Tech-based Business in Dubai: Where & How to Start?
Dubai, just like a ship in a glass bottle, is the whole world in a small city! Dubai indeed is an art of the impossible! And technology and the UAE’s passion to make the country a “go-to tech hub” for investors and talent worldwide are to blame!
The UAE government has set a mark to double the size of the national economy (from AED 1.4 trillion to AED 3 trillion) within the span of ten years. Lately, they have signed contracts with eight key countries to establish trade and meet this goal as part of the ‘Projects of the 50’. Technology and innovation will remain the cornerstone of the strategy. The private sector will be elemental to this ascension. With the introduction of new innovations in the IT sector and increased accessibility of tech-based devices for everyone, more business activities are evolving to cater to this field.
Why Choose Dubai for Tech-based Business?
The biggest magnets that pull entrepreneurs desiring to set up a company anywhere are the ease of doing business, business-friendly policies, access to world-class infrastructure, abundant business opportunities, ample investors, negligible taxes and proximity to potential markets. And Dubai has it all! A liberal, but sound regulatory framework, coupled with a cartload of business growth promotion initiatives, a favourable tax environment, and 25+ free trade zones, makes the emirate an extremely appealing choice for investors looking to establish a business in the UAE. In addition, Dubai, the bold and beautiful emirate of the UAE, has a leg-up on tech-based business set-ups, thanks to the intelligent infrastructure and immaculate support services. A city that never hesitates to experiment, Dubai is continuously shaping an enabling ecosystem to allow businesses across sectors to innovate. The ambition of the city is clearly visible in the raft of futuristic long-term strategies woven across AI, blockchain, 3D printing and Internet of Things (IoT). UAE’s ‘Projects of the 50’ also has been launched to digitally transform the region at the speed of light. The project will transform the UAE tech market, which is already worth more than 5.5 billion, into the market leader in the subsequent years. The recent launch of the DIFC, Artificial Intelligence (AI) & Coding Licence, opens doors to new horizons for seasoned as well as budding tech companies all across the globe.
Free Zone or Mainland?
Location can make or break your business! You can’t move ahead on your entrepreneurial journey until you get the right answer to this question. If you are still on the fence, allow us to help you choose the perfect jurisdiction that checks all the boxes for your tech company setup in Dubai. Ahead, we are going to ease your decision-making a little by elaborating on the features and benefits you get to enjoy with each of the two locations – Dubai Mainland and Dubai Free Zone.
|Free Zone Establishment||Mainland Establishment|
|Ownership||100% ownership for all entities without the need of local sponsor or local service agent||1. 100% ownership for business activities without strategic impact|
2. Local sponsor or local service agents required for some activities
|Scope of Business||Within free zones & outside UAE||Onshore companies within the UAE and international companies|
|Tax Exemption||All businesses||9% for most businesses, June 2023 onwards|
|Setup Period||3-5 days||5 – 10 days|
|Setup Procedure||100% remote||Physical presence or POA is mandatory|
|Work Premise||1. All businesses require office availability, except a few free zones|
2. Virtual offices allowed
3. Work premise only set up in free zones
|Office space of at least 140 square foot must be available, except businesses without instant licence|
|No. of Visas Permissible||1. 1 – 6|
2. Some free zones allow up to 120 visas with office space
|Eligible for unlimited visas provided office space is sufficient|
|Financial Audits||No obligation for most free zones||Mandatory requirement for all mainland businesses|
|Business/Trade Licence Type||1. All licence types obtainable in general free zones|
2. Limitations for specific free zones
|All licence types accessible|
|Share Capital||A minimum allotted share capital is required. The amount differs from free zone to free zone||No standard requirement, specified by the legal structure|
|Relevant Government Approvals||From free zone authority coupled with additional/external approvals if the chosen business activity by law requires them||From DED and other external bodies if applicable. The desired business activity might require additional approvals.|
|Corporate Banking||1. Not as flexible as in case of mainland companies|
2. Some free zones are considered prone to high risk by banks
|More flexibility than free zone businesses|
Tech-based Company Setup in Dubai Mainland
Choosing a site for your business setup could be easy if you know where your target audiences are based or need your offerings. Being an IT/technology services provider company, you would want to register your business in a mainland area of Dubai if a majority of your potential clients are living or doing business there. In short, incorporating your business under mainland jurisdiction is the best option if you wish to penetrate the UAE mainland market and reach and deal with locally-based customers and/or governmental bodies effortlessly. Onshore company registrations are done by Dubai Economic Department. Most IT consulting companies require a professional licence to operate in the UAE and since 100% ownership is permitted now for mainland corporations (that are eligible as per the list of allowed business activities) they don’t have to look for Emirati partner/s to share 51% shareholding of the company nor do they need to appoint a Local Service Agent (LSA). The UAE Commercial Agencies law applies to most economic activities conducted in mainland UAE. Foreign companies intending to conduct business in mainland UAE can do so either through a limited liability company or a branch or representative office of a foreign entity. Other perks of having an onshore establishment include faster company incorporation and fewer restrictions on how business activities can be undertaken and that the company can legally trade freely within the UAE. Plus, there are no constraints on office location, provided it is situated onshore and in the respective emirate from which the licence is issued. And the best part is mainland companies can bid for government contracts. So is not possible for free zone companies.
Steps for Registering Mainland/Onshore Licence
- Decide a suitable business name for registering the company in line with the UAE trade name regulations
- Determine all the services you are going to provide and ensure they all are covered under one licence. A business setup consultant in Dubai can help you in that
- Choose the company’s General Manager (GM)
- Rent a commercial space for your business and have the tenancy contact and Ejari ready as soon as possible. The company registration application will not progress until you have the rent agreement with you
- Register the company with the Chamber of Commerce
- Meet the company labour and immigration requirements to be able to apply for all investors, employees, spouse, family and dependent visas
Should you want to check whether your corporate activity is one of the 1,000+ DED-approved business activities or is included in the list published by the ADED. Approach us! Our experienced business formation specialists in Dubai can assist you in figuring out the eligibility of your trade activities and mapping out the process to acquire 100% foreign ownership.
If your clients are based outside of the UAE and you don’t wish to expand the client base of your IT/technology services company, you may consider registering the company as a free zone IT consultancy firm. The selected free zone will be in charge of company registration. There are about 50 free zones in the UAE, including industry-specific ones. Dubai’s major IT/technology free zones are Dubai Internet City and Dubai Silicon Oasis. The industry-specific IT/technology free zones are big-ticket free zones, unlike the general free zones nestled in the northern emirates.
Tech-based Company Setup in Dubai Free Zone
There are more than 25 Free Zones operating in Dubai. And each free zone has its own set of rules and regulations, as well as advantages and disadvantages. Expat entrepreneurs looking to bask in the benefits such as NIL corporate tax and personal tax, import/export duties exemption, remote registration processes and 100% business ownership regardless of their business activities would like to opt for a free zone area for their business setup in Dubai. Owning a free zone establishment means you have the freedom to trade across the free zones and international markets. Along with benefits, free zone company setups have some limitations as well. Owning a free zone business setup in Dubai means you cannot trade with the mainland companies in the UAE without involving distributors. Another limitation for free zone companies is that they cannot apply, bid, and lodge tenders for lucrative government contracts like mainland establishments. But the best part is nowadays every freezone in UAE offers the adequate facility for IT company setup which includes infrastructure and monetary benefits but it depends on your preference & requirements. Our two cents on which free zone is the best option for business set-up? DIFC is a pivotal and sector-specific business hub, now open and available to all start-ups, entrepreneurs and technology firms. It offers innovators an opportunity to establish, grow and scale up their innovative businesses with the DIFC Innovation Licence. Dubai Airport Free Zone, DMCC and Jebel Ali Free Zone are some other popular free zones in Dubai, but again, it depends on your priorities and needs. For instance, if you want a cost-effective free zone for your business setup in UAE go for RAK, Ajman and UAQ. If you like to be in prominent places in the business centre of the emirate then you choose one amongst IFZA, DIFC and DAFZA. And if you want a balance between the location & cost you can opt for SHAMS, SPC or KIZAD. Balanced- IT service company setup also depends on the activity they intend to perform and the number of employees they need to hire, such as consulting or software development. It is always suggested for tech-based start-ups who are planning to hire IT enthusiasts to choose a free zone that’s near Dubai or Sharjah, so it is convenient for their employees as well.
Mandatory Steps for Registering a Free Zone IT licence Company
- Select the appropriate business name for registering the company
- Choose the suitable free zone for your company to be incorporated in
- Determine all the services your business will offer, and ask your business setup consultant to review each business activity is covered by the licence applicable
- Decide on your company’s General Manager (GM)
- Have your commercial office rental agreement and Ejari ready for completing the company registration with the authorities. If you are in need of a small office this might not be available and office space is subject to availability
- Meet the company labour and immigration requirements to be able to apply for visas for investors and employees as well as for spouse, family and dependent/s
Business Set-up Process & Required Documents
Now that you know the significance of location for your business, you are almost there. Below we are going to straighten out the whole process of setting up a company in Dubai.
Outline the Business Activities
To determine the licence type for your company, you need to identify the business activities you are planning to carry out. And that’s where the first step to business formation in Dubai starts.
Outlining your business activities first thing will make the rest of the company setup process an easy breeze. Be informed that from a business perspective IT is a vast sector with several subsectors including technology, software development, hardware sales and IT services. You are required to decide the nature of services your IT company is going to offer – generalized IT services or specialized IT services.
Decide the Legal Company Structure
After you determine the type of licence you need to apply for the next step to form a legal business entity is to select a suitable company structure. This step requires you to evaluate your business operationally and financially keeping the market entry requirements in view. The typical legal corporate structures for company formation in Dubai, UAE are Sole Proprietorship, Limited Liability Company (LLC), Franchise Company, Branch of Foreign Company, Representative Office, Trust Company and Commercial Agency.
Name the Business
Your business must have a name that is in line with the company structure, activities it is going to render and of course the UAE trade name regulations. Therefore, carefully choose a business name that completely represents your business and its service offering. It would be great if the chosen name of the business is available to pick, simple to comprehend, easy to remember and simple to find on search engines or digital spaces. Do not forget to trademark your company name to make it a trusted brand and for your peace of mind.
Pick Your Company Location
Nothing starts until you finalise an ideal site for your company that squarely fits into the business nature, requirements and budget. UAE gives you three options to set up your business – Mainland (Onshore), Offshore, or Free Zone. You have to pick one keeping the benefits and limitations in view that each jurisdiction features.
Apply for the Right Tech Licence
The following documents are usually required to be submitted along with the filled-in licence application for a trade licence required to open and run a tech company in Dubai.:
- Copy of Passport and Visa of the manager of the proposed company, director of the proposed company, and any legal representative (if appointed by the business)
- Copy of Emirates ID (if applicable)
- Copy of Trade Licence (for the applicant and all shareholders)
- Summary of your Business Plan
- Attested Birth Certificate
Apply for Residence Visa
You need a resident visa to live in the UAE to be able to operate from here. For this, you can apply to the relevant immigration department. If you are setting up your tech business in a free zone area of Dubai, UAE, then the residence visa application is part of the primary company setup process. After the documentation part is over, your visa status will be changed, and you will have to undergo a medical exam for fitness followed by a biometric scan, as a final step for receiving the Emirates ID.
Pay & Collect Documents
The final payment needs to be made to collect the business trade licence. That’s what your last step of tech business formation in Dubai is. Pay, put your John Hancock, receive all the corporate documents, and voilà! You are a business owner now!
Create Your IT Team
It takes a village to run a business! Therefore, once all said and done, it’s time to build a team of technology experts and skilled resources by hiring skilled IT professionals. Depending on the number of visas you have been allowed by your jurisdiction, start hiring quality people. Your employees are the most valuable asset to your company, so ensure their needs are taken care of, from employment visas to healthcare insurance. The employees must be registered with the Ministry of Labour and General Authority for Pension and Social Security.
All in all, you have to follow all of the company registration and business licence procedures. In Dubai, company registration and business licensing are parallel processes. Once the company is registered by DED, the business licence will be processed and could be collected duly.
There are numerous tasks to be done even after company incorporation to be a full-fledged business entity. Below is the list of some of the most important ones:
- Open corporate/current account in an all-inclusive bank
- Buy a payment gateway that is suitable for your business (optional)
- Issuance of share certificate to each shareholder within two months
- Buy suitable corporate insurance, yes you need one for your mental peace
- Trademark registration
- Get the office fit-out done
- Register your company on the VAT system (not mandatory until your supplies and imports value-wise cross the minimum threshold, i.e., AED 375,000 per annum)
- Corporate tax preparation
- Get acquainted with the key changes in the New UAE Commercial Companies Law
Required Documents for Tech-business Setup in Dubai
It takes around one week or more to acquire the trade licence from the time you receive your initial approval. This mainly depends on the business activity and the external documentation. Check out the list of business setup documents and certifications that you need to present to the relevant licence-issuing authority in Dubai.
- Filled-in licence application
- Attested LLC agreement
- Governmental forms
- Name reservation certificate
- Initial approval certificate
- External departments’ approval (if applicable)
- Tenancy contract + EJARI registration certificate
- Passport copies of partners and NOC for partners (if any)
- Dubai Chamber of Commerce & Industry Registration
A payment voucher or transaction number will be given by the DED upon submission of all the required documents. A gentle caveat: Make sure all the required documents are in place and correct to avoid any delay in the company registration. You may also opt for professional help in Dubai to save your time, effort and money.
Cost of Setting up a Tech-based Company in Dubai
We know how much you hate to hear – “the business setup cost in Dubai depends on a variety of factors” as an answer to your question – “How much it will cost me to set up a tech-business in Dubai?”. But you have to take into account myriad costs and fees involved in the process. Below is a list of major costs that you have cough up to form an IT company in mainland Dubai.
- Commercial licence fees
- General trading activity fees
- Non-Arabic trade name fees
- Market fees
- Name board fees
- Service fees
- Partner accommodation fees
- Chamber of commerce fees
- Economy ministry fees
- Local fees
- Office premise rental
The minimum cost for an LLC Company formation in Dubai may range between AED 30,000-AED50,000.
Professional Assistance in IT/tech-based Business Setup in Dubai, UAE
Setting up an IT company in Dubai is no easy feat but can be – with the help of an experienced business setup consultant in Dubai. Adam Global possesses a wide range of business advisory experience and can assist you with any aspect of your company formation in the UAE, whether it’s an IT company or a digital marketing firm. Not only will our Dubai tech-business advisors help you set up a company in your desired industry but also with other day-to-day business-related needs. As we are a one-stop-shop for all your business requirements, you don’t have to worry about any challenges while running your business. You may count on us for all your visa & immigration requirements and government formalities, permissions and work permits that are required to do business in the UAE.
Simply put, our experts can take care of the initial phase of your entrepreneurial journey by helping you incorporate your dream company, make your licence and visa applications, manage vital admin work and taxation part – saving you tons of time and energy to embark on the next phase of the journey with a new spring in your steps. Get in touch with us to discuss the range of ways in which we can add value and support your objectives in the UAE. We don’t charge you for the first consultancy with our business experts in Dubai!