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Dubai is a global city and the business hub of the Middle East. It is the most populous city in the UAE and located in the north-eastern part of the country. Dubai is one of the world’s fastest growing economies, with the largest contributors to its GDP being real estate, trade, tourism, and financial service industries. Despite the emirate’s infrastructure having been built on the oil exports over 3 decades ago, oil and natural gas contribute to less than 5% of its GDP now.

Dubai has gained the reputation of a leading trading hub in UAE, owing to premier business locations and an environment that is not unduly restrictive. It offers businessmen the most liberal operating conditions, tax exemptions, asset protection, complete privacy, and limited liability, in establishing a business in Dubai. The tax haven also offers tremendous promise to overseas companies, as it has:

  • Excellent growth trajectory (imports have doubled since 1990) and unique policies of liberalization
  • Prosperous market located in one of the world’s richest regions that is diversified and offers wide opportunities to traders
  • No trade barriers, quotas, exchange controls (open market)
  • High accessibility through air or water (around 90 airlines and 170 shipping lines)

Types of Company Formation in Dubai

Al Sumood Group is conversant with the company formation laws and regulations in Dubai and can help you set up your business here, availing the required licenses (Industrial/Service License, Trading/Commercial License, and Professional/General Trading License). You can choose from among a free zone, mainland or offshore company in Dubai.

Onshore and offshore sectors dominate the UAE economy; the difference between these 2 is that offshore sectors contain free zones that award foreign investment, while onshore sectors put restrictions on the foreign ownerships and take care of local business interests. Here’s a little summary of the 3 types of company formation in Dubai:

1. Free Zone Company

Free zones in Dubai are the most sought-after locations for international business operations and attract foreign direct investment due to their policies that generate employment while supporting economic reforms. Free zone setup is a highly profitable investment option for organizations because of incentives like:

  • 100% foreign ownership
  • Exemption of taxes
  • Customs privileges
  • Greater growth potential due to the strategic location
  • Well established transport network and road connectivity
  • Proximity to a large customer base
  • Affordable cost for high-quality labor

2. Offshore Company

Many businesses prefer to set up an offshore company, also known as non-resident company, in Dubai as the income obtained from a holding company (offshore company) is not taxable.

Other than tax savings, people prefer having an offshore company as a holding company so that they can hold:

  • The interest of other companies in a separate jurisdiction
  • Licensing of franchises
  • Intellectual property rights like patent, trademark, copyright, etc.

3. Mainland Company

A business entity falling under commercialized geographical areas and directly registered under the Emirates government and its authorities is known as a mainland company. A mainland company in Dubai can carry out business across the UAE but permits a maximum foreign shareholder equity capped at 49%. Mainland represents the most developed economy as it is setup directly in accordance with the legal structures of the Government policies.

Company Incorporation in Dubai

As per the Federal Law, it is mandatory for a commercial company in Dubai to have not less than 51% local equity (participation of UAE nationals). The law also defines 7 categories of business organizations that are permitted to establish in Dubai. These are:

  • Sole Proprietor Company
  • General Partnership Company
  • Partnership-en-Commendam
  • Limited Liability Company (LLC)
  • Joint Venture Company
  • Public Shareholding Company
  • Private Shareholding Company
  • Professional Company

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