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Startup Company in Dubai: A 2024 Guide
Dubai, often referred to as “The City of Gold,” holds a prestigious position as the economic epicenter of not only the United Arab Emirates but also the entire Gulf region. Its strategic geographical location serves as a vital gateway, bridging the gap between diverse and expansive markets across the Middle East and North Africa (MENA) region, as well as the continents of Europe, Asia, and Africa. As we step into 2024, Dubai’s allure for investors and entrepreneurs from around the globe is more prominent than ever. This dynamic city offers a harmonious blend of an advantageous tax regime and a welcoming business environment. A landmark development in its commercial landscape is the introduction of the provision for 100% foreign business ownership in numerous sectors. This progressive policy change marks a significant shift from previous restrictions and opens up a realm of new possibilities for international businesses and startups looking to establish their presence in this thriving market.
Business Entity Types in Dubai
When starting a company in Dubai, it’s important to choose the right business structure:
- Limited Liability Company (LLC): Common in Dubai, LLCs can have 2 to 50 shareholders, each liable only up to their capital investment. Some LLCs may require a local UAE national as a sponsor, owning a majority share.
- Sole Proprietorship: This allows full ownership of the business to the individual, who also assumes all liabilities.
- Branch/Representative Office: Suitable for businesses that intend to operate as extensions of their parent company.
- Freezone Establishment (FZE): Enables 100% foreign ownership, with up to 5 shareholders for Freezone Companies (FZC).
Company Registration Options
- Mainland Company Formation: Allows unrestricted business operations throughout the UAE, including contracts with government entities.
- Freezone Business Setup: Over 20+ freezones in Dubai cater to specific business activities, with the limitation of operating only within the freezone area.
Licensing and Taxation
Every business in Dubai must obtain one of the four main types of business licenses: Professional, Commercial, Industrial, or Tourism. The license type determines the permissible business activities.
Corporate Tax Relief for Small Businesses
The UAE Ministry of Finance announced significant corporate tax relief for small and micro businesses, effective from June 2023. This relief is part of the broader Corporate Tax Law, which applies to both onshore and free zone companies. The corporate tax rates are 0% on taxable income up to AED 375,000 and 9% on taxable income over this amount. Notably, free zone entities maintaining adequate substance in the UAE and complying with transfer pricing rules are subject to 0% tax on qualifying income.
Eligibility for Tax Relief
- Businesses and individuals with annual revenues up to AED 3 million are eligible for this relief.
- The relief is available from June 2023 until December 2026.
- It is exclusively for UAE entities that are resident persons, which do not form part of a multinational enterprise group and are not free zone entities qualifying for reduced tax rates.
- Eligible businesses not electing for this relief can carry forward tax losses and disallowed net interest expenditure from eligible tax periods.
Definition of a Resident Person
- A juridical person incorporated or established in the UAE, including free zones.
- A juridical person established in a foreign jurisdiction but managed and controlled in the UAE.
- A natural person conducting business activities in the UAE.
- Any other person determined by the Cabinet or Finance Minister
How Can Choose UAE Help
At Choose UAE, we specialize in assisting entrepreneurs and professionals with obtaining their business licenses and UAE residence visas. Our expert team simplifies these complex processes, ensuring full compliance with local regulations. We offer personalized support tailored to the unique needs of each client, making the journey of setting up a business and transitioning to life in the UAE both smooth and successful.
What Makes Us Stand Out?
- Trustworthy Reputation
- Individualized Solutions
- All Around Services
- Hassle-free, Fast and Efficient
- Excellence and Professionalism
- Dedicated Support
