American entrepreneurs can now set up their businesses in Dubai or expand their current companies in the UAE. Although it may seem that the process is difficult if you follow the steps carefully, they can easily start their business in the UAE. The benefits of doing business in the UAE are countless and not unknown to smart entrepreneurs and businessmen. It is why they look to set up their companies here. Read on to learn about the requirements, the process, documents, and other related things that US entrepreneurs may need to set up a business in Dubai.
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Can American Entrepreneurs Set Up a Business in Dubai?
In most cases, US entrepreneurs or non-residents can set up their businesses in Dubai. But, there can be restrictions based on the country where you file your taxes, the kind of business you want to launch, and your nationality.
There might be some specific circumstances where it may be necessary to work with a local sponsor who will own 51% part of your company. They are compensated for their services with a pre-agreed fee, but they are not involved in the decision-making of the business.
You can profit from the UAE’s 0% corporation tax rate as a non-resident. But whether you can take advantage of this rate on your personal income or not will depend on your country of tax residency.
Steps to Start a Business in Dubai as a US Entrepreneur
If you are aware of the rules and regulations defined by the government, it will be easy for any non-resident to set up a business in Dubai. Following are the steps to follow to start a business in Dubai as a US entrepreneur:
1. Choose Your Business Type
The first thing that you need to do to start a business as a USA entrepreneur is to decide the type of your business that you are planning to build in Dubai. Your chosen business activity will define your business’s structure. The two main types of business structures in the UAE are:
- Sole proprietorship
LLC is the most common type of business structure that legally lets entrepreneurs have a separate legal structure. Most people choose to form an LLC company.
If you are looking to be the sole owner of a business, you should go for a sole proprietorship.
2. Pick a Trading Name
Before you can register your company, you need to pick a trading name and reserve it. Choose a name that can reflect the type of your business or what your business is about. You must choose a name that complies with your business activities, is never registered before, and does not violate public sentiments.
3. Free Zone or Mainland
Next, you have to choose the best location for your business. It can be either the mainland or a free zone. It can be tricky to choose the ideal location. The type of business you want to start, what your individual circumstances are, or preferences are, and some other factors will help you in deciding the right location for your business.
4. Issue a License
It is compulsory for you to obtain a license for starting a business in Dubai as a USA entrepreneur. You can issue the license by approaching the DED (Department of Economic Development) or free zone authorities, or the mainland.
5. Business Registration and Incorporation
After completing the steps here, you can register your business with your chosen jurisdiction authorities and start conducting your business activities in Dubai. The process of registering the business includes submitting details of bank accounts, required documents, trade licenses, identity proofs, permissions, and other required things. After registering your business, it will become a legal entity in the UAE.
6. Get a Business Visa
If you want to go out and come back to the UAE for business purposes, you must have a business visa. This visa also allows you to apply for residency for your three business employees or shareholders. USA entrepreneurs can also apply for a long-term visa for themselves along with their family members. Contact the local embassy to get the visa.
In short, a business visa can be issued to those who are looking to move to the UAE to set up a business in Dubai.
Documents Required for Company Setup in Dubai, UAE
Regardless of setting up your business or establishing your company in the mainland or in a free zone, generally, you are required to submit the following:
- A business plan
- A completed application form
- Copy of existing trade registration certificate or license (if you have an existing company and is applicable for the local company only)
- Articles of incorporation (if required)
- Colored copies of the passport of the appointed director or manager for the new company and the shareholders of the company
- Brief description of intended business activities
- Certificate of reference of the individual shareholder from a personal bank or audited financial reports for two years for a corporate entity
- NOC from current sponsor (for individuals)
- Specimen signature of the appointed director or manager for the new company and the shareholders of the company
Approvals Required to Setup a Business in Dubai as an American Entrepreneur
It is mandatory for some businesses to get permission from different government agencies in Dubai. Consider the example of a restaurant. If you want to establish a restaurant in Dubai, you will need to get permits from the Municipality for food and safety. In the same way, to conduct industrial activities, you need to rent or lease factory space of a specific minimum area.
Things to Know Before Establishing a Business in Dubai as USA Entrepreneur
Here are some of the things that you must know and understand that will help you in doing business in Dubai.
Dubai is becoming the economic hub of the Middle East. It is taking steps to make its presence prominent in the international business community. Almost, 90% of the population of Dubai consists of ex-pats from across the globe. Thanks to its strategically well-placed location, you can easily access suppliers in Africa, Asia, and Gulf region.
Establishing a company in Dubai as USA Entrepreneur gives you the option to live in a lucrative city like Dubai. Furthermore, Dubai provides business-supportive things for entrepreneurs to thrive. These features include visionary leadership which supports innovation and technology, excellent infrastructure, tax-friendly policies, and a safe living environment.
This one is discussed before in the process. But it is something important and requires great attention of yours. You must decide which type of company you want to establish in Dubai. The purpose of your business, the nature of your company, its business aspects, and some other factors will determine the type of your business. Sole Establishment and Limited Liability Company are the two primary types of corporate structures legally allowed in the UAE.
You can set up your business either on the mainland or in any free zone in Dubai. To start a business in Dubai as a US entrepreneur, you must know the difference between free zones and the mainland.
It is quite reasonable and favorable for new businesses to set up a business in free zones. But, the timeline for business setup formalities and regulations and rules for businesses, can differ from one free zone to another free zone. It is so because their own respective authorities govern the free zones.
Some of the most important free zones in Dubai are as follows:
- Dubai Multi Commodities Center (DMCC)
- Jebel Ali Free Zone (JAFZA)
- Dubai Media City
- Dubai Silicon Oasis
- Dubai Airport Free Zone (DAFZA)
- Meydan Free Zone
- Dubai Healthcare City (DHC)
If you set up a business on the Dubai mainland, you can trade with the international and domestic markets. It is very easy to set up a business in the region. You will require to get a business license which can be issued in one day.
Types of Business Licenses in Dubai, UAE
In terms of jurisdictions, there are two common types of business licenses available to USA entrepreneurs to set up a business in Dubai. The first is a free zone license. This is most likely the most cost-effective and easy way to start a business as a US entrepreneur in the UAE.
You can benefit from no restriction on currency, 100% customs tax exemption, and 0% corporate tax, depending on the free zone where your business is established.
The other option is to start a business on the mainland. The mainland license lets you open a business anywhere in this region. But you may need to work with a local sponsor for trading in the country.
In terms of business activities, there are primarily four types of business licenses around the UAE.
- Tourism license for the tours and travel industry
- Commercial license for general trading businesses
- Industrial license for manufacturing goods
- Professional license for service-related businesses
The initial stage to set up a business in the country is to get a business license. But it is also important for you to learn about various jurisdictions and agencies that are responsible for managing the business licensing system.
Required Documents to Get a Business License in Dubai
The process to get a business license in Dubai is straightforward. Different business activities and jurisdictions have their own respective licensing demands. But for those who opt for a mainland license in Dubail, they need to submit the following documents. Keep in mind that you need to submit these documents to the DED.
- Copies of passports of business managers and partners on the basis of the requirement of the business activity.
- The Ejari and the tenancy contract for the office space.
- A NOC from the company’s sponsor for your foreign partners or ex-pat investors.
- Copies of the residency visa for every business shareholder or partner.
- External approvals and initial approval from the DED are to be submitted with the business registration application.
- After submitting the documents and paying the fees, the department will issue the license. Plus, one of your business partners must be present when applying for the license.
Benefits of Doing Business in Dubai as an American Entrepreneur
There are many benefits and rewards that come with doing business in Dubai for USA entrepreneurs other than ease of doing business in Dubai. No matter the format, here are some of the advantages of doing business in the UAE:
- Robust and safe governance
- A zero-tax regime; No corporate or personal income taxes
- A top-class financial hub
- Zero capital repatriation restrictions
- An educated supply of human capital with versatile professional experience belonging to different parts of the world
- There are no requirements for a physical office
- There are no requirements for share capital
- In comparison to other onshore jurisdictions, Dubai has lower set-up costs
Etiquette in the UAE to Do Business in Dubai
Before you begin to establish your company in a fast-moving, complex, and multicultural environment like Dubai, you need to look into the avoidable pitfalls of setting up a business here.
We will be dividing these things into do’s and don’ts:
Do Explore the Culture and Indulge Yourself in Local Traditions
Get used to the heat of the city, develop a tolerance for it, and appreciate all the positive things about it. Nobody will care about your complaints about the heat, which in the summertime may get very strong at 45 degrees. Plus, there is no benefit to complaining about it.
The city is a desert. So, there are numerous things to do including dune bashing and enjoying the breezy nights in the breathtaking scenery. Learn about the area and demonstrate concern for the local people’s welfare. Also, try to learn Arabic as it will help you in communicating with others.
Do Dress Right, Play Nice, and Smile
Although it is true that people living in Dubai are fans of brands, it should be highlighted that they have also grown to appreciate sophistication and subtlety. Dubai has deep Islamic roots despite having extremely Western characteristics. Combining these elements makes it obvious that, dressing smartly, stylishly, and modestly is essential regardless of being a man or a woman. For example, if you’re looking for a local sponsor, wearing a suit and a tie is essentially required for men attending meetings.
A key element of Dubai’s entrepreneurial, social, and even corporate tendencies is happy, positive energy. Nobody relocates here to spend their days in the darkness. So complete your look with a smile.
Do Deal with Locals in the Right Way
Understanding the right way to interact with local Emiratis is crucial when learning how to launch a business in Dubai. First of all, you should be aware that it is polite to show the highest respect throughout any introductions in meetings.
It’s important to be aware of proper etiquette when it comes to addressing people and socially interacting with them because you might not instantly know the ranks of the individuals in the meeting room. For example, always avoid shaking hands with the opposite gender unless they extend their hand first. And if they extend it, always use your right hand to do so.
In the end, take your time when it comes to dealing with business or commercial affairs. Even though you might be in a hurry, taking the time to ask someone how their day, health, and family are will be beneficial for you. The best thing to do is to wait for the other person to initiate the business conversation and to avoid using any European corporate bluntness. Small talk is a non-intrusive way of determining if someone would be a suitable business partner for you or not.
Do Get Out There
If you only do simple online transactions and email introductions, you might not be able to start a business in Dubai. Dubai is nothing but just about in-person meet-and-greets and networking events. Do visit those networking events, enjoy the drinks, talk to the people present in the room, and try to stay in touch with them after the event. Close personal relations are key because each particular industry has generally a small network.
To improve your client base and skills, you should make a maximum number of positive contacts. Also, word-of-mouth is extremely strong in the city.
That is why go to conferences, join groups, and attend networking sessions. Plus, keep your business card always with you and print it on one of the sides in the Arabic language.
Don’t Show Off About Your Achievements
Dubai is home to people that show off a lot. They pretend to have a lot and be the biggest things in the city. You should avoid doing the same and don’t boast about your achievements.
The city is now leaning towards quality over quantity, clean design, modern minimalism, and elements rooted in humility and taste. Thus, market yourself without using the tired Dubai cliches and by spreading different business collaterals, such as online event invitations or flyers.
Don’t Expect Negotiations and Meetings to Go Smoothly
The most valuable quality you can develop throughout your work and life in Dubai is patience. On some occasions, long meetings can be somewhat hectic. It is so because attendees may show up late to the meeting, proceed to change the topic, use mobiles during discussions, and join without announcing.
As you will be belonging to the American business environment, you can feel frustrated. But if you are patient and punctual as well, it will be very beneficial for you. A way of life in the city is to keep business in the family. So you might require to change the style and speed of your decision-making and the dynamic of your interactions with companies.
FAQs – Frequently Asked Questions
Can a US citizen start a business in Dubai?
Yes, a US citizen can start a business in Dubai. Most of the local people in Dubai are expatriates and own their businesses in the city. The city openly welcomes entrepreneurs and investors from across the globe.
Which type of license is required for business setup in Dubai?
There are multiple types of licenses that you can get for business setup in Dubai. The most common ones are professional, industrial, tourism, and commercial business licenses. The type of license you require depends on the type of your business activities and plan. Here are some business activities that fall under these business licenses:
- Event organizers
- Medical Clinic
- Legal services
- Cleaning services
- Real estate
- Steel workshop
- machinery and appliances manufacturing
- Food industries
- Meat processing
- Glass industries
Can a US company do business in Dubai?
Yes, a US company can do business in Dubai. Plus, there is no requirement for a local sponsor except for some business activities.
How Much does it cost to set up a business in Dubai?
The cost to set up a business in Dubai is comparatively low. It can vary depending on various factors such as license, visa, type of business activities, location, and more. Particularly, location plays the most important part in determining the cost of the business setup. Free zones are cheaper than the mainland. Your office space can also impact heavily on the business setup cost, mainly if you prefer a co-working space instead of renting an entire office.
How to choose a business name?
You should take the following into consideration when picking a business name for your company:
- The business name can’t contain any names of governing authorities or religions
- The business name cannot violate public order or public morals of the country
- The business name can’t be one that was registered in the past
- The business name must be followed by FZE or LLC or any other legal form
- The business name must be compatible with the legal status and the type of business you are conducting
RIZ & MONA: Your Partner for Business Setup in Dubai and UAE as an American
We hope that this guide on setting up a business in Dubai as an American entrepreneur has made everything easy and crystal clear for you. Equip yourself with the ideal knowledge and you can effortlessly start your business in the UAE.
But you might require some prior information about the whole process before you proceed further. Furthermore, make sure that your license application is perfectly filled, completed at the time of submission, and error-free.
For that, it is recommended to get in touch with RIZ & MONA CONSULTANCY, Dubai business setup experts when starting your new business in Dubai. Our team of company registration professionals will take care of everything and handle the process on your behalf. So, contact us now and leave everything to us.