Dubai, the commercial hub of the United Arab Emirates (UAE), has gained a reputation for being a business-friendly city with favorable tax policies, advanced infrastructure, and an overall positive environment for entrepreneurs. However, starting a business in Dubai requires complying with specific legal and regulatory requirements that must be adhered to. In this article, we provide an overview of the legal aspects of starting a business in Dubai.
Legal requirements for starting a business in Dubai, UAE:
To start a business in Dubai, obtaining a business license is mandatory. The type of license required depends on the nature of the business activity, which can range from a commercial license for trading activities to a professional license for services. Business owners need to submit the necessary documentation, including passport copies and visa copies, to the Department of Economic Development (DED) to obtain a license.
Deciding on a business structure is another critical aspect when starting a business in Dubai. Business owners can choose to set up a Limited Liability Company (LLC), Sole Proprietorship, or a Free Zone entity. Each business structure has its own legal requirements, such as minimum capital requirements, ownership restrictions, and liability limitations.
Foreign business owners planning to set up a business in Dubai must have a local sponsor. The local sponsor can be a UAE citizen or a UAE-based company that holds 51% ownership of the business. The sponsor’s role is to provide support in obtaining the necessary licenses and permits and to act as a local partner to the foreign business owner.
Employment laws in Dubai are regulated by the UAE Federal Labor Law, which outlines the legal obligations of employers and employees. Business owners must comply with labor laws regarding employee contracts, salaries, and working hours. The law also mandates that all employees must have valid work visas.
Dubai has a favorable tax regime, with no personal or corporate income tax, no value-added tax (VAT) on most goods and services, and no withholding tax. However, some sectors, such as the oil and gas industry and banking, are subject to taxation. Business owners should seek the advice of a tax consultant to understand their tax obligations.
How we help you:
At Legal House Consulting Firm, Our team of professionals is ready to assist you with the establishment and management of your business in various jurisdictions throughout the UAE. We offer exceptional support and guidance on legal matters related to corporate business and company formation in this land of vast opportunities. Whether you have questions, doubts, or concerns, our knowledgeable team is here to help. If you’re seeking a dependable business legal consultant in the UAE, look no further. Contact us today.
Frequently asked questions:
Starting a business in the UAE requires a minimum age of 18 years. Nevertheless, if you are below the age limit, you have the option to enlist one of your legal guardians as the interim owner of the enterprise, and when you satisfy the age criterion, you can take ownership of the shares.
The business owner must submit the necessary documentation, including passport copies and visa copies, to the Department of Economic Development (DED) to obtain a license.
Business owners can choose to set up a Limited Liability Company (LLC), Sole Proprietorship, or a Free Zone entity. Legal prerequisites vary according to the type of business structure.
The process for obtaining a visa to start a business in Dubai depends on the type of business license and business structure chosen. The local sponsor in Dubai can provide guidance on the visa process.
Businesses operating in free zones are subject to the laws and regulations of the free zone authority, rather than the UAE federal laws. However, some federal laws, such as the UAE Labor Law, apply to businesses in the free zones.
The cost of a business permit in the UAE varies depending on the type of license and the nature of the business activity. The fees can range from AED 10,000 to AED 50,000 or more.