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Dubai company formation

What to know before you start a new company in Dubai?

Setting up a new company in Dubai can become a herculean task if you don't do the proper research before launching your new business. An entrepreneur has to first understand the difference between a local Dubai company and a Free Zone company. Unfortunately, if you are new to the country and are not aware of the laws and regulations, you can make the costly mistake of setting up the wrong type of company.
Lets' be clear about the difference between a local Dubai company and a Free Zone company. A free zone company cannot conduct business in a non-free zone area without a local distributor or a local agent. Regardless of what people tell you, the law is very clear on this, there are no grey areas.

If you are a free zone trading company, you can trade your goods internationally and within the trade zone. Clients from the mainland can come to the free zone and purchase products from your business, however upon clearance of customs, the client will have to pay a 5% duty. Many free zone companies trade in the mainland by appointing locally licensed freight forwarders or logistics firms to take care of their local distribution.

If you are a free zone consulting firm, you must conduct your business in the free zone that you are legally licensed to practice. You cannot get a free zone license and then operate out of a Dubai virtual office. The Dubai Department of Economic Development (DED) has stated in the newspaper, the radio and via its various spokesmen that these rules are not subject to interpretation and have subjected companies providing virtual office services to sanctions.

If you are incorporating a local company in Dubai, in most cases you will require an Emirati national to hold 51 percent of the shares. The fact that someone else has a majority stake in your firm, means that you have to ensure that you are fully protected under the law. We highly recommend that you go through reputable company formation specialist to protect your interests.

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