Business Setup in UAE: FAQs

Benefits of starting a business in UAE

  • UAE is economically diverse
  • UAE ranks first in ease of doing business (in the MENA region)
  • UAE is a regional leader in protection of IP rights
  • UAE has high % of expatriate workforce
  • UAE has no exchange control restrictions
  • UAE is considered as the trading hub in the middle east region. UAE boasts one of the largest seaports in the world and the busiest airport in the world
  • UAE provides political stability, safety, security for businesses to run smoothly
  • UAE is renowned for its well established infrastructure.
  • UAE is considered a tax haven as it has no income tax provisions.
  • UAE is well connected to all parts of the world
  • UAE has large network of banks that provide all the required services to facilitate businesses and help investors conduct banking transactions seamlessly
  • UAE has signed DTAA (Double Taxation Avoidance Agreement) treaty with 117 countries and Israel is the new entrant in this list. This makes incorporating a company in the UAE and invoicing from this company an important method to save taxes in the investor’s home country.

What are PRO services?

While setting up a business in UAE, every company needs the services of Public Relations Officer (PRO). PRO services include all activities related to processing of government (e.g. visa applications) and company related (e.g. trade license) documentation and approvals.

What is the difference between Mainland, Free Zone and Offshore companies in UAE?

# Jurisdiction/Economic Zone Ownership Cost of setup Visa Requirement
1 Mainland 49% to business owner, remaining 51% to local sponsor highest Yes
2 Free Zone 100% ownership cheaper than Mainland and higher than Offshore Yes
3 Offshore 100% ownership (if business resides outside UAE) cheapest No

What is the cost of company formation in the UAE?

a) Mainland business setup cost
Cost of setting up a business in UAE Mainland depends on a number of factors: Some of these factors are: business activity, location of office, number of visas you require. Besides, following are some mandatory fees imposed by government while setting up a business in UAE Mainland:

  • Notary fees
  • Trade License
  • Registration at the government department

b) Free zone business setup cost
There are a total of 37 Free Zones in the entire UAE region. Cost of setting up a business in the UAE Free Zone depends on the business activity, number of visas you require, type of building and office space you select. Besides, couple of other applicable one time fees include:

  • Fee for company registration in the city
  • Fee for trade name-reservation

c) Offshore business setup cost
Cost of setting up an Offshore business includes nominee fee, business maintenance fee, bank account fee, company registration fee, agent fee, registered office fee and standard share capital fee.

What is a LLC company in the UAE?

LLC, which stands for Limited Liability Company, is the most common form of business in the UAE. An LLC can be created by a minimum of two shareholders and a maximum of 50 shareholders.

What is the impact of COVID-19 in the business ecosystem of the UAE?

Similar to other countries, UAE was also affected by the pandemic, though the scale of impact was comparatively less. To mitigate the adverse impact of pandemic on SMEs (Small and Medium Enterprises) which constitute 92% of UAE business ecosystem, UAE announced a stimulus package for them. Right now, life in UAE is coming back to normal and UAE is gearing up for Dubai Expo 2020 which couldn’t happen last year due to the pandemic. Dubai Expo is scheduled to start from 1st Oct’21.

Do you need to rent a physical office for business setup in Dubai?

Renting a physical office is not mandatory for business setup in Dubai. Mainland jurisdiction offers virtual offices at a very minimal cost. Similarly, in Freezones, virtual offices, co-working spaces, sharing desks, physical offices, warehouses etc. are easily available.

What are the different business licenses available in the UAE?

There are 3 key business licenses available in the UAE while forming a company. These are- Commercials, Professional and Industrial. Based on your business activity, you can choose these licenses. E.g. trading businesses can go for commercial license, consulting companies can avail professional license and manufacturing entities can avail industrial license.

What are the steps involved in company formation in the UAE?

Company formation in UAE involved a number of steps. These are- selecting the business activity and jurisdiction (Mainland, Free Zone and Offshore), determining company structure, applying for business license and registering business entity, drafting MoU (Memorandum of Understanding), getting required approval from DED and renting an office.

Why should you avail services of business setup consultants in the UAE?

Company formation in the UAE could be challenging for foreign entrepreneurs or investors as various offerings have been provided by different jurisdictions in the UAE. Also, liasoning with Govt. Authorities for approvals, availing licenses require help from a credible agency. All these things necessitate the need of availing services of business setup consultants like MBG Corporate Services in the UAE.

What are the different types of companies in the UAE?

There are 3 types of companies in the UAE – 1) Free Zone Company 2) Mainland Company 3) Offshore Company

What are the advantages of Mainland company formation in Dubai?

Mainland company formation in Dubai has its own advantages. Some of the key benefits include: trading access in Dubai Mainland, other parts of UAE and GCC countries. Mainland companies can also expand their reach by opening new branches, actively participate in govt. tenders or bids and projects and recruit a number of office employees without any restrictions.

How much time does it take to register a Mainland company in the UAE?

Time required to register a Mainland company in UAE depends on the business activity an entrepreneur is going to choose. For some business activities, approvals may take longer than usual. But, in an ideal situation, 3-4 days is what it takes to register your Mainland company in the UAE.

What is the most common legal structure for Mainland company formation in UAE?

Limited Liability Company or LLC is the most common legal structure entrepreneurs use while forming a Mainland company in the UAE. This legal structure provides required flexibility for business expansion. Earlier, there was a need to have a UAE local as partner to own majority shares (51%) in the company formation but with the recent 100% FDI law, this is not mandatory for a number of sectors.

Does a Mainland company require a rented office space?

Yes. While registering your Mainland company, you must possess a rented office space and tenancy contract in the company name. While issuing the company license, authorities review the tenancy contract.

What is a Civil Work Company in the UAE?

Foreign nationals such as Doctors, CAs, consultants, legal advisors can incorporate a Mainland company in the UAE with 100% ownership. This is called Civil Work Company. Here, instead of a local sponsor, they need to appoint a Local Service Agent (LSA) as POC (Point of Contact) of Civil Work Company to liaise with the government authorities. The LSA neither owns company shares nor takes part in business activities of the company.

Is VAT applicable to the Mainland companies in the UAE?

Yes, Mainland companies need to pay 5% VAT to the Federal Tax Authority (FTA for all the transactions that are initiated in Mainland.

What is meant by the Free Zone or Free Trade Zone in UAE?

Free Zones or Free Trade Zones are economic areas which were established within the UAE region to promote international business. Here, a business owner gets 100% company ownership and can trade goods and services at privileged tax and custom rates. Companies in each free zone can trade only within the same freezone and nowhere else in UAE.

How many Free Zones are there in UAE?

There are total of 37 Free Zones in UAE

What are the key advantages of business setup in Dubai Free Zone?

Business setup in Dubai Free Zone has a number of advantages. Some of them are: 100% foreign ownership, 100% repatriation of profits, no import/export duties, no corporate tax, easy company incorporation, world-class infrastructure.

What are the types of business entities you can establish in the UAE Free Zones?

UAE Free Zones allow establishment of following types of business entities: Free Zone Limited Liability Company, Branch of an International Company, Branch of a Company already operational in Dubai, Free Zone establishment- Single Shareholder and 2 to 5 Shareholders.

How to incorporate a trading company in the UAE Free Zone?

To incorporate a trading company in UAE Free Zone, you will have to-

  • Select the trading activity from the list of activities available in the Free Zone list
  • Book trade name
  • Submit an application with shareholder details, shareholder documents (passport, visa copy etc.)
  • Rent an office space
  • Apply for other clearances or approvals (Customs, Chamber of Commerce, ISO Certifications, etc.)
Can a Free Zone company in UAE do business with the Mainland entities?

Yes, a Free Zone company can do business with the Mainland entities. For the same, Free Zone company is advised to-

  • Appoint a local DED (Department of Economic Department) registered agent for sales and distribution
  • Open a branch in the Mainland
  • Start a LLC Company
  • Adhere to UAE customs law as the same will be applied for any trade that happens between the Free Zone company and Mainland entity or vice-versa.
Can a UAE Free Zone company only rent an office within its jurisdiction?

Yes. The Free Zones in the UAE are governed by various jurisdictions and each jurisdiction has different policies and regulations. Hence, company registered under a specific Free Zone can rent office space only in the respective Free Zone.

Is Customs Duty applicable to Free Zone companies?

Free Zone offers 100 % foreign ownership. Hence, it allows 100% repatriation of profits. Free Zone companies are also exempted from all import and export duties and no corporate tax is applicable on them. Only 5% VAT is applicable on all domestic transactions conducted inside UAE by the Free Zone company.

What are the key limitations with Offshore company formation in UAE?

Unlike Mainland and Free Zones, Offshore company formation in UAE comes with a few limitations. These are- Offshore companies can’t actively trade within UAE, they can’t rent or lease a space in the UAE for trading, even the company owner can’t issue residency visa, they must have a company registration agent for completing the registration.

Can an Offshore company open a bank account in the UAE?

Yes, an Offshore company can open a bank account in the UAE. For the same, the company owner has to visit UAE to complete the necessary paperwork or documentation. Further, this will be strictly reviewed by bank officials under the KYC process.

How much time does it take to register an Offshore company in the UAE?

Offshore company formation in UAE is comparatively easy as compared to Mainland or Free Zone company formation and usually takes 2 working days. Entrepreneurs can apply for an offshore company registration through an online form and upload required documents. Most of the time, physical presence of the company owner is not necessary for the offshore company formation.

Can an Offshore company buy commercial property in the UAE?

No, Offshore companies are not permitted by UAE legal laws to purchase any commercial property in the UAE.

How can foreign nationals obtain a Residence Visa in the UAE?

There are multiple ways for foreign nationals to obtain Residence Visa in the UAE. These ways include: applying for a job, investment in real estate or becoming a property owner, getting sponsored by the spouse, incorporating a company, and applying for the freelance permit.

What is the Long-term Residence Visa in the UAE?

Long-term Residence Visa was introduced by the UAE Government for promoting cross-border trade, economic activities and attracting quality talent from different regions of the world. Particularly for expats, the UAE Government introduced a 5-Year and 10-Year Long-term visa. This was instrumental in attracting global talent such as- entrepreneurs, academicians, scientists, HNIs, creative professionals etc.

What are the key advantages of hiring a PRO agent for business setup in Dubai?

Business Setup in Dubai involves a number of approvals and processing of government documents. PRO services refer to different support activities related to processing of government documents and paperwork, such as visa applications, labour cards, and company trade licencing documentation and approvals.

How long does it take to process a Residence Visa in the UAE?

It takes 4-5 days to get e-visa once a person applies for UAE Residence Visa and submits all the required documents to concerned authorities in UAE. Post this, you can get the in-country status change and visa stamping done. On an average, it takes 8-10 days to complete the whole process of Residence Visa in UAE.

How to open a corporate bank account in the UAE?

As soon as you incorporate a company in UAE, you become eligible to open a corporate bank account. You will have to go through the KYC process and meet other compliance requirements set by the bank. Also, a minimum monthly balance (in the range of 50,000-2,00,000 AED) is required to be maintained. The documents required for opening a corporate bank account in UAE are as follows:

  • Company Trade License, Certification of Registration, Share Certificate
  • Board resolution for authorized signatory to manage the corporate bank account
  • Business profile of the company, expected annual revenue, details of suppliers and transactions
  • Passport copies of shareholders and authorized signatories
  • Other documents like MoA (Memorandum of Association), AoA (Articles of Association), etc.

Above is not an exhaustive list and based on the business activity, additional documents can also be asked from the bank as part of the compliance process.

Are foreign companies eligible to open a corporate bank account in the UAE?

Yes, foreign companies are eligible to open a corporate bank account in the UAE but for the same, they will have to take attestation from both UAE embassy in home country and UAE Ministry of Foreign Affairs. An easy route they can take is to set up a new company or branch office of the existing company in the UAE and open a corporate bank account.

Need further assistance?

If you have any queries related to business setup in UAE which are not listed above, then our company formation specialists would be happy to help! Start chatting and share your queries with us.



  • Established
    In 2002
  • Covering Europe,
    Middle East & Asia
  • 17 Offices in 7
    Countries
  • 3000+
    Clients Globally
  • 500+ Professionals
    employed full time