If you’re looking to start a business abroad – look no further than Dubai. As a well-known trading hub of the Middle East and North Africa (MENA) region, Dubai boasts a wealth of benefits for businesses and companies looking to succeed, thrive and connect to the rest of the world.
In the first half of 2024, Dubai’s GDP grew by 3.6%, with the Central Bank of the United Arab Emirates (CBUAE) maintaining its real GDP growth projections for 2024 at 4%. For 2024, the forecasted growth in real GDP is 4%. The UAE is considered a low-risk nation for business where EKN, a Swedish export agency, has classified the UAE with a risk category of 2 out of 7. This means that transactions processed within the UAE are assessed without special requirements or terms and conditions, and there are no predetermined restrictions for guarantees. If you are considering setting up a business in Dubai, the process is relatively simple – especially in the form of the UAE’s free zones.
Things to know before setting up your business
Generally, there are a few things you will need to understand before you start the process to set up your business in Dubai. Let’s take a look through each of them.
Mainland vs. free zones vs. offshore
Before setting up your business, you must decide whether you would like to operate on the mainland, in a free zone, or offshore. Each option has its benefits and specifications based on your business requirements.
Mainland
If you are looking to establish a business with the flexibility to trade directly with the UAE local market and internationally, setting up on the mainland is a viable option. Mainland companies can operate anywhere in the UAE and are not restricted to designated areas. Most business activities allow 100% foreign ownership. However, some strategic sectors may require an Emirati partner.
Mainland companies also have a mandatory office space requirement, having to lease an office of at least 200 square feet. Virtual offices are not allowed for mainland companies.
Free Zones
If you are looking for 100% ownership of your company, consider applying for a licence and location in one of Dubai’s free zones. The free zone concept was introduced by the Dubai government to generate foreign interest and set up businesses in the city. It’s a special economic area where business owners can enjoy full ownership, 0% corporate taxation up to profits over AED 375,000 (9% corporate taxation for profits above AED 375,000), and 0% personal income tax.
However, one of the key limitations of operating a company in a free zone is that you are not allowed to make direct trade with the UAE local market without a local partner or distributor.
Currently, there are over 30 free zones operating in Dubai. Generally, each free zone is designed around an industry category and offers licences to companies within those categories, with Dubai Multi Commodities Centre (DMCC) as one of the leading free zones in Dubai.
Offshore companies
Offshore companies can also be registered in a free zone and enjoy many of the same benefits. However, it’s not a substitute for a free zone company. The main difference between a free zone company and an offshore is the operations of the business. Offshore companies are allowed to have business activities outside the UAE and not inside. They also have no requirements for minimum capital deposited before incorporation.
