Setting up a business in Dubai
In Dubai, the authorities have deliberately sought to create an environment which is well ordered without being unduly restrictive. As a result, Dubai offers businessmen operating conditions that are among the most liberal and attractive in the region.
There are many options open to international companies seeking to establish a business relationship with Dubai.
Having a presence can provide considerable business advantages in the Middle East. Businessmen in the region prefer to deal with someone they know and trust and personal relationships are much more important in doing business in the Arab world than they are in western Europe or America.
The basic requirement for all business activity in Dubai is one of the following three categories of licences:
- Commercial licences covering all kinds of trading activity;
- Professional licences covering professions, services, craftsmen and artisans;
- Industrial licences for establishing industrial or manufacturing activity.
These licences are all issued by the Dubai Department of Economic Development. However, licences for some categories of business require approval from certain ministries and other authorities: for example;
- Banks and financial institutions from the Central Bank of the UAE;
- Insurance companies and related agencies from Insurance Authority;
- Manufacturing license; from the Ministry of Finance and Industry;
- Pharmaceutical and medical products from the Ministry of Health;
- Contracting and Building Maintenance and some other activities from Municipality (click here for the list of activities required Municipality Approval);
- Transportation and vehicle rental activities from Road and Transport Authority (click here for the list of activities required RTA approval);
- Printing, publishing and advertising activities from National Media Council;
- Cargo Clearing, Cargo packaging, Canal dredging contracting and Fishing cages manufacturing activities from Dubai Maritime City;
- Travel and tourism activities (now direct approval from DED. No need approval from Department of Tourism and Commerce Marketing DTCM).
- Gymnasium Club activity from Dubai Sports Council.
- Social Club registration and licensing to be completed from Community Development Authority.
- Tents, awnings and Tarpaulin manufacturing from Environment Protection Section of Dubai Municipality.
- Car Wash License is issued only in locations where there is a petrol filling station. This will need an agreement with the said oil company to lease the space at their filling station. Other norms on environment protection and safety have to be followed as per the standards prescribed.
More detailed procedures apply to businesses engaged in oil or gas production and related industries.
Practicing some trade activities (e.g. jewellery and insurance) requires the submission of a financial guarantee issued by a bank operating in Dubai.
In general, all commercial and industrial businesses in Dubai should be registered with the Dubai Chamber of Commerce and Industry.
For Inbound Tourism Dh100,000 to be deposited in Bank
For Outbound Tourism Dh200,000 to be deposited in Bank
These deposits are irrevocable till the license cancelled.
For Travel Agency Dh100,000 to be deposited at Department of Tourism & Commerce Marketing. This deposit is irrevocable till the license is cancelled.
Building Contracting Companies
For Building Contracting Company License, Dh10,000 to be extra at the Department of Economic Development when the license issued first time.
For General Trading License, Dh15,000 to be extra at the Department of Economic Development when the license issued first time.
Dh50,000 to be deposited at Dubai Customs. This deposit is irrevocable till the license is cancelled.
RTA Activities (following fees to be paid for RTA initial approval)
Rent a Car: Dh5000
Bus Rental: Dh1000
Passenger Transport by rented Buses: Dh1000
Telephones & Telecommunications Equipment Trading
Dh5500 to be paid at Telecommunications Regulator Authority (TRA). This is one time fee.
Security Service: Property guard & Surveillance Services, Party security & private guarding services
Initial approval from Department of Protective Systems, Dubai. Tel. 04-2048312
Oilfield & Natural Gas related activities
Initial approval from Ruler’s Court
Initial approval from Central Bank of UAE and Department of Protective Systems
Jewelry, Mobile SIM Card Trading, Stamp & Seal Making
Initial approval from Department of Protective Systems
For supermarket, 2000 square feet area is required.
Electrical Fitting Contracting: minimum 360 square feet office area is required.
Minimum 175 square feet kitchen area is required.
To set-up your business, to prepare your DED related forms, court agreements and amendments, call: 04 220 4141
Street Food Truck License in Dubai is controlled by Dubai Municipality
Only ready-made meals and fry-ups are allowed to be served by food trucks.
Get No Objection Permit from Permits and Applied Nutrition section at Dubai Municipality to conduct this activity.
The kitchen area in the vehicle must be suitable for the permitted activities. The floors, walls and ceilings should be made of smooth materials; they should be easy to clean, non-absorbent of water, fire-resistant, light-colored, non-toxic and without cracks.
Food trucks must also provide appropriate ventilation and lighting.
There should also be a double sink for washing small equipment that is situated close to the preparation area.
It is also required to provide sufficient and appropriate places for storing one-time use packaging materials, and the equipment should be conveniently distributed inside the vehicle, so as to separate the various operations to prevent cross-contamination. It is not allowed to prepare raw materials, thawed meat, poultry and fish in the mobile truck.
The activity of food trucks should be limited to heating operations, simple barbecues and fry-ups for ready-made meals like burgers, sausages and French fries.
It is not allowed to clean and wash the vegetables in the mobile trucks, and all vegetables must be sorted, cleaned, sterilized and stored in clean covered containers outside the vehicle, in a licensed and secure place in order to avoid cross-contamination.
Minimum area required for a normal commercial/professional shop/office: 200 square feet.
Fifty-one per cent participation by UAE nationals is the general requirement for all UAE established companies except:
- Where the law requires 100% local ownership;
- In the Jebel Ali Free Zone;
- In activities open to 100% AGCC ownership;
- Where wholly owned AGCC companies enter into partnership with UAE nationals;
- In respect of foreign companies registering branches or a representative office in Dubai;
- In professional or artisan companies (eg. consulting, educational service) where 100% foreign ownership is permitted.
In the past, each emirate followed its own procedures governing the operations of foreign business interests. In practice, however, Dubai and the other emirates followed the same general system, whereby foreign companies operated in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company incorporated by Ruler’s decree.
The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organisation which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures.
The seven categories of business organization defined by the law are:
- General partnership company
- Joint venture company
- Public shareholding company
- Private shareholding company
- Limited liability company
- Share partnership company
A limited liability company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company’s capital. Such companies are recognized as offering a suitable structure for organisations interested in developing a long term relationship in the local market.
In UAE, The minimum capital requirement law was abolished on 10th August 2009. While foreign equity in the company may not exceed 49%, profit and loss distribution can be prescribed. Responsibility for the management of a limited liability company can be vested in the foreign or national partners or a third party.
The following steps are required in establishing a limited liability company in Dubai.
- Select a commercial name for the company and have it approved by the Licensing Department of the Economic Department;
- Get initial approval for the activity from Economic Department;
- Draw up the company’s Memorandum of Association and have it notarised by a Notary Public in the Dubai Courts;
- Seek approval from the Department of Economic Development and apply for entry in the Commercial Register;
- Once approval is granted, the company will be entered in the Commercial Register and have its Memorandum of Association published in the Ministry of Economy and Commerce’s Bulletin. The licence will then be issued by the Department of Economic Development;
- The company should then be registered with the Dubai Chamber of Commerce and Industry.
Trade Names that cannot be reserved: Name of country, Name of Continent, Famous regions and Towns, Color (blue, red etc.).
Foreign words and short words will be charged extra fee of Dhs 2000 per year.
The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed.
Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local agents (which should not be confused with the term “commercial agent”). Local agents – also sometimes referred to as sponsors — are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general, branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature.
To establish a branch or representative office in Dubai, a foreign commercial company should proceed as follows:
- Apply for a license from the Ministry of Economy and Commerce, submitting an agency agreement with a UAE national or 100% UAE owned company. Before issuing the licence, the Ministry will:
- Forward the application to the Department of Economic Development to obtain the approval of the Dubai government;
- Forward the application specifying the activity that the office or branch will be authorized to undertake in the UAE, to the Federal Foreign Companies
Committee for approval;
- Once this has been done, the Ministry of Economy and Commerce will issue the required Ministerial licence specifying the activity to be practiced by the foreign company;
- The branch or office should be entered in the Economic Department’s Commercial Register, and the required licence will be issued;
- The branch or office should also be entered in the Foreign Companies Register of the Ministry of Economy and Commerce;
- Finally the branch or office should be registered with the Dubai Chamber of Commerce and Industry.
Branches and representative offices of foreign professional firms may be 100% foreign owned provided UAE nationals or 100% UAE owned companies are appointed as local agents. Such agents are not involved in the operations of the firm but assist in obtaining visas, labour cards etc and are paid a lump sum as remuneration. The Department of Economic Development is the authority in charge of licensing such branches or representational offices.
In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. Such firms may engage in professional or artisan activities but the number of staff members that may be employed is limited. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover. The role of the local service agent is to assist in obtaining licences, visas, labour cards, etc.
A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51%, but the profit and loss distribution can be prescribed. There is no need to license the joint venture or publish the agreement. The foreign partner deals with third parties under the name of the local partner who – unless the agreement is publicised – bears all liability.
In practice, joint ventures are seen as offering a suitable structure for companies working together on specific projects.
The Law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. Foreign banks, insurance and financial companies, however, can establish a presence in Dubai by opening a branch or representative office.
Shareholding companies are suitable primarily for large projects or operations, since the minimum capital required is Dh. 10 million (US$ 2.725 million) for a public company, and Dh. 2 million (US$ 0.545 million) for a private shareholding company. The chairman and a majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.