How to Start a Business in Dubai – Legal Forms, Licenses, Costs, Taxation, and Local Cooperation

Dubai is one of the world’s leading destinations for entrepreneurs and corporations seeking expansion. With zero corporate tax in many cases, advanced infrastructure, strategic location between Europe and Asia, and a business-friendly environment, the city attracts SMEs, multinational corporations, investors, and family offices. Yet, every opportunity comes with legal complexity. Setting up a company in Dubai requires careful planning: choosing the right legal form, securing licenses, understanding costs, complying with tax and labor law, and building local partnerships.

At ARROWS, we help companies, investors, and entrepreneurs navigate these challenges daily through our ARROWS International network built over more than ten years. If you want to avoid costly mistakes in Dubai, contact us at office@arws.cz.

Which legal structures are available in Dubai?

There are three main ways to establish a business in Dubai. Each form has its own benefits, restrictions, and risks.

Mainland company (LLC)

• Allows you to operate across the UAE without restrictions.

• Requires at least one local partner or service agent for some regulated industries.

• Enables contracting with the government and participation in tenders.

Free zone company

• Offers 100% foreign ownership.

• Simplified formation procedures and lower barriers to entry.

• Restricted to operating within the free zone and international business (local trade outside the zone requires an additional mainland license).

Branch or representative office

• Allows foreign companies to expand without creating a new entity.

• Limited to the scope of the parent company’s activity.

• No separate legal personality – liability remains with the parent company.

Choosing the wrong legal form can lead to unnecessary costs and restricted operations. ARROWS provides comparative legal analyses and drafts founding documentation adapted to your project. For tailored advice, contact us at office@arws.cz.

What licenses and permits are mandatory?

Operating without the correct license is one of the most common mistakes foreign businesses make. Dubai requires companies to hold the right licenses for each activity.

• Commercial license – for trading and distribution.

• Industrial license – for manufacturing or industrial activities.

• Professional license – for services such as consultancy, IT, education, or law.

Sector-specific approvals may be needed in finance, healthcare, construction, or real estate. For example, a fintech startup must obtain a license from the Dubai Financial Services Authority (DFSA).

Missing or incorrect licenses lead to fines, suspension of activities, or closure of the business. ARROWS prepares complete licensing documentation, represents clients before regulators, and ensures ongoing compliance. Need help with your license strategy? Write to office@arws.cz.

How much does it cost to start a business in Dubai?

Costs vary significantly depending on free zone choice, business activity, and scale. Typical expenses include:

• Registration and government fees (USD 3,000–15,000 depending on zone).

• Office lease (mandatory in most free zones; can be flexi-desk or physical office).

• Visa fees for employees and dependents (USD 1,000–2,000 per visa).

• Bank account opening and minimum deposit.

• Compliance costs (insurance, labor contracts, reporting obligations).

Unexpected costs often arise from hidden approvals, mandatory insurances, and compliance requirements. ARROWS helps clients prepare realistic budgets, review contracts with free zones, and protect them against hidden clauses. If you need a full cost overview for your business plan, contact us at office@arws.cz.

How does taxation work in Dubai?

Historically, Dubai was known for zero corporate tax. The rules have changed since 2023.

• Corporate tax: 9% applies to profits exceeding AED 375,000 (approx. EUR 90,000). Below this threshold, companies are exempt.

• Free zones: Many retain tax exemptions if they comply with economic substance regulations and only transact internationally.

• VAT: 5% applies to most goods and services.

• Withholding tax: None on dividends or royalties.

Improper tax structuring can result in significant penalties and loss of exemptions. ARROWS provides tax structuring, prepares compliance documentation, and represents clients in audits. Want to optimize your tax strategy? Reach us at office@arws.cz.

Employment and visas – what must employers know?

To employ staff in Dubai, companies must secure visas and labor cards. Typical requirements include:

• Offer letter in Arabic and English.

• Labor contract registered with the Ministry of Human Resources.

• Health insurance for every employee.

• End-of-service gratuity payment upon termination.

Mistakes in employment compliance can lead to employee claims and fines from regulators. ARROWS drafts employment contracts, sets up HR policies, and provides training for management. Need to secure compliant contracts for your Dubai office? Contact office@arws.cz.

Why local cooperation matters

Even if your company is 100% foreign-owned, cooperation with local partners is often key to success. Distribution agreements, service agent contracts, or joint ventures with UAE nationals are common.

Poorly drafted contracts with local partners are one of the biggest risks for foreign investors. At ARROWS, we negotiate agreements, draft watertight contracts, and protect your position in disputes. If you plan to partner with a local business, write to office@arws.cz.

Key Risks and How ARROWS Helps

Risk: Choosing the wrong legal form → restricted operations, unnecessary costs
Solution: Comparative legal analysis, founding documents – need the right setup? Contact office@arws.cz

Risk: Missing license or regulatory approval → fines, suspension
Solution: Full licensing support, representation before authorities – want to stay compliant? Write to office@arws.cz

Risk: Weak contracts with local partners → disputes, financial loss
Solution: Contract drafting and negotiation – protect your investment, email office@arws.cz

How ARROWS supports international clients in Dubai

Through ARROWS International, our lawyers provide daily support to European, Asian, and American clients entering Dubai. Our services include:

• Legal analysis of company structures and licensing

• Preparation of compliance documentation and internal policies

• Drafting and negotiation of contracts with local partners

• Representation before UAE courts and regulators

• Tax structuring and advisory on VAT and corporate tax

• Employment law support and HR compliance

• Training for management and employees on UAE law

With ARROWS, you gain a partner experienced in cross-border business. For customized legal assistance, contact us at office@arws.cz.

FAQ – Most Common Legal Questions About Starting a Business in Dubai

1. Can I own a business in Dubai as a foreigner?
   Yes, 100% foreign ownership is allowed in free zones. Mainland companies may require a local partner. For tailored structuring, contact office@arws.cz.

2. How long does it take to set up a company?
   Usually 2–6 weeks if documentation is correct. Delays occur when licenses are missing. We handle the process for you – office@arws.cz.

3. What are the main costs of company formation?
   Registration, office lease, visas, and compliance. Free zones advertise low fees but hidden costs are common. ARROWS prepares realistic cost analyses – write to office@arws.cz.

4. Do I need an office to set up a company?
   Yes, most free zones require at least a flexi-desk lease. We negotiate contracts to save costs – office@arws.cz.

5. What happens if I operate without a license?
   Authorities can impose fines, suspend business, or revoke visas. ARROWS prevents these issues – contact office@arws.cz.

6. Can ARROWS represent me directly in Dubai?
   Yes. Through our ARROWS International partners, we provide representation before UAE regulators and courts. Need legal representation? Email office@arws.cz.