mainland companies may face customs duties (typically 5%).

The UAE’s low corporate tax rate (9%) and Free Zone incentives make it one of the most tax-efficient jurisdictions globally, compared to higher rates in Western countries (e.g., 21% in the US, 25% in the UK). However, compliance with FTA regulations is critical to avoid penalties.

Conclusion

Registering a company in Dubai is a straightforward process that opens a gateway to a wealth of business opportunities. With a variety of legal entities—such as LLCs, Free Zone companies, and offshore setups—entrepreneurs can tailor their business structure to their goals, whether targeting the UAE’s vibrant local market or leveraging Dubai’s strategic position for international trade. The requirements, including trade name registration, licensing, and office setup, are supported by efficient government processes and professional consultants. Dubai’s tax regime, with its low corporate tax, VAT exemptions in Free Zones, and no personal income tax, enhances profitability and competitiveness. By establishing a company in Dubai, businesses gain access to a dynamic ecosystem with world-class infrastructure, 100% foreign ownership, and connectivity to global markets across Asia, Africa, and Europe. Whether you’re a startup or a multinational, Dubai’s business-friendly environment positions your company for growth, innovation, and success in one of the world’s most exciting economic hubs.

This article is carefully prepared by the team of dedicated professionals from Migrate Global.

Reach us for any additional questions at info@migrateglobal.net