The first important factor to consider when setting up your business in Dubai is the nature of the business you want to undertake. The good news is that Dubai permits many kinds of activities; however, you have to ensure that the activity you select complies with the requirements of the Free Zone or Mainland law.
Common low-cost business activities include:
Depending on the activity you opt for, you will be issued a different type of license, and you will be allowed to operate in a specific area only.
In Dubai, there are two primary business setup options: Mainland and Free Zones. In terms of cost, Free Zones are usually cheaper than other options because their setup fees are relatively low, and formalities are less complicated.
Dubai has over 30 Free Zones, separated by the kind of industries they cater to. Some of the most affordable Free Zones in 2024 are:
This brief discusses the distinct forms of business structures and the steps that a businessperson should take in choosing the correct legal framework for their enterprise. The most common types for small businesses are:
The next step after selecting your business activity, jurisdiction, and legal structure is applying for a trade license. The type of license depends on your business activity:
If you want to set up a business in a Free Zone, the application can be made directly through the Free Zone authority’s website or with the assistance of business setup consultants.
Even if you plan to establish a company with minimal capital investment, you will require a registered office address. Free Zones provide flexible options such as:
Opting for a virtual office space or a flexi-desk significantly reduces overhead costs, making it easier to achieve a low cost business set up in Dubai.
In some cases, due to the nature of business activities, there may be additional official permissions from the government. For example, media businesses must obtain permission from the National Media Council (NMC). Organizations like financial or consultancy firms might need to deal with approvals from the Dubai Financial Services Authority (DFSA).
Your Free Zone authority will advise you on whether any external approvals are necessary.
Once you obtain your trade license, the next procedure is to open a corporate bank account. Some local banks have begun to ease their procedures for account opening for Free Zone businesses, although the process might sometimes take time.
You will typically need the following documents:
Once your business is licensed, you can apply for residence visas for yourself, your employees, and any dependents that may accompany you. The number of visas allowed will depend on the office size and the Free Zone regulations. The visa application process generally includes:
Dubai’s tax efficiency is a significant advantage. The new 9% corporate tax commences in 2024, with only businesses earning profits of AED 375,000 or less excluded from this tax. For small businesses, this means you can operate without incurring taxes until your profits reach a certain threshold. Additionally, the 5% VAT is one of the lowest in the region, ensuring low operation costs.
All business licenses in Dubai must be renewed yearly. This process is straightforward but requires good planning to avoid penalties. Most Free Zones offer special renewal rates that are cheaper if you remain within the Free Zone. Keep in mind that renewal fees are usually lower than initial setup costs. Different agreements specify the renewal of a virtual office or flexi-desk if utilized.
By following these steps, you can establish a low cost business set up in Dubaieffectively, taking advantage of its friendly business climate. Dubai remains one of the most suitable places for investing in business due to its low taxes, well-developed infrastructure, and favorable economic climate. With careful planning, you can embark on your business journey in 2024 successfully.
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