If we talk about right now, Dubai is one of the most favorable places in the world to set up a business and as well as has been for tourism. Initially, however, Dubai was known for its strategic position and was known for trading businesses. Now, Dubai is known as a favorable place for setting any kind of business, trading or otherwise, because of the world-class facilities and free zones. Even still, the government of Dubai acknowledges the fact that the strategic position of the city brings most of the revenue of the region, as the site is easily accessible for trade between different parts of the world.
General Trading Business In Dubai
Since the beginning of time – from the point when Dubai started being known as a strategic position for trading between different parts of the world, the city’s port has been one of the most famous ones for trading. Hence, starting a trading company in Dubai since has been considered one of the most valuable investments for foreigners as well as entrepreneurs in the city. To set up a general trading business in Dubai, one must follow the proper procedure step by step that incorporates all the laws which need to be abided in order to establish a legal company in the region. The step by step of setting up a general trading company in Dubai is as follows:
- Business Plan
The first thing required of you to set up a business in Dubai, or any part of the world for that matter, is to decide on the type of business and business activities you wish to set up. A fresh and well-planned start always gives fruitful results in the end. Setting up a business in most of the jurisdictions of the UAE – even Dubai requires a well thought out plan first. Your plan should consist of thorough research regarding these things:
→ Products and activities
→ Office space requirement
→ Total number of employees
→ Initial investment
→ Marketing tactics
→ SWOT analysis
→ Investors, financing
All the factors mentioned above require to be well thought out and planned properly in advance. Here is a tip alongside, be careful and wise while choosing the market, business activities and the initial investment plan.
- Determine Business Activities
Business owners and trading businesses that are looking to focus on specific business activities will be required to obtain a specific trade license. Whereas, businesses that opt for a number of different business activities shall require a general trading license and will be considered as a general trading business. The cost of obtaining a general trading license is often times more than a specific trading license as it covers a number of different trading activities. Determining the business type and the activities of the business is therefore important before setting up a business and obtaining a license for it.
- Choose The Jurisdiction
A business owner looking to set up a business in Dubai will most definitely be needed to obtain in and out knowledge of all the jurisdictions available in the market of Dubai and all the perks and cons that come with every jurisdiction to choose a jurisdiction that compliments their choice of business activities. The three types of jurisdictions in Dubai are free zones, mainland and offshore.
Talking of right about now, Dubai holds 48 free zones in the emirate. Each free zone in the emirate is governed and incorporated in distinct authorities. Free zones offer a lot of benefits to foreigners and entrepreneurs alike, which attracts them from all around the world and from within the emirate. Such free zones provide tax-free business establishment in the region and 100% ownership of the business owner of their own company.
However, if we talk about mainland business setup, a business owner requires a local sponsor or a shareholder in order to set up a company in the mainland jurisdiction. The local sponsor or the shareholder will be accountable for 51% shares of the company along with the required payment each month.
Coming down to the last, but certainly not the least, jurisdiction in Dubai offshore company setup. Offshore companies support branches of international businesses in the jurisdiction while the head offices of the business rest outside of the UAE. An offshore company does not hold an office in the jurisdiction, thus, they do not physically exist in Dubai.
- Find A Sponsor
As it is already discussed above, setting up a business in mainland Dubai requires a local sponsor who will be accountable for 51% shares of the company. This is one requirement of setting up a business in mainland Dubai. It would be wise to find a local sponsor who can be held accountable for 51% shares of the company as well as help you in establishing a business in Dubai abiding all the laws and procedures. To break it down even further, there are three types of sponsor you can find in Dubai:
→ There is a type of sponsors who sign all the required documents in setting up a business as well as take care of all the business problems which you might be unaware of how to deal with. Such types of sponsors are usually considered to charge the lowest fees of them all.
→ Other than that there is a kind of sponsors who have got big connections with powerful people of the emirate and basically are mid-level governmental functionaries and these sponsors come in most handy when you are stuck in a problem which could be costly or hard to get out of otherwise. The fees to these sponsors are more than the first type.
→ The last but not least is the types of sponsors are high-level brands that have links to the senior-level. These types of sponsors charge the highest fee.
- Legal Formalities
The first and foremost legal formality is to obtain a business license to carry out business activities legally. In order to run a general trading company that covers trading and import and export of more than one product, you will be required to obtain a general trading license. A general trading license covers trading of all the products, such as clothes, accessories, furniture and fixtures, pieces of equipment and other such electronic devices. You can obtain a general trading license easily with the help of the steps mentioned below:
→ Decide on an appropriate trade name and the legal structure of the business
→ Determine the business activities which will be included in your trading license. Each license allows up to 10 activities.
→ Fill the initial approval form and submit it
→ If required, obtain external approval which will depend on your chosen business activity
→ Arrange all the required documents like the MOA of the company alongside all the approved documents from their respected authorities
→ Choose a location for your business and obtain a tenancy contract by Ejari
→ When all of that is done and over with, submit a final application to DED for the license
→ Pay the required fees for obtaining the license alongside the issuance fee
In order to obtain a valid trading license from offshore or a free zone, the company owner shall be required to submit all the required original documents to the Commercial Registry at the Trade License and Commercial Registration Department.
Required Documents For General Trade License
- A signed license application by the company representatives or the managers
- Memorandum of Association (MOA)
- An attested company name approval letter from DED
- Passport copies of the management partners