Aurion Business Consultants

How to open a startup in Dubai?

Dubai is a city that is perfect to open a startup. Dubai has the best business infrastructure and ecosystem that support business growth. There are a lot of opportunities to be tapped by businesses here. The diverse multi-national population forms the perfect audience pool to test out any new ventures.

Why choose Dubai for opening a Startup Company?

Main reasons to choose Dubai for opening a Startup:

  • Ease of Doing Business
  • Government Support
  • Cost-effective Business Setup Package
  • Networking Possibilities
  • Diverse Talent Pool
  • Easy Access to Global Markets
  • Robust Transport and Logistics Support
  • Technology Infrastructure, and,
  • Many more components that are supporting the startup growth

However, there are certain key areas to be considered while setting up a startup in Dubai. Reducing the overall business setup cost is the key focus for startup companies. Above all, the company registration process in Dubai is relatively easy for startups.

Startups would require a lot of investor funding for Product Development, Testing, and Software Development.

Advantages of setting up your Startup in Dubai

  • Government support towards entrepreneurship and Startup culture
  • World-class infrastructure facilities and Freezones
  • Ease of business setup and quick company formation
  • Geographic advantage as Dubai connects the East and the west.
  • Gain easy access to the international markets

As per the Global Entrepreneurship Index, UAE is ranked 26th globally and third in the MENA region in 2018. Studies indicate that the majority of the Startups opened recently in UAE, and Dubai are e-commerce, marketplaces, and infrastructure/software as a service.

Key Focus Areas to Know Before Setting up a Startup in Dubai

Startups will always be looking at the following to achieve business sustainability:

  • Lowering the Company Setup Cost, and,
  • Reducing the Operating Expense

There are a handful of choices for an investor looking for opening a startup company in Dubai.

However, the following parameters have to be considered for assured success in a startup business in Dubai.

1. Assess all the Options in Detail

Dubai has a lot to offer for startups and entrepreneurs looking for setting up their stores.

There are 45+ Free Zones in the UAE that offer various business setup packages. Starting from Freelance Permits to fully-furnished Executive Office Packages, they have it all.

Intending to strengthen the local presence in UAE, then LLC Business Setup is the perfect option. Investors can choose from a wide range of business activities spread across retail, trading, services, etc.

startup in uae

They can also look at opening a Civil Work Company for delivering professional services in the Mainland of Dubai.

Dubai offers a wide range of business setup options for entrepreneurs. They can take a well-informed decision in choosing the right business jurisdiction.

Investors can choose Free Zone, Mainland, or Offshore based on their business activity and growth prospects.

 2. Start a Service Company & Get 100% Ownership

The key benefit of a Services Company in mainland of Dubai is:

  • Getting 100 % ownership of the company, and,
  • Operating & Expanding the business in the local UAE market.

You may also be interested to know more about “Benefits of Registering a Mainland Company in Dubai“.

The foreign investor must appoint a Local Service Agent (LSA) as a Government liaison. The LSA Agreement has to be renewed yearly by paying a fee.

Also, the Free Zones in Dubai will provide investors with a host of benefits such as:

  • Tax Savings – No Corporate or Income Tax
  • 100% Profit Repatriation,
  • 100% Foreign Ownership,
  • World-class Business Infrastructure for startups,
  • Attractive Company Formation Packages, etc.

The Free Zone in Dubai is the perfect choice for startups in the following field :

  • Service Companies,
  • Overseas Exporters, and,
  • International Trading & Logistics Companies

Having Zero Customs Duty for Import/Export to and from the Free Zone makes it an ideal choice for trading companies.

Also, the Free Zones of Dubai is furthermore attractive option for investors due to:

  • Easy access to the Airports and Seaports of UAE,
  • On-Premise Customs Clearance,
  • Warehousing Facilities, etc.

3. Find an Experienced Consultant

For foreign investors and startups venturing into the UAE market, it is best to proceed with a seasoned Business Consultant. The company formation process in Dubai requires a few pieces of paperwork, documentation, and approvals.

An expert PRO agent would be handling all of these tasks on behalf of the investor and ensure a hassle-free company setup in the UAE.

Hence, to save time, money, and effort it is best to take the assistance of an expert business consultant and have a comfortable business setup in the UAE.

4. Choose Business License Rationally

Choosing a Business License is one of the most important steps in the opening process of your startup in Dubai. Based on business activity, you must choose the right business license.

Dubai is stringent in terms of the law. The companies operating specific business activities must be having a valid business license.

Else, the company will be penalized with fines and license termination.

For example, a heavy equipment trading business in UAE must be having a trading license with activity specified as heavy equipment trading.

A general trading license would not suffice for such special activities.

5. Investor Visa and Employee Visa Quota

The investor must have a clear understanding of the following:

  • Investor Visa Guidelines,
  • List of Restricted Nationalities,
  • Complications of Visa Processing for Certain Passports,
  • Additional Documents Required, Visa Fees, etc.

Based on Government Regulations, immigration has certain criteria in issuing residence visas to a few nationalities, demographics, and passport holders.

The Free Zones have Business Setup Packages based on the Visa Quotas.  The Visa costs vary across the free zones and in the mainland. Free Zones have fixed Visa Quotas for their companies.   

Also, there are some additional costs that the investors have to be aware of: Fees for establishment card, immigration process, and visa processing.

6. Forming an LLC business in Dubai

Another interesting option for Business Setup for Startup is by forming an LLC company in Dubai. If the investors are looking for a long term business plan, and have a UAE National to support them, they can look at forming an LLC Company.

The major stake must be owned by the UAE National (51%) and rest by the foreign nationals. LLC Company will give more flexibility to the investors to choose their office location, add staff, and, manage the business.

Also, LLC Company Setup helps in penetrating the local UAE market more effectively. Expand business easily through opening branch companies.

LLC Company Setup in Dubai is a prospective option for opening a Startup due to:

  • Ability to participate in government project tenders, and,
  • Expand business activities through a wide range of activities (listed with the Department of Economic Development – DED)

So in a nutshell, selecting a business jurisdiction that helps in achieving sustainability, convenience, and costs is the key to the success of setting up a startup in Dubai.

Dubai has a lot to offer the investors, it is a matter of making the right choice to achieve business excellence.

Business Support Infrastructure in Dubai

The Startup growth in Dubai is supported by Government and semi-government institutions to a large extent. Also, many incubators and Freezones provide the required infrastructure support for Startups.

Name a few Freezones that support the Startup culture the Dubai Silicon Oasis, Fujairah Freezone, Dubai Media City Freezone, DMCC, etc.

startup in dubai

The Freezones in UAE offers special licenses for freelancers, flexi-desk, and shared workspaces for entrepreneurs with a business license to support their entrepreneur efforts and gain results.

Also, incubators like Turn8, ImpactHub, AstroLabs, etc., support in providing the right platform for entrepreneurs with interesting business ideas to create, work, and test their product ideas.

6 reasons for Dubai being one of the world’s best places for Starting a Business

1. Technology Support

UAE is a young country with attractive financing options, a large network of banks, and ultra-modern infrastructure. UAE has planned a massive tech transformation and continues its journey of building a smart and futuristic city.

To promote innovation and development, the UAE has invested in research institutions and technical centers.

The Dubai Science Park, Dubai Academic City, Masdar City in Abu Dhabi, etc., are a few to name. UAE is aiming to provide complete technology support and build infrastructure that stimulates the Startup ecosystem and draws more entrepreneurs into Dubai.

2. Government Support

The Government of UAE is very supportive of Startups, entrepreneurs, and innovation. There is a wide range of incentives offered by the government to new businesses set up in Dubai.

The Freezone Authorities, the Department of Economic Development (DED), and the Government of UAE are implementing Startup packages to stimulate the growth of Startups.

Read more about Freezones in UAE

3. Access to the International Markets

UAE is the perfect location for any business. Due to the virtue of the geographic location UAE act as a link between the east and the west. UAE is well connected to the Airports and Seaports of the world.

The logistics support and operational infrastructure in the UAE make it stand out as a perfect location for Startups to try, test and execute their products.

Also, UAE is home to a diverse expat population, and there is no other country with a representative population of the world, unlike the UAE. Hence, Dubai is the perfect place to open your startup and test your product ideas.

The global connectivity, business infrastructure, secure banking system, political stability, etc., are making UAE the perfect choice of investors.

4. Living Standards

Dubai has already grown into a prominent business hub. Over the decades Dubai has become one of the best cities to live in with all top-class services and amenities for the public. 

UAE is an extremely safe place to reside, and the living standards in the UAE are much higher than in many countries in the world. There are numerous cost-effective residence options available in UAE. The Dubai Government’s initiatives are constantly focused on making Dubai the happiest place on earth.

5. Tax Benefits

UAE has very few tax norms, it just being two years since VAT has been introduced in the Dubai market. There is no income tax on individuals.

However, there is a corporate tax for oil companies and foreign banks. Also, for specific goods that are harmful to human health or the environment, there is an excise tax levied.

For businesses, the Freezones in UAE has a 100% tax-free environment, with only 5% VAT to be levied when doing business with the Mainland and the rest of the GCC Countries.

Also, Freezones allow 100% profit and capital repatriation and a 0% customs duty if operating from the designated Freezone and not on the Mainland.

Read more about VAT in UAE

6. Investor Friendly Location

As per the Dubai Statistics Centre, 50% of all companies registered in Dubai are early-stage Startups.

Dubai offers cost-effective Startup packages, world-class infrastructure, lifestyle, the ability to easily setup business models, access to well-qualified mentors, workshops, events, and a supportive investment community.

There are numerous support services Dubai offers for investors to promote entrepreneurship. Accelerators and Incubation facilities such as the Dubai Silicon Oasis, Dubai Science park, 5Dubai, etc., contribute to the Startup growth. in the region.

New Business Opportunities for Startups

With the Free Zones offering low-cost business packages targeting new entrepreneurs, freelancers, and start-ups; UAE has evolved into a start-hub of the middle east.

The Flexi-Desk and Shared Office Spaces offered by the numerous Free Zones in UAE are powering the growth of the startup culture. These affordable business setup packages are the perfect start for a new business to venture into the UAE at minimal company setup costs.

With the onset of the Pandemic, many traditional business activities are experiencing downtime.

However, the digitally connected world has given rise to a set of new business opportunities that leverage digital connectivity and reach customers online.

Ranging from online tuition to Yoga-classes, to virtual assistance services, there is a whole lot of new business opportunities out there that startups and new entrepreneurs are exploring currently.

To know more about opening a startup company in Dubai and starting a business in Dubai, connect with our experts today!

Contact: Aurion Business Consultants

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