About DubaiThe Centre of the Middle East Economy
Dubai has emerged as a leading regional commercial hub with state-of-art infrastructure and a world class business environment. It has now become the logical place to do business in the Middle East , providing investors with a unique and comprehensive value added platform.
With its strategic location, tax-free living and consistently strong economic outlook, Dubai is the ideal base for multinationals targeting markets in Central Asia, the Middle East, Africa, the Asian Subcontinent and the Eastern Mediterranean . These regions have a population of over 2 billion people and a combined GDP of US$ 6.7 trillion.
Accessible through its ultra modern airport, that offers connections to over 140 destinations, Dubai is also a thriving tourist destination and attracts a large number of skilled professionals. Its robust economic cluster of technology, media, finance and healthcare hubs makes Dubai a viable and attractive proposition for any business.
Apart from economic advantages, the city offers a superior quality lifestyle that is truly international with luxury residential and office accommodation and excellent educational, health and shopping facilities. Sporting and leisure facilities are abundant and Dubai 's top class international hotels offer a wide range of dining and entertainment choices.
Why DubaiThe past 10 years have witnessed incredible growth throughout all sectors of the Dubai economy. The emirate’s government is constantly working to improve its commercial transparency and introduce dynamic regulations that aid the formation of small and medium enterprises (SMEs) and have the ability to react to global financial challenges. Dubai’s economy is no longer reliant on oil, but is more diversified, relying heavily on trade, services and finance sectors.
With its central geographic location between Asian and European markets, Dubai has worked hard to establish itself as an integral part of the global trade mechanism. Its central location has also allowed Dubai to become a popular and accessible tourist destination.
The Department of Economic Development has been exceptionally forward-thinking, and is moving towards a more streamlined electronic services system in which most aspects of the business set up process is conducted through the internet.
Getting familiar with the Dubai Strategic Plan 2015Released in February 2007, the Dubai Strategic Plan 2015 is a declaration of where the emirate is headed and what steps need to be taken to get there. Aside from the headline-making ideas of urban growth and technological advancement, the plan focuses on making Dubai a more desirable place to live and do business. Infrastructure improvement, health and safety, education, and judicial excellence are the factors that will most benefit business owners. The plan also addresses concerns that might otherwise hinder future business growth, such as the mounting demand for energy and water.
Despite the global financial crisis, many of these aspirations are being advanced. Several government departments, including the Department of Economic Development, have made a move to efficient electronic interfaces, new roads and public transportation. Alternatives that ease congestion and aid local trade have been constructed, and reforms dealing with education and health are regularly being passed. All of these changes amount to a Dubai that is more attractive to potential residents, customers and clients.
Cost of setting up in DubaiOne of the most important steps in creating a viable business plan is understanding the initial costs of setting up a business. Dubai’s tax free nature is attractive to many entrepreneurs, but it’s important to keep in mind the fees involved in issuing a new trade licence. If you are planning to start a business in one of Dubai’s many free zones, keep in mind that each free zone has different start-up procedures and fees. Many free zones also require that the business owner have a minimum amount of capital if they are establishing the company or enterprise in the free zone as opposed to just opening a branch of an existing company. Another cost of running a business in Dubai or in a free zone is sponsoring your employees and providing them with the necessary visas and paperwork to allow them to reside in the country.
Trading companies should also consider the future costs of importing goods to the country. Dubai Customs has clear guidelines to the types of goods that can be brought in, as well as the costs of importing those goods. If the company will only be trading within the GCC, customs fees will be less expensive thanks to the newly established GCC common market, which promotes trade and employment among GCC nationals.
Investment opportunities in DubaiFour sectors make up nearly 74% percent of Dubai’s non-oil GDP. Those sectors are manufacturing, construction, trade and repairing, and services. The services sector makes up the largest percentage of the city’s GDP and can be further broken down into hospitality, transport, storage, real estate and personal and business services. Since 2000, the services industry has also been the fastest growing sector in the city. One of the factors aiding the rise of the service sector is an attempt to improve the city’s e-commerce infrastructure. Both Etisalat and du have introduced secure means of online retail to aid in this developing field.
For businesses opening outside of Dubai’s many free zones, there are several forms of ownership. The form that your company will take depends on your nationality and the services you provide. Non-GCC nationals are restricted to limited liability companies and private joint stock companies, whereas GCC nationals can also own sole proprietorships and public joint stock companies. Keep in mind that non-GCC nationals must have a UAE national partner that controls at least 51% of the company.
Preparing to Open a BusinessBefore starting the formal procedures of obtaining a trade licence, you will want to be sure every aspect of the new business has been planned. New businesses will need start-up funds, either from friends and family, or from lending institutions. Each bank has different requirements for business loans and business banking services, so it’s important to find a bank that suits your needs.
If your future business is in a new field or this is your first business, it might be a good idea to take a basic course in business management or a course specifically designed for the market you’re trying to reach. Most of the major universities in Dubai offer masters of business administration programmes. There are also several training institutes that run business-related workshops throughout the year.
Most importantly, it’s important to understand Dubai’s commerce laws before you get started. The Department of Economic Development is a good resource for researching the laws that will affect to your business
Becoming an entrepreneur in DubaiDubai’s status as an emerging market makes it an ideal place for entrepreneurship. With the constant influx of new residents from every corner of the world, new markets are constantly opening. The Dubai government strongly supports entrepreneurs through the Mohammed Bin Rashid Establishment for Young Business Leaders and the Mohammed bin Rashid Al Maktoum Foundation. Both of these organizations seek to motivate young Arab leaders to become integral parts of their region’s economy.
The first step in starting your business is to create a viable business plan which outlines the aims of the company and communicates to investors and future clients the reasons they should work with you. Government support for young Emirati entrepreneurs is exceptionally generous and there are several grants available for those with a strong business plan.
There are several ways to obtain funding for a new business, including business loans from financial institutions and business grants from the Dubai government. Attracting venture capital is an option for initial funding and is often a serious part of many investors’ portfolios.
Business in DubaiDubai’s many free zones are another aspect of the city’s growing economy. Established as a way of attracting more foreign investment, free zones adhere to unique laws regarding ownership, taxation and labour. Unlike businesses in the rest of Dubai, which require at least 51% ownership by a UAE national, free zone businesses can have 100% foreign ownership. Legally, companies based in free zones are considered “offshore” so they are unable to trade within the city without an agent or distributor. Free zones also tend to assist new businesses in the set up process.
Once the preliminary details of your future business are ironed out and your funding and initial investment capital is in order, you can begin the formal process of obtaining a trade licence through the Department of Economic Development. Regardless of what business structure you’ve decided on, if you’re an expatriate you are likely need to appoint a local service agent, also known as a sponsor.
Since non-GCC nationals are not permitted to be majority shareholders outside of free zones in the UAE, a system of shared ownership has been developed in which UAE nationals formally own 51% of the company and the foreign proprietor owns the remaining 49%; details of profit and loss distribution are then agreed upon in a separate contract. Local sponsors can be individuals or locally-owned businesses. For the most part, a local sponsor will not have any responsibility towards the business but is obliged to assist with all government related procedures such as obtaining permits, trade licences, visas and labour cards. His/her signature will be required on most official forms. Depending on the legal structure of the business, the Department of Economic Development has certain capital requirements for obtaining a trade licence. Those requirements are detailed in the DED’s official explanation of legal business structures on its website.
Also keep in mind that certain businesses require separate approvals from varying government ministries before the trade application can be completed. When applying for a trade name, be sure to enquire about any external approvals that will be needed for the proposed business activity. Do note that 'Virtual offices' are not allowed by DED which has advised potential investors that any commercial enterprise in Dubai must have a physical address and an actual office.
It is important to do as much preliminary research as possible before applying for your trade licence. This means attending trade shows and exhibitions, networking through Dubai’s various business councils and even meeting with a consultancy firm that specialises in the business set up process.
Selecting a locationAnother major aspect of planning for and starting a new business in Dubai is finding an appropriate location. If you are planning on operating within one of the several free zones, you will need to consult with the corresponding free zone authority to determine if your business is authorized for that area. Many free zones also allow businesses to buy land within the free zone in order to build their own offices.
If your future business is within a freehold development, the master developer will most likely have a say in the types of businesses allowed. For example, if you would like to open a shop in International City, you will need to submit an NOC from Nakheel to Dubai Economic Department when you apply for your trade licence.
Another option for small businesses is to lease a serviced office. The lease for a serviced office will often include value-added services including communication utilities, administrative support and concierge services. Some organizations, such as the art-focused Shelter, tend to cater for specific fields and provide business facilities as well as networking opportunities and a community atmosphere.
When applying for the formal trade licence, you will be asked to show a rent agreement for the proposed location of your business. This is agreement is called an MOU by most real estate agents and acts as a precursor to the official lease. The Dubai Municipality has strict zoning rules for businesses, so be sure your business is legally allowed to operate before signing any agreements. To be sure your proposed location is within the city’s zoning regulations, call the Planning Department Office within the DED (04 202 0105) and tell them the exact location and plot number of the proposed location; they will inform you whether or not it is acceptable.
Getting Initial ApprovalsLaw No. 13 of 2011 states that the Department of Economic Development (DED) will be the body responsible for the regulation of economic activity for all businesses outside the freezones. DED's responsibilities include licensing, classification of economic activity permitted within Dubai, issuing trade permits for marketing activities and setting business work hours. The law also establishes a one-window system with a single portal managed by DED for issuing licenses to businesses and dealing with investors.
The first official step in obtaining a trade licence is to reserve a trade name and obtain an initial approval from the Department of Economic Development. Unlike the rest of the official set up process, this step is the same for all business structures. The application for trade name approval can be completed online and a list of trade name restrictions and regulations can be found along with the online application. The costs for obtaining a trade name varies depending on the content and language of the name. The process is relatively straight forward – after filling out the online application or submitting the application in person to the DED, you will be given a date on which you can pick up the approval. All fees must be paid before the trade name approval certificate can be released. Applicants can usually submit their initial approval applications at the same time as submitting their trade name approval application. The documents needed for this step vary depending on the business structure of the company. At this point you will also need to submit any necessary special approvals from Ministries corresponding to your business.
If you are planning to open your new business within a free zone, keep in mind that the process for registering a trade name is usually taken care of by the free zone authority and each authority has different application processes.
Opening a branch of an existing company requires an added set of documents that verify the legitimacy of the branch and its future managers. A list of necessary documents for licensing a branch or any form of business can be found on the DED website. All new agencies can now register electronically with the Ministry of Economy using the 'New Agency Registration eService' that was launched in March 2011.
After Initial ApprovalsThe procedures following the DED’s initial approval vary depending on the business structure. You must submit all of the documents you needed for the initial approval, as well as a few others, including the initial approval, the trade name approval and the final tenancy contract for the office or warehouse. If you are applying for a limited liability licence, you will need to prove your capital requirements by depositing the required amount in a commercial bank and obtaining an undertaking from that bank that the deposited amount will only be released to the managers upon proof of company registration.
If one of the partners of the LLC is an existing company, a copy of that company’s memorandum must be translated, notarised at Dubai Courts and submitted along with the rest of the required documents outlined on the DED website. The clerk at the DED will assign a time to pick up the approved application. Return at the declared time, pay the final fees and submit an application to be inscribed in the ministry’s commercial register. Once the formal licence is awarded, the company must apply to become a member of the Dubai Chamber of Commerce and Industry.
Acquiring a businessAcquiring an existing business in Dubai requires that both the current future owners agree on a set of terms and conditions. Since existing companies often contain a large number of assets and debts, the contract between seller and buyer usually warrants legal consultation.
Once the final contract has been agreed upon and a payment plan set into motion, the act of transferring ownership must be performed through an amendment in the trade licence at the Department of Economic Development. If the business was foreign-owned, a new Appointment of Local Services Agent contract must be signed with the local sponsor and notarised at the Dubai Courts. The fee for amending a trade licence for new ownership is Dhs.500, but other fees may be applicable depending on the circumstances.
Acquiring and opening a local or international franchise has become quite popular in the region, but the process can be extremely complex depending on where the franchise is from. The best place to start the process of opening an international or local franchise is the Franchising Middle East Exhibition held each year at the convention centre. Dubai’s ever-expanding market and its reputation as a financial hub for the region make it a prime location for private equity. There are several opportunities to invest in successful businesses in the region, and most companies looking for investors start their search at the Dubai International Financial Centre.
Free ZonesThe Free zones have been designed to complement and contribute to Dubai’s growth and development but their legal status is extremely unique with the companies operating in them being legally treated as foreign companies or companies operating outside the UAE. The choice of doing business in free zones is very suitable for companies interested in taking advantage of Dubai as a regional manufacturing or distribution area, as most of the sales of such companies will be exported without any tax being imposed.
Advantages of free zonesInvesting in a free zone allows 100% ownership of your enterprise, 100 % repatriation of capital and profits, no minimum capital investment, no corporate or personal tax and no need for a local partner. Added to these advantages are ready-made offices, factories, warehouses and easy start-up and licensing procedures. With such benefits, it is no wonder that Dubai has the finest free zones in the world. Click here for a list of Dubai free zones.
Jebel Ali Free ZoneOne of the oldest and most successful is Jebel Ali Free Zone (JAFZA), which was set up in 1980 and has the world’s largest man-made port in the world. The upcoming Maktoum International Airport will make JAFZA the only free zone with both an international port and airport.
Financial free zonesSome free zones are created in city-clusters or districts with specific services or industrial specializations. The financial free zones include Dubai International Financial Centre, Dubai Multi Commodities Centre, Dubai Gold & Commodities Exchange.
Media and technology free zonesThe media and IT specialized zones include Dubai Media City, International Media Production Zone, Dubai Studio City, Dubai Internet City, Dubai Silicon Oasis Authority, Mohammed bin Rashid Techno Park and Dubai Biotechnology & Research Park.
Other free zonesOther free zones include Knowledge Village and Dubai Academic City, Dubai Healthcare City, International Humanitarian City, Dubai Outsource Zone, Dubai Airport Free Zone, Dubai Flower Center, Dubai Maritime City, Dubai Logistic City, Enpark (Energy & Environmental Park), Dubai Textile Village, Dubai Cars & Automotive Zone (DUCAMZ), Awir Free Zone, Dubai Carpet & Textile City and Dubai Sports City.
(Publication of Dubai eGovernment, On: 01/01/2012 We are not responsible for any amendment to this data )