Putting the 'ease of doing business' index to test: all you need to know about setting up a business in Dubai
The UAE is one of the world’s easiest places to do business in, according to the World Bank’s Ease of Doing Business report for 2014. It is also one of the most economically progressive places to do business in – a large part of the credit for which goes to Dubai and its rapid growth as a middle-eastern business hub.
Its growing economy, positioning as a gateway city to West Asia and Africa, non-restrictive regulatory and taxation environment, and an ever increasing population of skilled expats make it a very attractive location for people looking to start or expand their own ventures.
According to Citibank, Dubai’s gross domestic product is expected to reach $107.1 billion, posting a growth rate of 6.1 per cent in 2014 and exceeding Dubai government’s estimates of 5 per cent.
In Dubai, you have two options to opening a business – in one of the multiple free zones in the country or outside it i.e. in Dubai “Mainland” – that come with their own set of regulations and norms. Here, we focus on how to open up a business with a Dubai Mainland license.
Select a business activity
The first step involves selecting a business activity from the over 2,000 business activities available in Dubai as per the Department for Economic Development (DED). If your business can’t be categorized into one of the available options, you may contact the DED, which may prescribe a business activity after understanding your request.
Select a legal form
After selecting your business category, you move onto choosing your company’s legal form – not to be mistaken with paperwork. There are different types of legal forms or company structures available such as LLC (Limited Liability Company) or PSC (Private Shareholding Company), each with different ownership rules and definitions. The type of legal form you choose also depends upon your chosen business activity.
Select a trade name
You may apply for a trade name online on the DED website or go through a local law firm to guide you through the process. There are strict regulations regarding trade names and failing to follow them will result in hefty fines. Also, note that inclusion of certain features such as Gulf or European in your trade name will require a fee ranging from Dhs1,000 to Dhs2,000.
Apply for Initial Approval Certificate
An Initial Approval Certificate is a document that says the Dubai Government has no objection to you starting a business and that you can take the next step to getting a business license. You may apply for the certificate online or on a visit to the DED’s countrs.
Prepare Your MOA
Depending on the legal form of your company, you and your business partners may need to draft and sign a Memorandum of Association (MOA). Outside of the free zones, you will have to sign a Local Service Agent (LSA) agreement with a UAE national, who will represent your business with regards to licensing and compliance.
For an expatriate, your LSA will own 51 per cent of the business. However this does not entitle him to 50 per cent of the profits and the details of profit and loss distribution will be agreed upon in a separate document. His or her signature will be required on most official forms. You can’t write the memorandum yourself, you will require the services of a law firm, DED Legal Affairs or Notary Public to draft it.
Establish your business location
All businesses in Dubai must have a physical address. Before finalising the location of your business, the Dubai Municipality Planning Section has to confirm the property’s availability and suitability and compliance to public health and safety requirements. However, you may also choose to locate your company in an authorised business centre, in which case you do not need location-related approvals from Dubai Municipality.
Get licensing approvals
Some business activities require special licensing approvals by different government departments. For example, if you want to set up a hospital, it is not enough to get licencing approvals from DED only but you also have to get approvals from the Dubai Health Authority.
Collect your business license
After completing the steps above, you need to submit all the documents to the DED. Depending on your business activity, the processing of your business license ranges from 1 – 7 days. These documents are:
- Trade Name Certificate
- Initial Approval Certificate
- Initial Approval Form with required stamps
- Ejari registered Tenancy Contract
- Approvals on your selected business activity from other government departments, if applicable
- MOA or copy of MOA, attested by UAE Ministry of Foreign Affairs, if applicable
- Local Service Agent agreement if applicable