Dubai has rapidly evolved into a global business hub, attracting entrepreneurs, investors, and multinational corporations from around the world. With its strategic location, world-class infrastructure, and investor-friendly policies, Dubai offers an ideal environment for starting a business. However, to establish a successful venture, it is essential to understand the legal and procedural obligations related to licensing, ownership, and visa requirements.
1. Licensing: The Foundation of Legality
Business licensing is the first and most critical step in the process of mainland company formation in Dubai. Every business operating in the Emirate must have a valid license issued by the appropriate authority.
There are three main types of licenses in Dubai:
- Commercial License – For trading and general business activities.
- Industrial License – For manufacturing and industrial activities.
- Professional License – For service providers, professionals, and artisans.
Each license is issued by the Department of Economy and Tourism (DET) for businesses in the mainland. In the case of Free Zones, licenses are granted by the respective Free Zone Authority. As of 2024, Dubai has over 30 Free Zones, each catering to specific industries such as technology, media, finance, and logistics.
According to the UAE Ministry of Economy, over 650,000 active business licenses were recorded across the UAE in 2023, a significant portion of which are based in Dubai. The licensing process includes trade name reservation, initial approval, drafting a Memorandum of Association (MoA), and selecting a business location.
2. Ownership Structure: Local vs. Foreign Investment
Until recently, most foreign entrepreneurs had to partner with a UAE national who held 51% of the business ownership in the mainland. However, in a significant reform, the UAE implemented the Foreign Direct Investment (FDI) Law in 2020, allowing 100% foreign ownership in over 1,000 commercial and industrial activities in the mainland, depending on the nature of the business.
In contrast, Free Zones have always allowed 100% foreign ownership, which is why many international businesses choose Free Zone entities. However, Free Zone companies are limited in their ability to trade directly with the UAE mainland unless they appoint a local distributor or establish a mainland branch.
Key Considerations for Ownership:
- Mainland Companies: Can operate anywhere in the UAE. Some sectors still require a UAE national sponsor.
- Free Zone Companies: Benefit from 100% ownership, tax exemptions, and simplified import/export procedures, but are geographically limited unless structured properly.
- Offshore Companies: Ideal for international operations without a physical presence in Dubai.
Ownership structure also affects the type of license and visa eligibility, making it a key strategic decision when setting up a business.
3. Visa Obligations: Entrepreneurs, Employees, and Dependents
Securing the right visas is crucial for operating and residing in Dubai. The UAE government offers various visa types, depending on the role and requirements of the business.
a. Investor/Partner Visa
Business owners and investors are eligible for an Investor Visa, typically valid for 3 to 10 years. Recently, the Golden Visa program has been introduced, offering long-term residency for investors, entrepreneurs, and professionals meeting specific criteria, such as an investment of AED 2 million or more.
b. Employment Visa
Companies in Dubai can sponsor visas for their employees. The number of visas a business can apply for depends on its size, office space, and business activity. The visa process includes:
- Quota approval
- Employment entry permit
- Medical fitness test
- Emirates ID registration
- Visa stamping in the passport
c. Dependent Visas
Entrepreneurs and employees can also sponsor their immediate family members, subject to meeting the minimum salary requirements and accommodation conditions.
In 2023, the UAE issued over 9 million residency visas, showing the scale of migration driven by business and employment opportunities. Dubai’s proactive visa policies are key to attracting international talent and investors.
Additional Obligations
In addition to the core elements of licensing, ownership, and visas, businesses must also comply with:
- Taxation: While the UAE has no personal income tax, a 9% corporate tax applies to profits exceeding AED 375,000 as of June 2023. VAT (5%) is also applicable on goods and services.
- Economic Substance Regulations (ESR): Certain businesses must demonstrate substantial activities in the UAE.
- Ultimate Beneficial Ownership (UBO): Disclosure of real ownership is required to prevent fraud and improve transparency.
Conclusion
Dubai offers immense opportunities for entrepreneurs, but navigating the legal and procedural landscape is essential for success. By understanding the licensing options, ownership structures, and visa obligations, investors can make informed decisions that align with their business goals.
With ongoing regulatory reforms and a business-friendly ecosystem, Dubai continues to strengthen its position as a global destination for innovation, investment, and enterprise.