How to start a tech business in Dubai | PRO Partner Group
How to start a tech business in Dubai
In just a few decades, Dubai has established itself as a centre for commerce, finance and tourism. Its modern infrastructure, business friendly policies and liberal tax regime have attracted investors from across the globe.
Situated strategically at the crossroads between Asia and Africa, it has used this geographic advantage to grow and diversify its economy with foreign direct investment as the main driver.
More recently, it has set its sights on the technology industry and is fast becoming a major player in this arena, challenging other established global hubs such as San Francisco, London, Beijing, Hong Kong and Singapore.
It has already attracted global companies such as IBM, Oracle, Microsoft and Apple and is now enticing up and coming tech startups and entrepreneurs as it continues to look to the future.
But how has it achieved this? And why should you consider setting up a tech business in Dubai?
Ease of doing business
Attracting foreign investment is key to the success of Dubai and all of its policies are made with the goal of making market entry as easy as possible and making Dubai as accessible to foreign investment as possible.
The numerous free zones, dotted around the emirate, offer a great investment model, with 100% foreign ownership, full repatriation of capital and profits, and 100% exemption from income tax and customs duty being among the major incentives that these economic jurisdictions offer.
Now, with the allowance for 100% foreign ownership of companies on the mainland too, investors can retain much more control over business operations than previously.
Recent visa initiatives like the Golden Visa and the Green Visa have also added to the attraction, making long-term residency in the UAE much more accessible and allowing investors with business interests in several countries much more freedom to enter and exit the country as required.
Culture of innovation
Dubai embraces technology and innovation at every opportunity and its impact can be seen everywhere from digitisation of government services to business interactions and the way in which its residents use digital services in every area of daily life.
Dubai really is the land of convenience, and the government is continually striving to find new ways to leverage the latest technologies to improve its infrastructure and simplify life for its citizens.
Through its Smart Dubai initiative, it has already implemented e-service channels for the majority of its government and civic services, and most private businesses also offer online payment and delivery services for their goods and services.
As a busy professional, time is always at a premium and the level of service and convenience in Dubai and the UAE as a whole is hard to beat.
Business funding and other initiatives
Policy makers in Dubai have recognised that to attract the most talented individuals and startups in the tech space, it is necessary to incentivise them by offering funding programmes and the support needed for their ideas to succeed.
The Dubai Future Foundation is a great example of this. Its Future Accelerators programme is aimed at finding entrepreneurs and start-ups with unique ideas on how to leverage emerging technologies to solve everyday problems and issues. It provides then with funding, support and direct access to important decision makers in government to speed up approvals.
The foundation’s ‘one million Arab coders’ is another great initiative that illustrates Dubai’s creativity in finding ways to nurture the talent of the future. The initiative equips Arab youths with digital skills in the fields of AI, machine learning, data science and cloud computing to use their programming skills to drive the nation’s digital economy.
Where to set up your tech business in Dubai
The DIFC Innovation Hub
Launched in May 2021, the DIFC Innovation Hub is a community of over 500 innovative companies in the tech space including new start-ups, established global corporations, unicorns and sovereign wealth funds.
It serves as a launchpad for entrepreneurs and tech startups to access the MEASA region, providing educational programmes, funding and accelerator programmes that enable new businesses with innovative ideas to get their product or service to market.
Dubai Internet City Freezone
Dubai Internet City (DIC) is a well-established IT and business park offering business licences for companies involved in activities such as software development, e-commerce, internet and multimedia, telecommunications and IT.
Its success has led to many global firms such as Facebook, Google, Microsoft, Samsung and IBM to establish regional headquarters there and provides access to around 1600 other tech-based corporations.
Dubai Silicon Oasis Freezone
Dubai Silicon Oasis is a technology park, serving businesses involved in sectors such as IT, research and development, biotech, engineering, aerospace, alternative energy and oil and gas. It offers low set up and operational costs, no income, corporate or income/export taxes and is the only technology park in the region that provides an integrated working and living community.
How to Start Your Tech Business in Dubai?
1. Choose the correct jurisdiction
Choosing the best jurisdiction for your business is perhaps the most important decision to make and will have implications for which companies you can trade with in the region, your setup and operational costs and your tax obligations.
Mainland companies have the most flexibility in terms of the availability of business activities, acquisition of residence visas and office space and trading scope.
A mainland business licence allows your business to trade freely across the entire UAE, GCC region and beyond. Set up costs are generally more expensive and time-consuming than a free zone setup. However, your business will not be limited to only doing business within a certain jurisdiction, as is the case with free zone companies.
A relatively new change to the structure of mainland companies, is that they can now be 100% foreign owned. Previously this was only possible with free zone companies as foreign ownership of mainland companies was capped at 49% with the other 51% to be held by a UAE national service agent.
Free Zone Company
Licensing and operational costs are generally more cost effective for free zone companies than for those on the mainland. However, one major drawback of a free zone setup is that your company will not be permitted to trade directly on the mainland or submit tenders for government contracts.
In order for a free zone company to trade on the UAE mainland, it must partner with a DED licensed distributor or establish a civil company, LLC or branch office.
Free zone companies do, however, benefit from significant tax and customs duty exemptions and are ideal for smaller business or those primarily trading with businesses outside the UAE.
2. Select the correct company structure
Choosing the correct legal structure for your business requires careful thought and will involve evaluating factors such as company ownership, shareholder agreements, documentation requirements, capital requirements and personal liability.
The simplest business structure that is available in the UAE is the sole proprietorship. It has the lowest setup costs and is ideal for small start-ups that want to scale with the minimum of expense and have full control of business operations and profits.
The most common legal structure in the UAE is the Limited Liability Company (LLC). This type of company can have up to 50 shareholders, each of whom is liable only to the extent of his or her share in the capital of the company. LLCs are permitted to carry out any industrial or commercial business, but not professional. Shares of an LLC cannot be offered to the public and the company is not allowed to resort to public subscription to increase its capital or secure loans.
Other business structures that are possible in the UAE and should be considered include:
• Civil Company
• Private Share Holding Company
• Public Share Holding Company
• Branch of Foreign Companies/Representative Office
• Branch of UAE based company
• Branch of GCC company
• Branch of free zone company
3. Apply for your business licence
The documents required for your business licence will vary depending on the legal structure of your company, the nature of your business and the business jurisdiction, but in most cases will include:
• A business plan
• Relevant qualifications legally attested
• Passport copies of the Managing Director and all shareholders
• Copy of Emirates ID (if already obtained)
• Memorandum and Articles of Association (notarised and attested)
You will also need a residence visa for yourself and any staff members who will be employed by the company. These are issued by the General Directorate of Residency and Foreigners Affairs (GDRFA).
How can PRO Partner Group help?
PRO Partner Group has an experienced team with a wealth of experience in company incorporation in the UAE and direct contact with key government departments. We can advise you on the best business licence and corporate structure for your tech business and help you deal with all regulatory and legal requirements.
If you need assistance with setting up a tech business in Dubai or for any other onshore or offshore company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or KSA, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at firstname.lastname@example.org or complete the contact form below and we will be delighted to assist you.