Types of Company Formation in Dubai

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Perfect Stars Business Services is conversant with the company formation laws and regulations in Dubai and can help you set up your business here, availing the required licenses (Industrial/Service License, Trading/Commercial License, and Professional/General Trading License). You can choose from among a free zone, mainland or offshore company in Dubai.

Onshore and offshore sectors dominate the UAE economy; the difference between these two is that offshore sectors contain free zones that award foreign investment, while onshore sectors put restrictions on the foreign ownership and take care of local business interests. Here’s a little summary of the 3 types of company formation in Dubai:

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1. Free Zone Company

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Free zones in Dubai are the most sought-after locations for international business operations and attract foreign direct investment due to their policies that generate employment while supporting economic reforms. Free zone setup is a highly profitable investment option for organizations because of incentives like:
 

• 100% foreign ownership

• Exemption of taxes

• Customs privileges

• Greater growth potential due to the strategic location

• Well established transport network and road connectivity

• Proximity to a large customer base

• Affordable cost for high-quality labor
   

2. Offshore Company

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Many businesses prefer to set up an offshore company, also known as non-resident company, in Dubai as the income obtained from a holding company (offshore company) is not taxable.

Other than tax savings, people prefer having an offshore company as a holding company so that they can hold:
 

• The interest of other companies in a separate jurisdiction

• Licensing of franchises

• Intellectual property rights like patent, trademark, copyright, etc.
   

3. Mainland Company

 

A mainland company in Dubai can carry out business across the UAE but permits a maximum foreign shareholder equity capped at 49%. Mainland represents the most developed economy as it is setup directly in accordance with the legal structures of the Government policies.

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What is the Procedure for Business Setup in Dubai?

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For setting up a business in Dubai, these steps may be followed:

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• Submit the proposed company name and registration application to the Department of Economic Development (DED)

• Get the company’s Memorandum of Association in notarized in the DED

• File documents of the company with the DED to obtain a trade license from the Chamber of Commerce and Industry

• Submit the application at the Ministry of Labour for Establishment Card

• Get the native workers registered with the Ministry of Labour and General Authority for pension and social security
   

What are the Types of Business Licenses Available in Dubai?

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The Department of Economic Development (DED), Dubai is the licensing authority that issues a license for major activities. A fundamental prerequisite for all business activity in Dubai is to apply for and procure one of the following 3 categories of licenses:

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1. Commercial License - Encompasses all kinds of trading activity

2. Industrial License - For setting up a manufacturing or industrial activity

3. Professional License - Meant for artisans, craftsmen, and other professional service providers

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