Do you dream of expanding your business in a global market full of opportunities? In recent years, Dubai has positioned itself as one of the world’s most attractive destinations for entrepreneurs and investors.

The capital of the Emirate, and one of the main cities of the United Arab Emirates (UAE), offers an exceptional business environment, combining a privileged and strategic location, world-class infrastructure and the most attractive tax system in the world. If you are thinking of opening a business in Dubai, here are the first steps to take, the key considerations to keep in mind and the incredible advantages of having a business presence in this city.

Why is Dubai the best destination for your company?

Dubai attracts entrepreneurs from all over the world, and rightly so, thanks to the unique combination of advantages it offers that establish it as a leading global business center.

Tax benefits and exemptions

One of Dubai’s greatest attractions is undoubtedly its tax regime. Unlike other countries, there is no personal income tax (0%) and corporate income tax is levied at a maximum rate of 9%. Companies with less than €750,000 turnover are not subject to taxation and €95,000 is totally exempt from taxation. This allows companies to increase their profits and reinvest in their expansion, with very few companies getting close to a 9% real tax rate.

In addition, Value Added Tax (VAT) is 5%, a significantly lower rate than in many other jurisdictions.

State-of-the-art business infrastructure

Dubai stands out for its state-of-the-art business infrastructure, comparable to that of the world’s leading cities. The city has an extensive transportation network, including 6- to 8-lane highways, an efficient subway system, and a major international airport.

In addition, specialized Free Zones offer last-generation facilities designed for specific industries.

Dubai’s digital infrastructure is particularly noteworthy, with high-speed Internet connectivity and a modern and efficient electronic bureaucratic system that streamlines administrative processes. This greatly facilitates the management in the creation of companies, obtaining visas, procedures with the tax administration and any other type of interaction with the administration.

Strategic location and access to the global market

Dubai’s location makes it a strategic connection point between East and West. This position enables companies to easily access markets in Europe, Asia, Africa and the Middle East. Jebel Ali Port, one of the largest and busiest ports in the world, along with Dubai International Airport, facilitate international trade and global logistics.

In addition, Dubai’s cultural diversity creates a cosmopolitan environment that attracts talent from around the world. This mix of cultures and experiences drives innovation and provides companies with a valuable global perspective, essential for success in today’s international marketplace.

Business structures in Dubai: which one is right for you?

If you are considering setting up your business in Dubai, it is essential that you know and understand the different types of business structures available in the city. Each option presents particular features and benefits, adapting to different needs and business objectives.

Freezone

Freezone companies are an attractive option for foreign investors who wish to maintain 100% ownership of their business. These zones offer important advantages, such as faster procedures, 100% digital documentation, full repatriation of benefits and simplified processes in general for obtaining licenses and visas.

Freezone companies are designed for virtually all types of business models, with some specifically specialized in sectors such as technology, media, logistics or financial services. For example, Dubai Multi Commodities Centre (DMCC) is perfect for trading commodities.

These zones provide a complete business ecosystem, with offices, warehouses and business support services. Some Free Zones with a high reputation, such as IFZA (Internatonal Free Zone Authority) do not require a physical office, which optimizes the costs of the business structure in the Emirates.

Mainland

Mainland companies are those established outside the free zones and are directly regulated by the Dubai Economic Development Department. These companies have the advantage of being able to operate freely throughout the local market in the United Arab Emirates and are used specifically for regulated sectors (management of third-party real estate assets, real estate agents, catering, premises open to the public, etc.).

Although they traditionally used to require a local partner with at least 51% ownership, recent changes in legislation have relaxed this rule for certain sectors, allowing up to 100% foreign ownership. Mainland companies are ideal for businesses seeking a strong local presence and expansion opportunities in the UAE market.

Offshore

Offshore companies in Dubai offer a structure for international investors seeking to manage global assets or engage in international trade without the need for a physical presence in the UAE and with the willingness to hide their assets from their countries of tax residence.

These companies benefit from almost total confidentiality although they present great complexities when it comes to opening bank accounts in the Emirates.

Under no circumstances do we recommend working with such companies as they cannot conduct business within the UAE or obtain residency visas, and it is virtually impossible to get a local bank account opened for them.

How to incorporate your company in Dubai: a step-by-step guide

Setting up a company in Dubai requires following a structured process which, although it may seem complex, is greatly simplified if you have the right advice. Discover below the essential steps to establish your business presence in the United Arab Emirates.

Definition of legal form and business activity

The first crucial step is to determine the most appropriate legal form for your business. This involves choosing between a Freezone or Mainland company, depending on your business objectives, target market and operational requirements.

In most cases, you will require a Freezone company, as few business models are required by law to obtain a Mainland license (for which it will only apply if mandatory).

It is important to consider factors such as operational flexibility, upfront costs and capital requirements. Therefore, at Virtus Tax, we will always recommend working with a Free Zone company, as long as the business model allows it.

Licenses and permits

Once you have defined your company’s structure and activity, you need to obtain the necessary licenses and permits. In Dubai, there are mainly three types of licenses: commercial, professional and industrial. The type of license you need depends on your business’s characteristics.

For companies in Free Zones, obtaining a license is usually easier and faster, with standardized costs. In the case of Mainland companies, the application is made through the Dubai Economic Development Department and the related fee can vary significantly depending on the type of activity and location.

Company registration and required documentation

The company registration process involves the submission of various documents and information, including identity documents of the shareholders, the company’s corporate names, among others. It is a process that requires little documentation and information and is very convenient for the entrepreneur.

For the incorporation of a subsidiary company, more documentation is required, mainly from the parent company (holding company), such as deeds, bylaws and records legalized consularly at the Emirati embassy in the country of origin of the parent company.

It is essential to make sure that all documentation is complete and correctly presented to avoid delays, something that Virtus Tax can help you with in its entirety. The constitution time may vary, but generally ranges from 10 days to 14 days.

Once the incorporation is completed, the next step involves the partners (or one of the partners) visiting Dubai to obtain their Emirates residency visa (even if they will not be living in the country). This visa will be essential to be able to open the company’s bank accounts.

Thus, about 20 days after the start of the process, members will be able to visit the Emirates where, after staying for only 5 working days, they will be able to obtain their residence visa and, subsequently, open their bank accounts.

Initial investment and associated costs

When planning to open a business in Dubai, it is essential to have a clear understanding of the associated costs and the initial investment you will need. The sum of the two can vary significantly depending on the type of company, its location and scale of operations.

Minimum capital required: how much do I need?

The minimum capital required varies according to the type of company and activity. For Freezone companies, some zones do not require a specific minimum capital requirement, nor do they require any capital to be paid in. The capital is therefore declared and subscribed without having to be credited to the company’s own account.

For Mainland companies, the minimum investment requirement has been eliminated in many cases, although certain regulated activities may still require substantial minimum capital.

Although there is no legal minimum capital requirement, and just as in any other business in any other country in the world, having adequate operating capital is crucial to the success of the business.

Other considerations you should take into account

When budgeting for the opening of your new company in Dubai, you must take into account that there will be certain annual recurring costs, such as annual license renewal fees.

In addition, you must calculate the monthly or annual costs of accounting and tax maintenance and regulatory compliance in which Virtus Tax will be able to fully assist you.

It is also important to consider the cost of living in Dubai if you plan to reside in the city. Careful financial planning and an adequate capital reserve are essential to successfully navigate the first years of operation in this market.

Legal framework and key tax issues

Understanding Dubai tax legislation, which has undergone significant changes in recent years, is crucial when setting up your business in the emirate, especially when it comes to ensuring compliance and optimizing your business structure.

The new corporate income tax: impact and considerations

Starting in 2023, Dubai introduced a new corporate income tax, marking a significant change in its tax policy. This tax applies to companies with profits exceeding AED 375,000 (about €95,000) per year, with a 9% levy on profits exceeding this threshold.

This new tax regime aligns Dubai with international standards of tax transparency, while maintaining it as an attractive environment for business. However, until 2027, companies with an annual turnover of less than AED 3,000,000 (about €750,000) can apply for Small Business Relief which exempts them from paying any amount of corporate income tax.

If you plan to get established in the country, it is advisable that you carefully plan the structure of your company and its operations to optimize your tax impact within this new legal framework and Virtus Tax can help you achieve this.

Residency requirements for entrepreneurs: visas and obligations

If you wish to reside in Dubai while managing your business, you should know that there are different types of visas available. Employers can access an Employment Visa, as can their employees. This visa obliges the resident to visit the country once every 180 days to comply with the visa renewal requirements.

For business owners who want to have a lesser commitment to visit the country or who live in their home country, there is the option of the Investor Visa only available to businessmen with a minimum of 33.3% of the share capital of a company in the Emirates, which requires visiting the country only once a year.

One of the most popular options is the Golden Visa, which requires a minimum investment of AED 2 million (about €500,000) in property or a local company, and includes the applicant’s immediate family members on the visa.

Comparison with other jurisdictions: is Dubai the best option for you?

If you are planning to expand your business, you probably haven’t considered just one country: comparing Dubai with other popular destinations for international business will help you understand the emirate’s unique competitive advantages and make the best decision for your company.

For example, another great alternative to establish your company is Andorra, the small trans-Pyrenean country with advantageous tax conditions and an enviable quality of life.

What makes Dubai a unique destination?

Dubai stands out for its unique combination of unparalleled tax benefits, modern infrastructure, extensive leisure offerings and strategic global location. Unlike many European countries or the United States, Dubai offers a near 0% impact tax environment, with personal income tax exemptions and very low corporate taxes. In addition, its geographical position allows easy access to fast-growing markets in Asia, Africa and the Middle East.

Dubai’s political and economic stability, the long-term vision of its leaders to be the world’s benchmark metropolis, coupled with its pro-business approach, contrasts with the volatility of other emerging markets.

In addition, the city offers an exceptional quality of life to its residents, both in terms of services, cleanliness and public safety, making it an attractive destination not only for business, but also for the day-to-day life of international talent.

Recommendations for Spanish investors

Dubai offers unique opportunities for Spanish investors seeking to establish themselves in the country: thanks to the double taxation agreement between Spain and the United Arab Emirates, you will be able to make efficient tax planning, obtaining great savings if you are well advised.

However, in order to achieve this, it is crucial to properly structure your company and personal operations so that you comply with both Dubai and Spanish regulations. For this, having the right tax advice is essential and at Virtus Tax we have extensive experience in the sector and we are ready to help you.

As a foreign investor, you must be aware of both cultural differences and local customs regarding business practices. Dubai is a cosmopolitan city, but understanding and respecting local customs is essential for business success.

Other alternatives in the United Arab Emirates

Although Dubai is the best known option in the UAE, other emirates such as Abu Dhabi or Ras Al Khaimah also offer interesting opportunities for certain types of business. Abu Dhabi, for example, is focused on sectors such as energy, finance and luxury tourism, while Ras Al Khaimah offers lower operating costs and is emerging as a hub for manufacturing industries.

Each emirate has its own free zones and regulations, allowing investors to choose the most suitable location according to their sector and business model. However, Dubai remains the preferred choice for many due to its more developed infrastructure, greater international connectivity and more diversified business ecosystem and it can be your gateway to a developing international market with great potential for your business.

Undoubtedly, Dubai is the option recommended by Virtus Tax to enter the Emirates market.

If you are thinking about expanding your company and you are looking for a country with great opportunities, a favorable fiscal environment and an unparalleled quality of life for you and your loved ones, without a doubt, Dubai is an option you must consider.

Contact us, and we will explain how we can assist you in establishing yourself in the country and developing your business.