Dubai has established itself as one of the world’s most attractive destinations for entrepreneurs and investors. Its strategic location, business-friendly environment, and forward-looking policies make it an ideal hub for startups and global corporations alike. However, before setting up a new business in Dubai, entrepreneurs must understand and comply with the legal requirements outlined by the Government of Dubai and relevant authorities. Adhering to these regulations is essential to ensure smooth operations and long-term business success. Below is a detailed overview of the key legal requirements for establishing a business in Dubai.
Dubai offers three main jurisdictions for company formation:
Your choice of jurisdiction impacts licensing, ownership, taxation, and operational scope.
2. Business Structure and Legal FormEntrepreneurs must select the appropriate legal structure for their business. Common options include:
Each legal form has specific requirements regarding ownership, liability, and capital. For instance, an LLC requires at least two shareholders, while a Free Zone Company may allow full foreign ownership.
3. Trade Name ReservationRegistering a unique trade name is mandatory. The trade name must comply with the naming regulations of Dubai Economy and Tourism (DET), such as:
Trade name approval is obtained before applying for the business license.
4. Business LicensingEvery company in Dubai must obtain a license to operate legally. The license type depends on the nature of the business:
Licenses are issued by DET (for mainland) or the relevant free zone authority. In some cases, external approvals from government departments may be required (e.g., Dubai Municipality, Dubai Health Authority).
5. Initial Approval CertificateThe Initial Approval Certificate is issued by DET or the free zone authority, confirming that the government has no objection to the business operating in Dubai. This certificate is necessary before proceeding with further steps like drafting the Memorandum of Association (MOA).
6. Memorandum of Association (MOA) and Local Service Agent (LSA) AgreementFor mainland companies, drafting a Memorandum of Association is a legal requirement. The MOA outlines shareholding, capital distribution, and company operations.
If a company is owned entirely by a foreign entrepreneur (in permitted activities), a Local Service Agent (LSA) Agreement may be required. The LSA does not hold ownership but represents the company before government authorities.
7. Office Space and Ejari RegistrationAll businesses in Dubai are required to have a physical office address. The office space must be registered under the Ejari system, which authenticates tenancy contracts. Free zones often provide flexible office solutions, including shared workspaces.
8. External ApprovalsDepending on your business activity, approvals from other government authorities may be necessary. For example:
After completing all the above steps, submitting the required documents, and paying the necessary fees, the business license is issued. This license allows you to begin operations legally in Dubai.
10. Employment and Immigration RequirementsBusinesses must register with the Ministry of Human Resources and Emiratisation (MOHRE) and General Directorate of Residency and Foreigners Affairs (GDRFA) to hire employees and sponsor visas. The process includes:
Dubai has implemented several tax and financial compliance requirements:
Even after business setup, companies must comply with ongoing legal requirements, including:
Setting up a business in Dubai is an exciting opportunity, but it requires careful compliance with legal procedures. From selecting the right jurisdiction to obtaining external approvals and adhering to tax regulations, each step must be followed diligently. To avoid delays and ensure accuracy, many entrepreneurs choose to work with professional business setup consultants like Bizvise.
At Bizvise, we help entrepreneurs navigate the legal framework, handle documentation, and liaise with government departments, ensuring a seamless and efficient business setup process. Whether you’re a startup founder or an international investor, our team provides expert guidance to save you time and reduce risks, so you can focus on growing your business in Dubai’s thriving market.