Setting Up a New Business in the UAE: A Step-by-Step Guide

Setting Up a New Business in the UAE: A Step-by-Step Guide

The UAE is one of the world’s most attractive destinations for entrepreneurs and investors. With its zero personal income tax, business-friendly regulations, and strategic global location, it’s no surprise that thousands of businesses are established here every year.

If you’re considering starting a business in the UAE, here’s a step-by-step guide to help you navigate the process smoothly.

1. Choose the Right Business Activity

Start by identifying your business activity. This will determine the type of license you need  such as commercial, professional, or industrial and which authority you’ll deal with.

Tip: Some activities require special approvals from UAE government departments or regulatory bodies.

2. Select a Legal Structure

Your company’s legal form affects ownership, liability, and business scope. Common legal structures include:

• Sole Proprietorship
• Limited Liability Company (LLC)
• Civil Company
• Free Zone Company (FZE/FZC)
• Branch of a Foreign Company

3. Decide Between Mainland, Free Zone, or Offshore

Each option has distinct advantages:

• Mainland: Allows full access to UAE markets and government contracts.
• Free Zone: Offers 100% foreign ownership and tax incentives but limited to operating inside the free zone or internationally.
• Offshore: Ideal for holding companies or international operations with no UAE market activity.

4. Reserve a Trade Name

Choose a unique and compliant trade name. It must reflect your business activity and follow the UAE’s naming rules avoiding religious or political references.

5. Get Initial Approval

This is a preliminary “no objection” certificate from the authorities to proceed with the business setup.

6. Draft the MOA or LSA Agreement

For mainland companies, you’ll need to prepare a Memorandum of Association (MOA) and possibly sign an agreement with a Local Service Agent (LSA) if required by your business structure.

7. Secure a Business Location (With Ejari Registration)

All businesses in the UAE must have a physical address. This can be:

• A traditional office rental
• A co-working space
• A flexi-desk in a free zone

For mainland companies, you are required to register the lease contract through the Ejari system, which is regulated by the Dubai Land Department. Ejari (which means “my rent” in Arabic) formalizes your tenancy agreement and is a mandatory requirement for license issuance and visa processing.

✅ Make sure the office space meets the minimum size requirements and matches the scale of your business activity.

For free zone companies, the free zone authority usually provides their own lease agreement or shared workspace, which is automatically recorded in their system.

8. Apply for Your Business License

Submit the required documents and pay the fees to obtain your official trade license. Licensing authorities include:

• DED (Department of Economic Development) for mainland businesses
• Free Zone Authorities for free zone companies

9. Register with the Federal Tax Authority (FTA)

Depending on your turnover and activities, you must:

• Register for Corporate Tax (CT):
  Starting from 1 June 2023, the UAE introduced a 9% Corporate Tax on the net profits of businesses exceeding AED 375,000 annually.
  Businesses must maintain proper accounting records and file annual tax returns with the Federal Tax Authority (FTA).
  Certain sectors and free zones may benefit from exemptions or 0% tax rates, depending on eligibility.

💡 Even if your business earns less than AED 375,000, it’s still mandatory to register for Corporate Tax to ensure compliance and avoid penalties.

• Register for VAT if your taxable turnover exceeds AED 375,000.

10. Open a Corporate Bank Account

Once your license is issued, you can open a business bank account. Most banks require:

• A valid trade license
• Company documents (MOA, share certificates, etc.)
• Emirates ID of shareholders
• Business plan or invoices (depending on activity)

Final Thoughts

Starting a business in the UAE can be a smooth and rewarding experience especially with the right support. At Finance and Tax House (FTH), we provide complete assistance, from company formation to VAT & Corporate Tax compliance.

📞 Ready to set up your UAE business?
Contact us today for expert guidance and personalized support.