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How to set-up your business in Dubai


Location

Location isnt simply about where you would like to set up an office, shop, or factory but more about licensing jurisdiction. There are a number options available, from onshore, licensed by the Department of Economic Development (DED) in each emirate, to a growing number of free zones, often themed around particular industries or segments. Some licensing authorities allow you to set up as a freelancer or professional services provider. Others will limit your scope of activities so if you plan to expand your services in the future, make sure you are licensed in a zone or authority that allows you to do so.

Onshore Licensing


Onshore licensing means you are licensed in DED (Department of Economic Development) and is best suited to all types of commercial enterprises that would benefit from being set up as a limited liability company (LLC). Examples of this might be a trading company, a logistics company, or a manufacturing company. Local laws require that a minimum of 51 per cent of the shares in such companies must be held by a UAE national. The company must also take up physical office space, and may be subject to further requirements or approvals from government departments that regulate specific industries. Offshore means you are licensed in a free zone.

Free Zones

Free zones can offer a suitable alternative to start-ups within specific sectors. A start-up looking to set up a manufacturing facility and export their products may consider Jebel Ali Free Zone. Other options include Hamriyah and Ras Al Khaimah free zones. Themed free zones such as Dubai internet City, Dubai Media City, or Dubai Design District can help start-ups within those sectors become part of the business community.

Local partner vs local service agent

If you decide to license onshore, everyone will tell you to find a local partner. This is not necessarily the case. Onshore professional licenses are available for activities such as consulting and other services, and may be owned 100 per cent by a suitably qualified foreign national, although he or she must appoint a Local Service Agent (LSA). The LSA provides government registration services for a fixed annual fee and has no shareholding or involvement in the business. Such licensing also requires a physical office location.

Office space

Because you must have office space, research rents in your chosen location and ensure it is right for your needs. Start-up media entrepreneurs, for example, dont realise they cant rent an office in Dubai Media City if their licensing is with the DED. Media City is a free zone and you must be licensed to operate in that specific free zone to rent space there. This works the other way round too: if you are licensed in the Media City free zone, then you are required by law to rent an office space in Media City, it is illegal for you to rent an onshore office.

Overheads


Although initial set-up costs can be lower with a free zone, there can be restrictions and higher transactional costs associated with visas and permits that require government approval. Free zones also offer licensing with a flexi-desk or even freelancer options, but limitations on the business activity and number of visas that can be issued. Another consideration is your monthly power bills, rent and human resources cost. You might not have any staff yet, but you will have to pay someone when your computer breaks down and may need a receptionist or cleaner. Add up all these costs and work out the real monthly cost. Renting a serviced office may be more cost-effective in some cases as its a fixed monthly cost that includes rent, bills and secretarial services. read more

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