Dubai has emerged as one of the most sought-after destinations for entrepreneurs and investors who want to establish a presence in the Middle East and beyond. Its strategic location, tax-friendly policies, and investor-friendly infrastructure make it an attractive hub for global businesses. However, before starting operations, it is critical to understand the legal requirements for a new business setup in Dubai. Adhering to the regulations set by the government ensures compliance, smooth operations, and long-term business success.
Below is a detailed guide that covers the essential legal requirements every investor must consider for a new business setup in Dubai.
When setting up a company, the first legal requirement is to decide the jurisdiction where your business will operate. Dubai offers three main options:
Selecting the correct jurisdiction depends on your business activity and expansion goals.
2. Determining the Business ActivityEvery business in Dubai must have a defined activity listed in its trade license. The DET for mainland companies and the respective free zone authorities regulate these activities. Whether it is commercial trading, professional services, or industrial manufacturing, the activity must be chosen carefully because it determines the type of license you require.
3. Trade Name RegistrationThe next step involves registering a trade name for your company. Dubai has strict rules for naming businesses. The trade name must not violate public morals, should not be misleading, and should reflect the business activity. The name is registered with DET for mainland companies or with the free zone authority in case of free zone businesses.
4. Obtaining Initial ApprovalBefore proceeding with licensing, entrepreneurs must secure initial approval from the governing authority. This confirms that the government has no objection to the business being established. However, it does not authorize you to start operations yet it simply allows you to proceed with the licensing process.
5. Drafting the Memorandum of Association (MOA) or Local Service Agreement (LSA)Depending on the type of company you choose, preparing legal documents such as the Memorandum of Association (MOA) or Local Service Agreement (LSA) is required. Mainland companies may need an MOA signed with a local sponsor or partner (for specific activities). Professional service companies often require an LSA with a UAE national to represent them in dealings with government authorities. These documents must be notarized and comply with UAE laws.
6. Office Space and Ejari RegistrationFor a new business setup in Dubai, having a physical address is mandatory. In the mainland, this requires an office lease agreement registered with Ejari (Dubai’s tenancy registration system). Free zones offer flexible options like flexi-desks, serviced offices, or dedicated spaces, depending on the license type.
7. Acquiring the Business LicenseThe business license is the legal document that authorizes your company to operate. The type of license depends on your chosen activity:
The license is issued by DET for mainland businesses or the respective free zone authority. Without this license, you cannot legally operate in Dubai.
8. Visa Applications and Immigration ApprovalsOnce the license is issued, the next step is applying for visas. This includes:
The company must register with the Ministry of Human Resources and Emiratisation (MOHRE) and the General Directorate of Residency and Foreigners Affairs (GDRFA) to process visas.
9. Compliance with Tax and Accounting RegulationsDubai introduced Value Added Tax (VAT) in 2018. Depending on your business activity and revenue, VAT registration may be mandatory. Additionally, companies must maintain proper accounting records, submit financial audits (in some cases), and ensure compliance with the UAE’s economic substance regulations.
10. Opening a Corporate Bank AccountOpening a corporate bank account is another critical legal requirement. UAE banks require documentation such as the trade license, MOA, shareholder details, and passport copies. A business setup company can simplify this step, as banks have strict due diligence procedures.
11. Meeting Industry-Specific ApprovalsSome business activities require additional approvals from government departments before operations can begin. For example:
Failing to secure these approvals can result in penalties and legal issues.
12. Renewal of Trade LicenseA trade license in Dubai is valid for one year and must be renewed annually. Failing to renew on time can lead to fines, blacklisting, or suspension of business operations. License renewal also requires updated tenancy contracts and compliance documents.
13. Adhering to Labor LawsIf your company plans to hire employees, you must comply with UAE labor laws. This includes offering employment contracts, health insurance, proper working hours, and end-of-service benefits. Employers are also responsible for ensuring safe working conditions.
Final ThoughtsThe legal requirements for a new business setup in Dubai may seem complex, but they are designed to ensure smooth operations and protect both investors and employees. From selecting the right jurisdiction and activity to securing approvals, obtaining licenses, and maintaining compliance, every step is crucial.
Partnering with a professional business setup company in Dubai can help navigate these regulations with ease. With the right guidance, your new business setup in Dubai can be launched quickly, legally, and successfully, giving you a strong foundation in one of the world’s most vibrant business markets.