Dubai has become a hub for information technology, experiencing remarkable growth like many other industries in the city. With an estimated investment of $8 billion, the IT sector has seen the establishment of subsidiary branches by companies from around the globe. Often referred to as the “Silicon Valley of the Middle East,” Dubai has successfully attracted top-notch industries.
As the authorities of the UAE are looking to transform the economic structure of the country. The demand for IT is at an all-time high. That is why today we are going to see how an IT business setup in Dubai and the UAE looks like.
As a foreigner, if you are looking to invest in the information technology industry in the UAE. You must comply with the various laws and regulations the government has put into place.
The UAE is the most technologically advanced country in the Middle East and Dubai is the most technologically advanced city in the Middle East. That is why there are a lot of investment opportunities for IT business setups in Dubai.
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Before diving into the details of setting up an IT business in Dubai and the UAEÂ in particular, here is a list of decisions you need to take:
- Choosing between a mainland company and a free zone company.
- Choosing a trade name for your business.
- Choosing what type of legal entity your business will be (sole proprietorship, partnership, corporation, S corporation, or Limited Liability Company (LLC)
These decisions will affect what your business will look like after formation, what activities it can perform and cannot perform, and what legal structure it can form. Among these, we will discuss the first point to help you decide better.
Where to open an IT business in Dubai?
When opening an IT business in Dubai, you have two main options for the business location: Dubai mainland or a Dubai free zone.
If you choose Dubai mainland, you can trade across Dubai and the UAE more easily. You will obtain all the necessary legal permissions for your business directly from the Department of Economic Development (DED). This option allows you to have an international outlook and expand your presence within the UAE. However, it’s important to note that forming a mainland LLC requires partnering with a local sponsor who will own 51% of the company’s shares.
Alternatively, you can consider setting up your IT business in a Dubai free zone. This option is often more cost-effective and provides several benefits. Each free zone has its own independent legal framework, so you’ll need to choose the one that aligns with your business requirements. The advantage of a free zone setup is that expatriates can enjoy 100% ownership of their businesses. Fortunately, Dubai has several IT-oriented free zones, making it easier to select the one that suits your needs.
Ultimately, the decision between Dubai mainland and a free zone will depend on your specific business goals, budget, and ownership preferences.
Top Jurisdictions for Establishing a Software Company
Dubai Silicon Oasis (DSO): DSO is a dream free zone for any tech-savvy enthusiast. The working atmosphere in this free zone makes every employee push harder towards their goals and make this world a better place through their tech solutions. Moreover, you also get a tier 3 data center and high-end infrastructure that facilitates hassle-free company registration in Dubai.
Dubai Techno Park (DTP): another free zone that can become your IT company’s area of establishment is Dubai Techno Park. There are no currency restrictions, and you can enjoy 100% business ownership in the region. Furthermore, several MNCs and world-leaders have their IT installments in DTP, making the area a premier hub for you to start your software company.
Dubai Internet City (DIC): the DIC is a part of the TECOM Group and offers an excellent infrastructure for budding IT companies. The free zone was founded back in 1999, and since that day, the entity aims to develop cutting-edge technological solutions. It’s home to prestigious IT giants like Sony Ericsson, HP, Oracle, Microsoft, and many more.
Dubai Media City(DMC): Dubai Media City caters to the media sector just as the name suggests. Businesses in this sector provide services like graphics design, web development and design, animations, and other creative services.
You can consult with Company Setup Consultants and enjoy a comfortable business establishment in Dubai. You get assistance with location, licensing, documentation, etc., when you collaborate with Company Setup.
How to Open an IT Company in Dubai?
Opening an IT company in Dubai involves several steps, but with proper planning and adherence to the necessary procedures, you can establish your business efficiently. Here is a simplified guide to help you navigate the process:
1. Choose a legal trade name:
Select a trade name for your IT company that complies with government regulations. Ensure it is respectful, non-offensive, and meets the specified criteria. If using a person’s name, use the full name rather than abbreviations or nicknames.
2. Determine the business location:
Understand the different business locations in Dubai and decide whether you want to establish your company in the mainland or within a free zone. Each option offers different advantages and considerations based on your business activities.
3. Complete the required paperwork:
Engage a business advisor or consultant to assist you in fulfilling the legal requirements and document submissions. This includes the reservation of your trade name and obtaining the necessary trading license for your IT company.
Read Also: How to Get a Trade License in Dubai
4. Visa application:
Apply for the necessary visas for yourself, partners, and staff members (if applicable). This typically involves submitting the required documents, undergoing a medical fitness test, and obtaining the official visa stamping. Additionally, open a corporate bank account for your business to manage finances effectively.
By following these steps and seeking professional guidance as needed, you can establish your IT company in Dubai and begin operations with the required legal authorizations.
Documents Required to Open an IT Company in Dubai
To open an IT company in Dubai, you will need to submit several documents to the Department of Economic Development (DED). The required documents typically include:
- Passport copies: Provide passport copies of the owner and partners of the IT firm.
- Entry stamp/UAE visa: Submit a copy of the entry stamp or UAE visa of the company owner and partners.
- Nationalization book: If you have chosen local partners, they will need to provide a copy of their nationalization book.
- No Objection Certificate (NOC): Obtain a No Objection Certificate from the sponsors of the expatriate partners, granting permission for them to establish the IT company.
- Partnership agreement: The agreement of partnership must be signed in front of a notary to validate the partnership arrangement.
These documents are typically required to initiate the company formation process and fulfill the legal obligations for establishing an IT company in Dubai. It’s advisable to consult with a business advisor or legal professional to ensure you have all the necessary documents and meet the specific requirements set by the DED.
Benefits of mainland IT business:
- Freedom to take on any contracts throughout the UAE.
- Freedom to access the global IT market.
- Freedom to diversify the business operations.
- 0% tax on personal and corporate incomes.
- Unlimited growth potential.
Unfortunately, IT businesses that are located in free zones cannot take on government contracts. However, they can do business freely across the free zone and international markets.
Benefits of free zone IT businesses:
- 100% exemption from import and export taxes.
- Do not need to register from the Chamber of Commerce.
- The company formation procedure is shorter and straightforward.
- No restrictions on company size.
Professional license for IT company
Before setting up the business, you must obtain a professional license from the Department of Economic Development in Dubai. The professional license allows you to engage in business activities in the UAE.
There are a few crucial steps for obtaining this professional license. The best course of action is to seek the help of experts who have done this before.
Read Also: How to Get E-Commerce License in Dubai
Here are the documents you need to submit to the Department of Economic Development in Dubai:
- Copies of your passport and your partners’ should you choose to have any.
- The proof of payment of the initial approval fee.
- A copy of your local partner’s naturalization book should you have one.
- A no objection letter from the sponsors of expatriate partners should you have any.
- A security deposit of 20,000 Dirhams each for partners in a professional license.
- A security deposit of 10,000 Dirhams for single investors.
- If the IT company will be a partnership, the partnership agreement needs to be signed in front of a notary.
If you want business setup in Dubai mainland , the registration procedure needs to be completed with the Trade Register in Dubai. If you are setting up business in one of the free zones, then the registration will be completed by the respective free zone authority.
Finally, you need to register for VAT if you want to start an IT company. Once all these are done, mainland licenses are issued by the Dubai Companies Register from 7 to 15 days. Free zone licenses are issued by the respective free zone authority within a few days.
Why open an IT business in Dubai?
If you are looking to start an information technology business in the UAE, it is recommended that you work with company formation professionals. Company setup Consultants have the necessary connections that help make the whole process smooth and effortless. Remember that the process is only easy and hassle-free when the business setup is done without any error.
To Speak with our Experienced Business Consultants for further information and assistance, call us at +971 58 2595164. Send a WhatsApp Message for Chat Query on +971 582595164 or email us at info@companysetup.ae.
