Features of registering and doing business in Dubai, UAE

The United Arab Emirates attracts entrepreneurs from all over the world with its advantageous geographical location, developed infrastructure, and favorable tax climate. However, registering and doing business here requires careful preparation and understanding of local legislation. In this article, we will examine the main aspects that will help you avoid common mistakes and navigate the nuances of the law.

Choosing a jurisdiction: Free Zone or Mainland?

Free Economic Zones (Free Zones). They offer 100% foreign ownership of the business, a simplified and more budget-friendly registration procedure, special conditions for import/export, etc. The limitation is the territory of operation: companies registered in a free zone can operate within its territory or outside the UAE. It is important to understand that each FEZ specializes in certain industries, so the choice depends on your field of activity. Examples of popular FEZs: Dubai Media City, Dubai Internet City, Dubai International Financial Centre (DIFC).
Mainland. Registration on the mainland involves a more complex procedure and strict regulation by local authorities. However, it opens up access to a wider range of activities and allows you to work directly with government agencies without the restrictions inherent in FEZs.

Regardless of the jurisdiction you choose, registering a company in the UAE involves several stages:

Obtaining preliminary approval from regulatory authorities. At this stage, you will need to provide a detailed business plan and description of your planned activities.

Choosing a name for your future organization. It must not coincide with existing names and must comply with the requirements of the chosen jurisdiction. It is usually recommended to prepare three options at once to avoid delays in the process.

Selecting the type of license. This is determined by the type of your activity. Licenses can be commercial, industrial, or professional. The types of activities specified in the license must match the actual activities of the company. In some cases, additional approvals from regulatory authorities may be required.

Renting or purchasing an office/retail space/warehouse. Proof of a legal address must be provided for registration. This can be a rented or purchased office in accordance with the requirements of the chosen jurisdiction and type of business.

Registration with the Ministry of Labor to obtain visa quotas and work visas for employees.

Registering the company with the tax authorities. Within three months of obtaining a license, the company must obtain a tax number.

Opening a bank account. After receiving the founding documents, you can open a corporate account at one of the UAE banks. This is a necessary step for carrying out financial transactions.

Tax features

Although the Emirates are famous for their favorable tax conditions, the complete absence of taxes is a myth. Key points to consider:

VAT (5%). A value-added tax of 5% applies to businesses operating in the UAE. Mandatory registration is required if turnover exceeds the threshold of AED 375,000.
Corporate tax (9%). From 2023, the UAE will introduce a 9% corporate income tax for organizations with annual revenues exceeding AED 375,000. However, some firms may be eligible for exemptions. For example, if a company's turnover does not exceed AED 3 million per year, the business is exempt from corporate tax.
Transparent financial reporting. Even if a company is exempt from paying taxes, Federal Law No. 2 of 2015 “On Commercial Companies” requires detailed and transparent financial reporting. Failure to comply with this requirement can lead to serious consequences, including fines and penalties. Consulting a qualified accountant is a prerequisite successful business in Dubai.

Human resources policy

Let's highlight the key aspects related to employment:

Registering the company with the MoHRE (Ministry of Human Resources and Emiratisation)

is a necessary step for obtaining work permits for employees.
Obtaining visa quotas and opening employment files for employees

depends on the jurisdiction, office size, and type of business.
The UAE actively promotes an emiratization policy

which aims to increase the proportion of Emirati citizens in the workforce. Some companies are required to comply with certain quotas for the employment of UAE citizens. For example, if an organization has between 20 and 49 employees, one of them must be a local resident.

UAE legislation is constantly evolving, expanding workers' rights and increasing the flexibility of working conditions. In particular, there is a trend towards increasing the minimum wage, improving working conditions, and strengthening the protection of employees' rights. Monitoring changes in legislation and adapting HR policies to new realities is a guarantee of avoiding conflicts and ensuring the stable operation of the company.

Registering a business in Dubai is an investment in the future, allowing you to enter the international market. Success depends on a deep understanding of local legislation, the tax system, and the specifics of HR policy. Professional advice from lawyers, accountants, and labor law specialists is essential for minimizing risks and achieving stable growth for your business in this dynamically developing region.