Faq's
Basics of Business Setup in UAE / Dubai
1. What is the process of establishing a firm in Dubai?
In Dubai, the first step to starting a new firm is to determine what specific business activities the firm will engage in and establish what the legal business structures will be in Dubai. After this, the company’s trade name is reserved, initial approvals are obtained, and the company is registered with the Department of Economic Development (DED) (for mainland companies) or the respective free zone company. Compliance with the law is something that the DBTA helps clients to do in each step of the process.
2. What are the company types that can be chosen in UAE?
With respect to the business form that can be chosen in the UAE, the options are Dubai dominator LLCs, free zone companies, branch and representative offices, and offshore companies. The company’s form that is to be chosen will depend on the degree of ownership, intended operations, taxation, and expansion of the firm in the future.
3. What are the categories of business permits in Dubai?
In Dubai, there are four categories of business permits. These are: Commercial business permits, which are for trading activities; Professional business permits, which are for the provision of service and engagement in consultancy; Industrial business permits, which are for the manufacture of goods; and specialized or e-commerce business permits, which depend of the specific activity the business will engage in. The activities that the business can perform is determined by the business permit that has been granted.
4. What is the distinction between offshore and free zone companies?
In the UAE, mainland companies can trade and do business without any restrictions. The Free Zones Franchise agreements are governed by individual Free Zones Authorities, and they are best suited for international trading, services and specialized functions. However, they may have restrictions when dealing with the UAE market directly. Offshore companies do not do business within the UAE and are primarily for asset holding, international business, or investment.
5. Can a foreigner have 100% ownership of a company in the UAE?
Certainly. There are now provisions for foreign investors to have 100% ownership of Mainland companies within the specified sectors; however, there are regulatory approvals required. In Free Zones, there has always been a provision for 100% foreign ownership. DBTA measures compliance and ensures that ownership is aligned with the current UAE legal framework.
6. Is having a local partner or a sponsor a must in order to form a company?
In the majority of business functions, having a local Emirati partner is not a must anymore. However, there are still some controlled or strategic functions where there is a necessity for local participation. Dubai Business and Tax Advisors assesses the business function in order to determine whether a sponsor or local service agent is required.
7. Is physical presence required to register a company in Dubai?
The answer is mostly yes. Mainland companies will always need some form of an actual office space while Free Zones may have more flexible desk or virtual office solutions depending on the Free Zone Authority. The office requirement is also tied to visa eligibility and compliance.
8. Am I allowed to use a flexi desk or virtual office to set up my business?
Yes. Several Free Zones permit the use of flexi-desk or shared office services. This is a value for money option for entrepreneurs and start-ups with no immediate full office requirement.
9. What are the documents I need for incorporating a business in Dubai?
Generally, the documents needed include copies of the shareholders and directors’ passports, visa or entry stamp (if there is one), the name for the business which is proposed, details of the business activity, and the incorporation documents. More documents may also be needed, depending on the authority or activity.
10. How much time is needed to finalize company registration in the UAE?
Company registration can take a few days or a few weeks depending on the business activity, jurisdiction (Free Zone or Mainland), required approvals, and availability of the documents. DBTA aims to optimize the registration process to reduce the time needed for registration.
11. What are the estimated expenses for setting up a business in Dubai?
Expenses vary with the type of license, jurisdiction, office space, required visas, professional fees, etc. Free Zone setups usually have package offers, while Mainland costs vary with office space, approvals for business activity, and other factors. Dubai Business and Tax Advisors offer a transparent cost breakdown before the process begins.
12. Can I change my business activities after the company is registered?
Yes, business activities can be added, removed, or adjusted after registration; provided approvals are obtained. These changes must be handled carefully, so they don’t create licensing or compliance issues later on.
13. Can any particular business entity have multiple licenses or business activities?
Yes, in most situations. One license can cover a number of interconnected activities. On the other hand, if there is a greater variance in the activities considered, then having separate licenses or branches is proposed. This is looked at in the advisory phase.
14. What is meant by a trade name and in what way can I register one?
A trade name is the name that the business is legally registered as. It is required to follow rules of naming in the UAE and receive the appropriate authority approval. DBTA deals with trade name reservations and verifies that they are congruent with brand and law.
15. What are PRO services and does DBTA offer such services?
PRO services include license applications, visa issuance, purpose of the labor card, issuance of Emirates ID, document attestation, etc. Office. PRO services are entirely offered by DBTA so that clients can concentrate on their core business while all administrative work is done properly and efficiently.
Faq's
Free Zones vs Mainland: Pros, Cons & Limitations
16. What are the key advantages of setting up a Free Zone company in the UAE?
Free Zone Company has various advantages for instance, the company can be solely owned by a foreigner, easy access to tailored ecosystems, easy setup procedures, various flexible options for offices, and the ability to qualify for a few tax benefits. This is ideal for most new businesses, businesses engaged in international trade, and any businesses in the provision of services aimed at a global clientele.
17. What limitations should I be aware of when choosing a Free Zone company?
A Free Zone company is not allowed business dealings in the United Arab Emirates mainland except by enlistment of a local distributor or by getting specific permissions. The activities you can do depend on what the Free Zone jurisdiction has as its activities, and each Free Zone has its own Zone policy.
18. Can a Free Zone company trade directly with customers in the UAE mainland?
Typically, Free Zone companies must use an authorised distributor or establish a mainland branch to trade directly within the UAE market. DBTA advises on compliant structures that allow Free Zone companies to expand their reach without regulatory risk.
19. How do visa quotas differ for Free Zone and Mainland companies?
Visa eligibility is linked to office space and jurisdiction. Free Zones usually assign visas based on the office package selected, while Mainland companies’ visa quotas depend on office size and Ministry of Human Resources regulations. DBTA helps optimise visa planning during setup.
20. Do Free Zone companies require a physical office?
Yes, Free Zones often provide flexible solutions such as flexi-desks, shared offices, or virtual setups. Mainland companies generally require a physical office lease registered with Ejari.
21. What about customs duties, capital, and profit repatriation in Free Zones?
When in a Free Zone, you can repatriate all capital and profits and get a customs duty exemption on goods you trade in the Free Zone or export outside the Free Zone. However, when trading goods that enter the UAE Mainland customs duties, exemptions will not apply.
22. If I want to operate across the UAE, should I choose a Mainland company instead?
Yes. Mainland companies ensure that you do not have any trading restrictions in the UAE market as you can deal directly with customers and trade with government entities. DBTA evaluates business models to decide if Free Zone set-up is appropriate or if Mainland registration should be pursued.
23. Which business activities are better suited for Mainland companies?
Businesses whose services are retail, food and beverage, construction, local consulting and professional services, and those that involve government contracting will more often need to be registered on the Mainland to function more effectively.
24. How do costs differ between Free Zone and Mainland companies?
New businesses will often prefer Free Zones as they have packages with fixed costs, reducing the costs of starting up. With Mainland set ups you may have more unexplored costs that are more flexible, as they will depend on your operational needs, like office space and approvals. DBTA has more precise comparisons that can help.
25. Can a company be converted from Free Zone to Mainland or vice versa?
Yes, but conversion involves regulatory approvals, license cancellation, and re-registration. DBTA manages the transition process, ensuring tax, visa, and compliance considerations are handled smoothly.
Faq's
Visas, Immigration & Employment / HR Considerations
26. Does company formation in Dubai automatically grant a residency or investor visa?
Company formation does not automatically grant residency, but it makes you eligible to apply for an investor or partner visa. Visa approval depends on the company’s license, office space, and compliance with immigration regulations. Dubai Business and Tax Advisors assist clients in securing the appropriate visa after company registration.
27. How many visas can a company sponsor in the UAE?
The number of visas a company can sponsor depends on the jurisdiction, business activity, and office size. Free Zones usually assign visas based on the selected package, while Mainland companies’ visa quotas are linked to office space and labour regulations.
28. Can a UAE company hire foreign employees?
Yes, it is possible for companies based in UAE to recruit foreign staff, provided they comply with the department of human resources and Emiratization. DBTA guarantees the recruitment of foreign staff in full compliance with the legal exigencies, such as work permits, employment contracts, and visa processing.
29. What is the difference between an investor visa, employment visa, and family visa?
An investor visa is granted to business owners and partners; employment visa is granted to employees with salaries, while family visa is provided to residents to whom sponsored dependents can be attached. Each of them has their own unique criteria to be met as well as the necessary supporting documents.
30. Does DBTA help with visa processing and immigration formalities?
Yes. DBTA provides complete immigration and visa support including investor visa, employment visa and family sponsorship. DBTA takes care of Emirates’ ID issuance, medical examinations, renewals, as well as other formalities.
31. What employment laws must businesses comply with in the UAE?
UAE labour laws regulate employment contracts, working hours, leave entitlements, end-of-service benefits, and terminations. Employers must also comply with WPS, employee insurance, and contract registration requirements. DBTA advises businesses on labour law compliance and HR structuring.
32. Can I easily scale my workforce as my business grows?
Yes. Businesses can expand their workforce by increasing office space or upgrading license packages to qualify for additional visas. DBTA helps plan scalable employment structures that support business growth while remaining compliant.
Faq's
Corporate Tax & UAE Compliance
33. What is the UAE Corporate Tax and when did it come into effect?
In the United Arab Emirates, corporate income is taxed on a federal level. In addition, corporate taxation will start to apply for businesses beginning their financial years on or after June 1, 2023. Almost all companies in the United Arab Emirates will fall under this tax, with the law providing for certain specific exemptions and thresholds.
34. Who is required to pay Corporate Tax in the UAE?
Corporate tax is categorized under the United Arab Emirates Mainland companies, and their specific Free Zone Company, foreign companies with a commercial presence in the United Arab Emirates, and individuals with business activity. However, whether corporate tax is applicable depends on the level of income, the business model, and whether the Free Zone benefits are retained.
35. What is the current Corporate Tax rate in the UAE?
Corporation tax is usually charged at zero percent on the first AED 375,000 of taxable income, and a 9 percent rate is charged on income above this amount. In accordance with the OECD guidelines, some large multinational entities may be liable to a higher global minimum tax.
36. Are small businesses exempt from Corporate Tax in the UAE?
Small businesses may benefit from Small Business Relief, which can reduce or eliminate Corporate Tax liability if eligibility conditions are met. However, registration and compliance obligations still apply.
37. Are Free Zone companies subject to Corporate Tax?
Free Zone companies can continue to benefit from a 0% Corporate Tax rate on qualifying income, provided they meet substance and compliance requirements. Non-qualifying income may be taxed at 9%.
38. What is considered “Qualifying Income” for Free Zone companies?
Qualifying income generally includes income earned from transactions within the Free Zone or from foreign clients. Income from mainland UAE sources may not qualify and could be subject to Corporate Tax.
39. What is a tax period and how is it determined?
A tax period usually follows the company’s financial year. Businesses must declare income and file returns based on their approved accounting period, which must be registered with the Federal Tax Authority.
40. Is Corporate Tax registration mandatory even if my business has no taxable profit?
Yes. Corporate Tax registration is mandatory for eligible businesses, even if no tax is payable. Failure to register can result in penalties imposed by the Federal Tax Authority.
41. What documents are required for Corporate Tax registration?
Typically required documents include trade license details, Emirates ID or passport of owners, financial year information, and authorised signatory details. DBTA assists clients in preparing complete and accurate submissions.
42. How do I register for Corporate Tax in the UAE?
Registration is completed online through the Federal Tax Authority’s EmaraTax portal. DBTA manages the full registration process, ensuring correct classification and timely submission.
43. What are the filing deadlines for Corporate Tax returns?
Corporate Tax returns must generally be filed within nine months from the end of the relevant financial year. Payment of any tax due must be completed within the same timeframe.
44. How is taxable income calculated under UAE Corporate Tax law?
Taxable income is calculated based on accounting profit, adjusted for allowable deductions, exemptions, and disallowed expenses as defined under the Corporate Tax legislation.
45. What business expenses are deductible for Corporate Tax purposes?
Most legitimate business expenses, such as salaries, rent, marketing costs, depreciation, and operational expenses, are deductible if they are incurred wholly for business purposes and properly documented.
46. What are common corporate tax compliance mistakes businesses make?
Common errors include late registration, incorrect income classification, mixing qualifying and non-qualifying income, poor bookkeeping, and ignoring transfer pricing requirements. DBTA helps clients avoid costly penalties through proactive compliance management.
47. Are businesses required to maintain accounting records under Corporate Tax law?
Yes. Businesses must maintain accurate financial records and supporting documentation for a minimum period as prescribed by law. These records may be reviewed in audits by the tax authorities.
48. What penalties apply for non-compliance with Corporate Tax regulations?
Penalties may apply for late registration, delayed filing, incorrect returns, or failure to maintain records. These penalties can be significant and increase with repeated non-compliance.
49. How is Corporate Tax handled for companies with multiple licenses or entities?
Companies with multiple licenses may still be treated as a single taxable person depending on the structure. Group relief and tax grouping options may be available in certain cases. DBTA evaluates group structures for tax efficiency.
50. What are transfer pricing and related-party transaction requirements under UAE tax law?
Businesses engaging in transactions with related parties must comply with transfer pricing regulations and maintain appropriate documentation to demonstrate arm’s-length pricing. DBTA provides transfer pricing advisory and documentation support.
Faq's
Free Zone, Offshore & Tax Structuring
51. Can setting up a company in the UAE help me obtain UAE tax residency?
Yes. A UAE company can support an application for a Tax Residency Certificate, provided substance and eligibility requirements such as physical presence, business activity, and compliance are met. DBTA assesses the eligibility and structures of businesses to support tax residency applications.
52. If a Free Zone company conducts business in the UAE mainland, will it lose its 0% tax benefit?
Free Zone companies may lose the 0% Corporate Tax benefit on income generated from mainland UAE activities that are considered non-qualifying. Proper structuring is essential to preserve tax advantages while expanding operations.
53. What happens if a Free Zone company earns a non-qualifying income?
Non-qualifying income may be subject to Corporate Tax at the standard rate. Businesses must properly segregate qualifying and non-qualifying income in their accounting records to remain compliant.
54. Are UAE offshore companies suitable for tax planning and asset holding?
Yes. Offshore companies are commonly used for holding assets, international investments, and intellectual property. However, they are not permitted to conduct business operations within the UAE. DBTA ensures offshore structures meet legal and compliance standards.
55. What are the compliance requirements for offshore companies in the UAE?
Offshore companies must comply with registration rules, maintain corporate records, meet Economic Substance Regulations where applicable, and adhere to international reporting requirements. DBTA provides full offshore compliance support.
56. Does DBTA provide transfer pricing and international tax advisory services?
Yes. DBTA advises on transfer pricing policies, related-party transactions, and international tax compliance in line with UAE Corporate Tax law and OECD guidelines.
57. For how long must companies retain financial and tax records?
Businesses are required to retain accounting and tax records for the statutory period defined under UAE law. Proper record retention is essential for audits and regulatory reviews.
Faq's
Company Lifecycle, Renewals & Exit
58. How and when do I need to renew my business license in the UAE?
UAE business licenses must be renewed annually before their expiry date. Renewal requires a valid lease agreement (if applicable), compliance with regulatory requirements, and settlement of government fees. DBTA monitors renewal timelines and manages the renewal process to avoid penalties or disruptions.
59. Can I change my business activities, shareholders, or legal structure after incorporation?
Yes. Companies can amend business activities, add or remove shareholders, change management, or restructure their legal form, subject to regulatory approval. DBTA handles all amendments while ensuring tax, legal, and compliance implications are properly managed.
60. What is the process for closing or liquidating a company in the UAE?
Company liquidation involves cancelling licenses, visas, labour cards, closing bank accounts, and obtaining tax and regulatory clearances. The process varies by jurisdiction and business type. DBTA provides full liquidation support to ensure a clean and compliant exit.
61. Are there tax responsibilities when dissolving or closing a company?
Yes. Businesses may be required to file final Corporate Tax returns, settle outstanding liabilities, and deregister with the Federal Tax Authority. DBTA ensures all tax obligations are fulfilled before the company’s closure.
62. How does business expansion or restructuring affect tax and compliance?
Expansion, mergers, acquisitions, or restructuring can change tax obligations, reporting requirements, and licensing conditions. DBTA evaluates the impact of structural changes and advises compliant growth strategies.
63. Does DBTA provide ongoing compliance and advisory support after setup?
Yes. DBTA offers ongoing services including license renewals, tax filing, bookkeeping, compliance monitoring, business restructuring, and strategic advisory to support long-term business success.
