Every year, hundreds of entrepreneurs relocate to Dubai with the hopes of starting businesses and growing them into multi-million-dollar enterprises. Dubai is the prime location for business and trade, a popular tourist destination, and is hospitable to ambitious entrepreneurs, making it an ideal spot for individuals with ambitious dreams.
However, before establishing your business in the Gulf Tiger, you must understand Dubai business laws and regulations to prevent complications. We have compiled a comprehensive guide to Dubai's business rules and regulations to simplify this task.
Dubai Business Laws and Regulations
Important Laws
In Dubai, local and federal laws serve as the basis of the legal framework. All 7 Emirates within the UAE have to follow the same set of laws that can vary according to each location. When establishing a business in Dubai, it is important to get acquainted with a few crucial laws, including:
- Bankruptcy laws: The bankruptcy law governs business-related bankruptcy in the United Arab Emirates. This legislation, which went into effect in December 2016, intends to provide a legal framework for struggling businesses and assist them in avoiding liquidation or bankruptcy through various measures.
- Federal Law on commercial companies: Any business engaged in financial, agricultural, industrial, real estate, or other economic activity is subject to this rule, except for a few exemptions.
- Tax Law: Since most firms in several industries in Dubai are exempt from paying corporate income taxes, Dubai's tax system is highly advantageous for enterprises. However, organizations not exempt from paying taxes should register for VAT, add VAT to taxable purchases, and file regular VAT reports. To achieve proper tax compliance, small and large businesses in Dubai must comprehend and follow the VAT requirements.
Business Entities
Once you have understood the important business laws in Dubai, the next step is to research the company structures and select the one that best suits your business. These include limited liability companies (LLCs), branch offices, sole proprietorships, and partnerships. The LLC is the most popular and adaptable structure. One key reason behind its popularity is that it allows a foreign investor to hold around 100% foreign Ownership in LLC Company in Dubai Mainland
No need for a local sponsor for LLC company in UAE.
As per new company law implemented from 1st June 2021, there is no more requirement of UAE national to hold the 51 % share of the LLC Company, now investors can own 100% share of a mainland trading company in UAE.
EXCEPTIONS
If you are setting up in Dubai or any other part of the UAE mainland in the following industries, you will require a local sponsor:
- Oil exploration and production
- Security and military services
- Banking, financing and insurance activities
- Pilgrimage and Umrah services
- Water and electricity provision
- Fishing and related services
- Post and telecoms services
- Road and air transport
- Printing and publishing
- Commercial agency
- Medical retail (including pharmacies)
- Blood banks, quarantines, and venom/poison banks
Outside of these industries and others like them, you may be able to retain 100% ownership of your business. However, you will need to apply to the Dubai Department of Economic Development (DED) for permission to trade.
Businesses operating in a Freezone, like the IFZA Freezone, can also enjoy 100% ownership and several other benefits.
Registration and Licensing
Businesses in the Gulf Tiger must comply with all registration and licensing regulations. Licenses must be issued by the DED (Department of Economic Development), depending on the specifics of the company's activities. Business owners have various legal options, including offshore corporations, mainland corporations, and free zone entities. Each alternative has its own rules defining taxes and ownership, etc.
These options can be challenging to understand; hence, hiring legal experts like business consultants in Dubai is important to ensure you abide by the law. If you want more information on Dubai business laws and regulations, we recommend contacting the experts at Capatt Services for business setup services in Dubai. Our experts have all the necessary knowledge to guide you through an effortless business setup or process. Get in touch with us now for more information.
