Dubai is home to some of the world’s most beautiful architectural marvels and thriving tourism communities. It also has one of the most desirable tax regimes in the world, with zero percent personal income and corporate tax, making it very appealing to businesses from all over the world.
There are additional reasons why many businesses are establishing themselves in Dubai. Free trade zones, excellent infrastructure, strategic location, economic and political conditions are just a few. Most importantly, the incorporation process is simple for foreign entrepreneurs; with the proper guidance, you could obtain a residency visa and have your company up and running in a matter of weeks.
However, it all starts with a business license.
The Importance of Getting a Business Licence in Dubai
Obtaining a business license in Dubai is the only way to confirm your company’s legal identity and status. In other words, you must obtain a business licence for your company to be recognised as a legal business entity by the relevant authorities in Dubai. A business licence also offers you tax rights and guards you against certain liabilities.
That being said, the process of obtaining a business licence in Dubai will differ depending on where you want to set up shop, the agencies in charge, and the type of licence required for your type of business operations.
The Different Types of Business Licences in Dubai
There are four different types of business licences you can obtain in Dubai, namely: tourism, commercial, industrial and professional.
1. Tourism License: If your company is going to provide services such as tour management, hospitality, visa assistance, and so on, you will need to obtain a tourism license before you begin operations.
2. Commercial License: A commercial licence is what you will need to get for your business if you intend to buy or sell goods in Dubai. That is, this licence allows your company to import and export products such as oil and gas, precious metals, and others, as well as provide brokerage and logistics services.
3. Professional License: This licence applies to companies that provide individual consulting services such as commercial and real estate brokerage.
4. Industrial License: This licence is required for any company that wants to manufacture goods or commodities in Dubai. This licence also covers industrial business activities such as product packaging.
How to Apply for a Business Licence in Dubai
Several steps must be completed before applying for a business licence in Dubai. While none of the steps are particularly difficult on their own, missing one will make the entire process much more complicated than it should be. As a result, use this section as a guide or a business licence checklist as you prepare to start your business.
1. Pick a Business Name
Choosing a business name that conveys everything a business stands for is often either a challenging process or a walk in the park, depending on the entrepreneur in question. There is no way to tell how you will feel about the process, but there is no avoiding this task.
Here are some best practices to follow to make the process go more smoothly:
- Go for clarity. There should never be any doubt about what your company stands for.
- Make it descriptive. Make sure the name you choose sells the brand’s identity.
- Keep it simple and easy to remember.
Finally, follow the UAE’s naming conventions. This means that the business name you choose must not contain offensive or blasphemous words or be an abbreviation of your name. Also, avoid using phrases that are similar to those of other businesses, and make sure to include LLC, FZE, and other legal identifiers that are relevant to your business operations.
2. Define Your Business Activities
It is not enough to have a general idea of what your business offerings will be; before applying for a business licence in Dubai, you must list out the business activities your company will engage in.
It is important to note that each business licence category has a list of approved activities maintained by Dubai’s Department of Economic Development (DED). Make certain that the activities you outline are on the approved list. It is also critical that you list every activity that pertains to your business when submitting your application; otherwise, your licence may be revoked after it has been issued, or you may be fined.
Not to worry, the DED’s list contains over 2,000 approved activities that cover almost every industry or business type.
3. Choose Between a Mainland or Free Zone Set Up
One of the most important questions to consider when establishing a business in Dubai is determining your company’s operating jurisdiction. For business locations, there are primarily two options: Free Zones and the Mainland. The best option for your business will be determined by the type of business activities you have chosen and the industry in which you are involved.
There are significant differences between the two zones, with each having its own set of restrictions and benefits. For example, free zone establishments are entitled to tax exemptions and have complete control over their operations. Most trading companies choose to establish themselves on the mainland because of access to direct trade with the local Dubai market.
On the Registration Process
Now comes the simple part. If you have decided to conduct business in a free zone, you must submit an application to the zone’s managing authority. Mainland businesses, on the other hand, are overseen by the Department of Economic Development.
In both cases, you will be required to submit the following document in addition to your application form:
- A letter of no objection from your current employer (if applicable).
- A copy of your passport – as well as the passports of any other shareholders.
- A business plan.
- A copy of your signature.
One Last Thing: The Cost of a Business Licence in Dubai
The total cost of obtaining a business licence for your company in Dubai will be determined by several factors, including the proposed location of the business, the type of business you run, and others. This can range from AED 15,000 to AED 50,000 on average.
Overall, Dubai is a rapidly evolving destination that has proven its ability to respond quickly to market forces and is uniquely positioned to keep improving its legacy as a global city of business. The cost of establishing a business in this city is well worth it.