Why Legal Requirements Matter in Dubai Business Setup
Dubai is one of the world’s most attractive places to start a company, but every entrepreneur must first understand the legal requirements for new business in Dubai. Choosing the wrong license, missing a compliance deadline, or misunderstanding tax laws can delay operations—or even put your business at risk.
At HA Group, we’ve helped hundreds of entrepreneurs and SMEs turn their ideas into registered companies in Dubai. This guide breaks down the 2025 legal rules for business setup—mainland, free zone, and offshore—so you can launch with confidence.
Choosing the Right Jurisdiction in Dubai
The jurisdiction you choose determines what legal requirements apply to your company.
Mainland Company Setup (Dubai Mainland)
- Licensed by Dubai’s Department of Economy and Tourism (DET).
- Can trade anywhere in the UAE and apply for government contracts.
- 100% foreign ownership is now possible for many sectors (since 2023 reforms).
- Requires a physical office lease (Ejari registered).
Free Zone Company Setup
- Over 40+ free zones (DMCC, DIFC, DAFZA, JAFZA, etc.).
- Full foreign ownership + 100% profit repatriation.
- Quick incorporation, but local UAE trade may need a distributor.
- 2025 Update: One Freezone Passport allows companies to operate across multiple free zones under one license.
Offshore Company Setup
- Best for international trade and holding structures.
- Cannot directly operate within the UAE market.
HA Group Tip: If your priority is local UAE trade, choose mainland. For tax benefits and global flexibility, free zones are often ideal.
Business Structures and Licensing Rules
When registering a company in Dubai, you must select both a legal structure and a license type.
Mainland Structures
- LLC (Limited Liability Company) – most common for trading.
- Sole Proprietorship – single owner, full liability.
- Civil Company – for professionals (doctors, engineers, consultants).
- Branch Office – extension of a foreign company.
- PJSC / PrJSC – for large enterprises requiring shareholder structures.
Free Zone Structures
- FZE (Free Zone Establishment) – one shareholder.
- FZCO (Free Zone Company) – multiple shareholders.
- Branch – for international companies expanding to Dubai.
License Categories in Dubai
- Commercial License – for trading activities.
- Professional License – for services/consultancy.
- Industrial License – for manufacturing.
- Tourism License – for travel and hospitality businesses.
Tax and Compliance Requirements (2025 Updates)
Dubai remains tax-friendly, but business owners must meet new 2025 tax requirements.
- Corporate Tax (Since 2023):
- 0% on profits up to AED 375,000.
- 9% on profits above AED 375,000.
- Free Zone companies can still enjoy 0% if they qualify.
- Multinationals (OECD Rule – 2025):
- Companies with global revenue ≥ €750M must pay 15% minimum tax (DMTT).
- Companies with global revenue ≥ €750M must pay 15% minimum tax (DMTT).
- VAT (Value Added Tax):
- 5% standard rate.
- Mandatory if annual turnover exceeds AED 375,000.
HA Group Tip: Early tax planning helps reduce liabilities. Our experts assist with VAT registration, bookkeeping, and corporate tax compliance.
Step-by-Step Legal Process for Starting a Business in Dubai
Here’s the legal checklist for new businesses in Dubai in 2025:
- Choose Business Activity – must match DET or free zone approved list.
- Reserve a Trade Name – must comply with UAE naming rules (no offensive/religious words, must reflect activity).
- Select Jurisdiction & Legal Form – mainland, free zone, or offshore.
- Prepare MOA (Memorandum of Association) – required for LLCs and partnerships.
- Lease Office Space – Ejari registration (mainland) or flexi-desk package (free zone).
- Submit Documents – passport copies, NOC (if required), shareholder details, MOA.
- Obtain Initial Approval – from DET or free zone authority.
- Get Business License – official authorization to operate.
- Open Corporate Bank Account – required for transactions and salary processing.
- Apply for Investor/Employee Visas – Emirates ID, medical, and residency visa processing.
Ongoing Legal Requirements After Setup
After incorporation, compliance doesn’t stop. Businesses in Dubai must follow ongoing legal obligations:
- License Renewal – every year (requires valid lease/Ejari).
- Corporate Tax Return – filed annually within 9 months of fiscal year end.
- VAT Filing – monthly or quarterly, depending on turnover.
- Audit Reports – required for many free zones and LLCs.
- Economic Substance Regulations (ESR) – applicable to holding, finance, and IP companies.
- Ultimate Beneficial Ownership (UBO) Reporting – disclosing real ownership structure.
Non-compliance can lead to heavy fines or suspension of trade license.
FAQs: Legal Requirements for Business in Dubai
Q1. What are the basic legal requirements for new business in Dubai?
- Trade license (mainland or free zone).
- Physical office (Ejari or flexi-desk).
- Corporate bank account.
- Tax registration (VAT/corporate tax).
Q2. Can a foreigner own 100% of a business in Dubai in 2025?
Yes. Most activities in mainland Dubai allow 100% foreign ownership. Free zones have always allowed it.
Q3. How much does it cost to meet legal requirements for company setup in Dubai?
On average AED 15,000 – AED 25,000 for a free zone company; AED 20,000 – AED 40,000 for a mainland setup (varies by activity).
Q4. Do all businesses in Dubai need an audit?
Not all, but many free zones and LLCs require annual audited accounts for license renewal.
Q5. What happens if I don’t renew my Dubai trade license?
You’ll face fines, possible blacklisting, and suspension of visas/bank accounts.
Q6: Can foreigners start a business in Dubai without a local partner?
Yes. Since recent reforms in UAE commercial laws, most business activities in the Dubai mainland now allow 100% foreign ownership without the need for a local Emirati sponsor. However, certain strategic sectors such as oil, gas, and banking may still require local participation. Foreigners can also set up fully owned companies in Dubai’s free zones, where they enjoy tax exemptions, full profit repatriation, and streamlined business regulations.
Q7: What is the minimum capital required to start a business in Dubai?
There is no fixed minimum capital requirement for all companies in Dubai—it largely depends on the business activity and jurisdiction. For instance:
- Free Zone companies: Often require a minimum share capital, which can range from AED 10,000 to AED 300,000, depending on the free zone authority.
- Mainland companies: The minimum capital is usually defined in the company’s Memorandum of Association but doesn’t always need to be deposited.
- Professional licenses: Typically do not have significant capital requirements.
It’s best to confirm the latest requirements with a licensed business setup consultant in Dubai, as rules are updated regularly.
Q8: Do I need an office space to get a business license in Dubai?
Yes, in most cases you need a physical office or flexi-desk space to obtain a trade license in Dubai. For mainland businesses, the Ejari tenancy contract must be submitted to the Dubai Department of Economy and Tourism (DET). In free zones, many authorities allow virtual or flexi-desk packages, making it easier and more cost-effective for startups and entrepreneurs to meet this requirement.
Final Thoughts: Start Smart, Stay Compliant
Understanding the legal requirements for new business in Dubai is the foundation of success. From choosing the right jurisdiction and license to staying compliant with tax and audit rules, every step matters.
At HA Group, we specialize in simplifying this process. With end-to-end support—licenses, banking, visas, and compliance—we help you set up quickly and legally, without unnecessary stress.
Ready to start your business in Dubai?
Book a free consultation with HA Group today and let’s build your company on a strong legal foundation.
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