Dubai is the second largest emirate and is known as the capital of the UAE’s economy especially regarding the financial and trading sector. The city has worked to transform itself into a broadly diversified economy and other important sectors include manufacturing, logistics, tourism, hospitality and real estate to name a few.
One of the important factors of setting up a business is deciding on the location hence it’s important to look into which free zone area you would like to be based in. Free zones are economic areas where goods may be received and stored without paying any taxes and have 100% ownership of their business. There are 45 free zone areas in the city however two of the most popular ones are RAKICC (Ras Al Khaimah International Corporate Centre) and DMCC (Dubai Multi Commodities Centre), which we are going to look at in more detail.
DMCC is known as the world’s best free zone and has been achieved with that award for the 7th consecutive year from 2015 to 2021. The free zone is best known for commodities, global trade and the financial sector although there are other types of business in the area too.
RAKICC is one of the few free zone areas where it’s beneficial for companies that need warehouses since you can have your own customisable warehouses and land for development purposes. The free zone is best for manufacturing activities however other activities also contributing to the free zone are commercial, media and e-commerce etc.
Between the DMCC and the RAKICC, which free zone area would be better for me?
Deciding where to ultimately set up your business can be quite a challenge since both free zone areas are attractive options in Dubai so here are some more additional benefits you would have when setting up your company in the chosen free zone area.
What are the basic requirements to set up a company in Dubai?
Although both located in the UAE and having similar set up requirements, there are a few differences in the initial set up requirements for the two free zone areas.
*All of the above can be a natural person or a corporation
Dubai being crypto friendly on company formation
UAE has proven to be crypto friendly and is known to be one of the best markets for cryptocurrency platforms in the world. The crypto developments of last year consisted of the UAE introducing the ‘’Blockchain Strategy 2021’’ (50% of the government transactions were projected to be conducted using blockchain technology) and the Securities and Commodities authority signed a deal with Dubai World Trade Center (DWTC) authority to support the trading of crypto assets in 21st September. The city has also hosted their first Crypto Expo, which soared the crypto assets in the region.
Currently there are more than 400 crypto businesses operating in the UAE and the number is expected to grow to 1000 by the year of 2022, accelerating the goal of becoming one of the world’s digital assets hubs and boosting the digital economy.
Recently the Emirate granted virtual asset licences to Binance, the world’s largest crypto exchange, and FTX Europe, the European affiliate of the Bahamas based cryptocurrency exchange hence allowing the companies to legally operate in Dubai. On 15th March 2022, FTX Europe opened their regional headquarters in Dubai.
Crypto-business company formation in Dubai
In order to start your cryptocurrency company in Dubai, you will need to obtain a trade licence, which falls under the category of ‘’commercial licence’’. The licence will allow you to buy and sell cryptocurrencies developed or distributed ledger technology applications however it doesn’t allow you to act as an exchange or brokerage. Examples of popular cryptocurrencies in the UAE consist of Bitcoin, Dogecoin, Ethereum and Tether.
Currently the three free trade zones which issue cryptocurrency licences are DMCC, Dubai Airport Free Zone Authority (DAFZA) and Abu Dhabi Global Market (ADGM).
The steps for setting up your own crypto business in Dubai is quite easy consisting of just 4 steps:
What services do we offer?
We assist our clients with the whole process of the registration and maintenance of their organisation:
Dubai Company Formation Requirements
Other than the basic requirements we mentioned you will need to set up in Dubai, you will also need a business licence to conduct business activities in both of the free zone areas.
They both offer industrial licences (beneficial for companies engaging in manufacturing and production), commercial licences (beneficial for companies engaging in trading) and service licences (beneficial for companies engaging in providing services such as consultancy and accounting).
An additional licence the DMCC provides is a licence for branch companies, which allows the opening of a branch of an existing business and allowing business activities to be conducted in the free zone area.
All companies must handle tax declarations regularly like accounting, VAT filing and annual renewal etc. The two free zone areas both will need an annual renewal to provide registered address (with limited amount of only 16 hours in the office for DMCC companies), company licences or application of a licence for new business nature and registered agents.
Below are more items that are different, which you will need for the type of free zone you have chosen to base your company in.
*There may be other requirements so please take this information as references
1. How long will it take to set up a business in Dubai?
Business registration in Dubai takes around seven working days when all of the required documents are done. For DMCC companies, it normally takes 10 working days whereas for RAKICC companies, it takes around 3-5 working days.
2. Can an offshore company lease office space in the UAE?
In the UAE, offshore companies are generally prohibited to lease an office space and they would have to use the address provided by their registered agents however in the DMCC, you will have to open up an office within the Jumeirah Lakes Towers (JLT) only.
3. What are the limitations of a Free Zone Company?
There are 4 main disadvantages of a free Zone Company:
Free zone companies may be confident in the business nature of their particular free zone and would be prohibited from expanding into other UAE markets.
Office choices are quite limited since you are only allowed to have in the free zone area so rent can be on the more expensive side and you would have to make sure your business turnover can cover the rent cost to survive
The free zone area may have limitations on the activities and the companies and individuals from the mainland in the UAE may not do business with the free zone company.
Companies may have more difficulties in trading with companies outside of their free zone area and the law prohibits free zone trade with the rest of the country, especially for service providers however this doesn’t apply to international trade.
4. Do I need to have a physical address in Dubai?
Yes, you won’t be able to start or engage in any business activities without a physical address or location in the UAE since you won’t be able to register your business if there isn’t an address provided in the application.
5. Do I have to live in Dubai to set up a business there?
No, you don’t have to be a full time resident in the UAE to own a business here and you may hire a power of attorney to handle your business matters on your behalf
6. Will I need a residence visa in Dubai after the successful company formation?
No, offshore companies are not entitled for resident visas.
7. Are there any business natures that may need additional approval?
Business activities related to education, engineering, construction or communications will require special approval (e.g. business activities relating to Education, you will need approval from Ministry of Education KHDA)
8. Can I carry out business anywhere with a Free Zone company?
Internationally, yes are allowed however if you are planning to deal within the mainland of the UAE then you could get the support of a mainland registered company or else you will need to set up a company in the mainland
9. What are the necessary rules when I name my company for each of the free zone areas?
You may choose any name however the DMCC authorities and Dubai Economic Department Approvals must be approve it via the registration process whereas RAKICC businesses must use the suffix Limited or Ltd. to indicate limited liability
10. What are necessary rules when I name my company in the RAKICC free zone?
RAKICC businesses must use the suffix Limited or Ltd. to indicate limited liability
11. I would like to open a crypto business in Dubai however I would like to know what are the city’s latest developments regarding the industry so far?
The first legal development, regarding Crypto business, goes back to December last year where the Dubai Media Office mentioned that the Dubai World Trade Centre would officially become a crypto zone so all companies operating cryptocurrencies and virtual assets can operate in the city. The city’s media office gave out a statement that established ‘’rigorous standards’’ for investor protection and anti-money laundering.
On 28th February 2022, Law No.4 was enacted on the Regulation of Virtual Assets (VAL) and established the Dubai Virtual Assets Regulatory Authority (VARA). This law being established would help the city encourage more businesses related to virtual assets, including crypto assets and NFTs, as well as make new developments for Dubai to become one of the leading jurisdictions for entrepreneurs and investors of blockchain technology.
The Dubai International Finance Centre (DIFC) has its own regulatory framework for virtual assets under the jurisdiction of Dubai Financial Services Authority since the VAL has excluded activities related to virtual assets in DIFC from its scope of application.
On 9th March 2022, the city adopted their first law that’s meant to regulate the activities of cryptocurrencies and digital assets like non-fungible tokens (NFTs). This was also confirmed by Sheikh Mohammed Bin Rashid Al Maktoum, the prime minister of the UAE via his public statement that states ‘’Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the UAE’s position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors’’.
12. What are the near future plans Dubai has regarding cryptocurrencies?
The UAE aims to establish a Dubai Virtual Assets Regulatory Authority (VARA), which would be regulating the assets and is supposed to be an independent authority under the Dubai World Trade Centre Authority, which will oversee the regulation, governance, and licensing of cryptocurrencies, NFTs, and other virtual assets. The new law would also prohibit anyone from engaging in crypto-related activities without the VARA’s authorisation.