Company Formation and Doing Business in Dubai


There are many ways in which foreign entities (individuals or companies who are not nationals of the UAE) can go about business set up in Dubai or seek to establish a presence in the Emirate. In the following summary, we provide a useful guide to the options available:

Methods of Doing Business

The principal ways a foreign entity might establish a business presence in the UAE are by means of

  • A branch or representative office of a foreign company
  • A limited liability company
  • A professional partnership
  • A Free Zone entity

Except in relation to Free Zone entities, it is generally necessary to enter into some form of agreement with a UAE national or a company wholly owned by UAE nationals.

Branch or Representative Office

It is possible for a foreign company to establish

  • A federally registered branch
  • A federally registered representative office
  • A locally registered branch office

Federal registrations fall within the jurisdiction of the UAE Commercial Companies Law whereas local registrations fall within the jurisdiction of the relevant Local Order applicable in each Emirate. The distinction lies in the fact that under the federal jurisdiction, either a trading branch office or non-trading representative office licence may be obtained, whereas under local jurisdiction only a non-trading branch office licence may be obtained.

Work Permits and Residence Visas

The most common form of commercial entity adopted by foreign companies is the Limited Liability Company. The law currently provides that in most cases, at least 51% of the total shareholding in a Limited Liability Company must be held by a UAE national (or a company wholly owned by UAE nationals).

There are exceptions providing that certain activities, such as real estate related businesses, can only be conducted by entities that are 100% locally owned. A reduction in this minimum local shareholding requirement is anticipated to be enshrined in the new Commercial Companies Law, but a timetable for the issue and application of that law has not yet been fixed.

Professional Partnership

Professional business is defined as ”work based on investing mental talents and acquired information”. The conduct of professional business is governed by Local Orders in each Emirate. If a non-UAE national person or a corporate body wishes to conduct professional business, a UAE national local service agent must be appointed.

Free Zone Entity

The UAE boasts several Free Zones. The attraction for some of establishing an entity in one of these areas is that there is no UAE national shareholding requirement. The Free Zone authorities also generally guarantee investors that they will not be liable for corporation tax for a specific period of time. Free Zone entities are not liable for import or export duties for goods imported into and exported out of the Free Zone.

A Free Zone entity can take one of four forms:

  1. A branch office of a foreign company
  2. A Free Zone establishment
  3. A Free Zone Company
  4. A Free Zone Offshore company (in Jebel Ali Free Zone only)

Major Free Zones in Dubai

  • Jebel Ali Free Zone
  • Dubai Airport Free Zone
  • Dubai Internet City
  • Dubai Multi Commodities Centre
  • Dubai International Financial Center
  • Dubai World Central
  • Dubai Media City

Work Permits and Residence Visas

In order for any non-UAE national to work and live in the UAE he or she is required to hold a valid work permit and residence visa. The Ministry of Labour is responsible for issuing work permits and the Naturalisation and Immigration Department of the Ministry of Interior is responsible for issuing residence visas.

Prior to an employee entering the UAE, the employer should apply for an employment visa for him, which is valid for two years. Upon arrival in the UAE, the employee must obtain a health card and thereafter attend a Government hospital for a blood test. Provided the results of the blood test are clear, the Ministry of Labour will issue a labour card which will enable the employee to obtain a residence visa. Residence visas are usually valid for a period of two years.


There is no federal legislation imposing taxes. In the 1960s the individual emirates did enact tax decrees providing for tax on corporate entities. The practical application of these largely identical decrees is limited almost exclusively to oil producing companies, certain related service industries and banks. Exemptions to this tax are available upon application, and even the vast majority of companies to which exemption has not been formally granted are for the most part not assessed to tax.

There is an import tax that is levied at the rate of 5% on goods entering the country, unless those goods are entering one of the Free Zone areas for the purposes of re-export. In certain circumstances it is possible to apply for exemption from import tax in relation to goods, which are imported from other GCC states provided it can be shown that at least 40% of the value of the goods has been added whilst in the exporting state. This applies equally to goods manufactured or processed in the UAE (including the Free Zones) and exported to another GCC state.


Fuelled by a relaxation on freehold ownership restrictions, the UAE property market—primarily the residential sector—has seen unprecedented growth in recent years. Essentially, the Dubai Government has authorised certain developers, including Emaar Properties PJSC, Nakheel Co LLC and Dubai Properties LLC, to offer freehold ownership to non-UAE nationals.

Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. IQTESADI does not accept any responsibility, legal or otherwise, for any errors or omission.