Do you dream of expanding your business in a global market full of opportunities? In recent years, Dubai has established itself as one of the most attractive destinations in the world 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 that combines a privileged and strategic location, world-class infrastructure and the most attractive tax system in the world. If you are thinking about opening a company in Dubai, here we explain the first steps you should take, the key considerations to bear 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, which consolidate it as a leading business hub on a global level.
Tax benefits and exemptions
One of Dubai's greatest attractions is, without doubt, its tax regime. Unlike other countries, here there is no personal income tax (0%) and corporate profit tax has a maximum rate of 9%. Companies with less than €750,000 in turnover are not subject to taxation and, likewise, the first €95,000 are completely tax-exempt. This allows companies to increase their profits and reinvest in their expansion, with very few companies coming close to an effective 9% tax rate.
In addition, the Value Added Tax (VAT) is 5%, a rate significantly lower than that of many other jurisdictions.
State-of-the-art business infrastructure
Dubai stands out for its cutting-edge business infrastructure, comparable to that of the world's leading cities. The city has an extensive transport network, including 6-to-8-lane highways, an efficient metro system and a world-class international airport.
In addition, specialized Free Zones offer state-of-the-art facilities designed for specific industries.
Dubai's digital infrastructure is particularly remarkable, with high-speed internet connectivity and, notably, a modern and effective electronic bureaucratic system that streamlines administrative processes. This greatly facilitates the management of company formation, obtaining visas, dealings with the tax authorities 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 allows companies to easily access markets in Europe, Asia, Africa and the Middle East. The Jebel Ali port, one of the largest and busiest in the world, together with Dubai International Airport, facilitate international trade and global logistics.
In addition, Dubai's cultural diversity creates a cosmopolitan environment that attracts talent from all over the world. This mix of cultures and experiences drives innovation and gives companies a valuable global perspective, essential for success in today's international market.
Business structures in Dubai: which one is right for you?
If you are considering establishing your business in Dubai, it is essential that you know and understand the different types of business structures available in the city. Each option has particular characteristics and benefits, adapting to different needs and commercial objectives.
Freezone
Freezone, or free trade zone, companies are an attractive option for foreign investors who want to keep 100% ownership of their business. These zones offer significant advantages, such as faster procedures, 100% digital documentation, full repatriation of profits and generally simplified processes for obtaining licenses and visas.
Freezones are designed for virtually all kinds of business models, with some specific ones specialized in sectors such as technology, media, logistics or financial services. For example, the Dubai Multi Commodities Centre (DMCC) is perfect for commodity trading.
These zones provide a complete business ecosystem, with offices, warehouses and business support services. Some highly reputable Free Zones, such as IFZA (International 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 regulated directly by the Dubai Department of Economic Development. These companies have the advantage of being able to operate freely throughout the local UAE market 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 required 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 looking to manage global assets or engage in international trade without needing a physical presence in the UAE and with the intention of hiding their assets from their countries of tax residence.
These companies enjoy almost total confidentiality, although they present major complexities when it comes to opening bank accounts in the Emirates.
We do not recommend under any circumstances working with this type of company, since they cannot do business within the UAE or obtain residence visas, and it is also practically impossible to open a local bank account for them.
How to set up 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 considerably simplified if you have the right advice. Discover below the essential steps to establish your business presence in the United Arab Emirates.
Defining the legal form and the commercial activity
The first crucial step is to determine the most suitable legal form for your business. This involves choosing between a Freezone or Mainland company, depending on your commercial objectives, target market and operational requirements.
In most cases, you will need a Freezone company, as few business models are legally obliged to obtain a Mainland license (which will only apply when it is mandatory).
It is important to consider factors such as operational flexibility, initial costs and capital requirements. That is why, at Virtus Tax, we will always recommend working with a Free Zone company, whenever the business model allows it.
Licenses and permits
Once the structure and activity of your company have been defined, the next step is 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 to obtain depends on the nature of your business.
For companies in free zones, the licensing process is usually faster and simpler with more standardized costs. In the case of Mainland companies, the application is made through the Dubai Department of Economic Development and the cost may vary significantly depending on the type of activity and its location.
Company registration and required documentation
The company registration process involves submitting various documents and information, including identity documents of the shareholders, the company 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), such as deeds, articles of association and records legalized by the UAE embassy in the parent company's country of origin.
It is essential to ensure that all documentation is complete and correctly submitted to avoid delays, something we can help you with entirely at Virtus Tax. The incorporation time may vary, but generally ranges between 10 and 14 days.
Once the incorporation is complete, the next step involves the partners visiting Dubai (or one of the partners) to obtain their UAE residence visa (even if they are not going to live in the country). This visa will be essential in order to open the company's bank accounts.
Thus, about 20 days after the start of the process, the partners will be able to visit the Emirates where, staying only 5 business days, they will be able to obtain their residence visa and, subsequently, open their bank accounts.
Initial investment and associated costs
When planning the opening of a company in Dubai, it is essential to have a clear understanding of the initial investment you will need. The sum of both 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 the activity. For Freezone companies, some zones do not require a specific minimum capital and, in addition, do not require it to be paid up, so the capital is declared and subscribed without it being mandatory to deposit it in the company's own account.
For Mainland companies, the minimum investment has been eliminated in many cases, although certain regulated activities may still require substantial minimum capital.
Even if no legal minimum capital is required, and as with any other business in another country in the world, having adequate operating capital is crucial for the success of the business.
Other considerations you should keep in mind
When budgeting for the opening of your new company in Dubai, you must bear in mind that there will be certain recurring annual costs, such as annual license renewal fees.
In addition, you must factor in the monthly or annual costs of accounting and tax maintenance and regulatory compliance, with which Virtus Tax can fully assist you.
It is also important to take into account 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 aspects
Understanding Dubai's tax legislation, which has undergone major changes in recent years, is crucial when establishing your business in the emirate, especially when it comes to ensuring regulatory compliance and optimizing your business structure.
The new corporate tax: impact and considerations
As of 2023, Dubai introduced a new corporate 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 levy of 9% on profits exceeding this threshold.
This new tax regime aligns Dubai with international tax transparency standards, while keeping it as an attractive business environment. However, until 2027, companies with turnover of less than AED 3,000,000 (about €750,000) per year can apply for the Small Business Relief, which exempts them from paying any corporate tax.
If you plan to establish yourself in the country, it is advisable to 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.
Residence requirements for entrepreneurs: visas and obligations
If you wish to reside in Dubai while managing your company, you should know that there are different types of visas available. Entrepreneurs can obtain an Employment Visa, as can their employees. This visa requires the resident to visit the country once every 180 days to meet its renewal requirements.
For entrepreneurs who want a lower visiting commitment in the country or who live in their home country, there is the option of the Investor Visa, only available to entrepreneurs 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 in a local company, and which includes the applicant's direct family members in the visa.
Comparison with other jurisdictions: is Dubai the best option for you?
If you are planning the expansion of your business, you have probably not considered a single 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 for establishing 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 unrivaled tax benefits, modern infrastructure, a vast leisure offering and a strategic location on a global level. Unlike many European countries or the United States, Dubai offers a tax environment with almost 0% impact, with personal income tax exemptions and very low corporate taxes. In addition, its geographical position allows easy access to rapidly 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 leading metropolis, together with its pro-business approach, contrast with the volatility of other emerging markets.
In addition, the city offers an exceptional quality of life to its residents, thanks to its services, cleanliness and public safety, which makes 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 looking to establish themselves in the country: thanks to the double taxation treaty between Spain and the United Arab Emirates, you will be able to carry out efficient tax planning, achieving great savings if you are well advised.
However, to achieve this it is crucial to properly structure the company and personal operations, so that you correctly comply with the regulations of both Dubai and Spain. To this end, having the right tax advice is essential and at Virtus Tax we have extensive experience in the sector and are ready to help you.
As a foreign investor, you must take into account both the 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, which allows investors to choose the most suitable location according to their sector and business model. However, Dubai remains the preferred option 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.
Without doubt, Dubai is the option recommended by Virtus Tax to enter the Emirates market.
If you are thinking of expanding your company and are looking for a country that offers you great opportunities, a favorable tax environment and an unbeatable quality of life for you and your loved ones, then Dubai is definitely an option you should get to know.
Contact us and we will explain how we can help you establish yourself in the country and develop your business.
