How to set up your business in Dubai and not get overcharged
One of the most popular topics of my newsletter - How to incorporate a business in Dubai. Without agents, middle man, unnecessary charges.
I shared my first post on this topic about 1.5 years back and it might be the reasons you’re subscribed. This post is refreshed and covers the most frequent questions & mistakes.
This is my third “starting startups mini-series”.
Previous mini-series post was about taking the leap and generating startup ideas.
Q: What type of company should I choose?
You have three main options:
1. Mainland Company: A must if you’re selling goods or services physically in the UAE (e.g., restaurants, salons). Most activities now allow 100% foreign ownership. The best way to set up is through the DED Café, an official government service. Mainland setup will be slightly more costly & time consuming compared to Freezone.
2. Freezone Company: Perfect for virtual businesses targeting both UAE and international markets. You retain 100% ownership, but each Freezone has its own rules, activity limits, and pricing. There are over 40 Freezones in the UAE. Unless you’re in a highly regulated industry or plan VC funding, it is not that important which one you choose (main difference is price, reputation, quality of service, digitalization).
3. Offshore Company: Meant international operations without physical presence in the UAE. It’s an LLC but has limited utility. It’s not that common or recommended.
Q: How do I choose the right Freezone?
Start by identifying a Freezone that matches your business activity and budget. Some Freezones, like DMCC, specialize in industries such as trading and crypto. Meydan is better for general SMEs with multiple activities. Contact Freezones directly for free consultations, they’ll explain their offerings and do the formation with you. You don’t need an agent.
For example, Meydan allows three business activities and charges 12,500 AED/year. DIFC setup starts at 30k AED/year. Freezones outside Dubai (e.g., Sharjah, Ras Al Khaimah) can significantly lower your costs, sometimes by 50%, however their level of service is also limited. I personally went with Meydan and can recommend.
Q: What other things should I take care of besides getting my business license?
You’ll need your visa (Emirates ID/EID), business bank account, tax registration, and accounting. Freezones often upsell these services for convenience, but you can handle most yourself with minimal effort and find better accountants (tips at the end).
Q: What’s the process for obtaining a visa and EID?
After securing your business license, apply for your investor visa and EID. Costs include an immigration card (~2,000 AED/year), visa allocation (~1,850 AED/year), and a two-year investor visa (~4,000 AED).
Your Freezone will guide you, but you’ll need to complete medical tests and biometrics at a specialized medical center (fastest is Smart Salem).
Q: What’s the easiest bank to open & use?
Wio Bank is a still the best option. It’s a fully digital SME-focused bank regulated by the Central Bank, offering accounts without deposits and minimal monthly fees (from 99 AED). Approvals are quick (mine took 12 hours).
Opening an account with Wio has become more difficult for certain nationalities, with frequent app and customer service issues. As your business grows, consider diversifying with banks like HSBC or Emirates NBD.
Q: Do I need to register for corporate tax?
Yes, all businesses must register for corporate tax with Emaratax online, for free, even if your revenue is below the 375k AED threshold. The 9% tax applies only to profits exceeding this amount from UAE-based operations. Businesses are also required to submit annual tax reports.
Keep your records in order and find a suitable accounting service.
You also have to register for VAT and comply with other tax rules I shared in this dedicated post.
Most common mistakes
Setting up your company without thinking it through or too early.
Don’t setup your company unless you’re ready to charge your first customer. Especially startups tend to incorporate too quickly, before even validating their idea. Remember, opening your company is super easy. Closing it is super difficult.
Not dealing directly with Freezones or DED.
Repeat after me - “I don’t need an agent.” Unless your company structure is complicated or 3 hours of your time is worth more than $10k, don’t use a middle man.
Choosing the wrong setup.
If you’re unsure, go to DED Cafe a consult with them whether your type of activity is better for Mainland or Freezone setup.
Being unaware of the real cost & renewals.
There’s number of recurring annual costs you have to budget for. Business license, visa, accounting, taxes… the list goes on.
Ignoring tax liabilities.
Late registration for corporate tax and VAT, late corporate tax filling comes with hefty fines. Keep your accounting in order.
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sep-by-step details to set up business in Dubai without a middle man.
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See you next week!
Kristina
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