Setting Up a Business in Dubai as an Indian Founder: What to Decide First

Search for "how to set up a business in Dubai" and you will find hundreds of service providers promising a licence in days. They are not wrong about the speed. Dubai has made incorporation remarkably efficient.

But in my view, speed is exactly why many Indian founders make expensive early mistakes. The licence is the last step of a set of decisions, not the first. Here is how I would think about those decisions, in order.

1. Define your licensed activity precisely

Every UAE company is licensed for specific activities. That list determines what you can legally do, which authority regulates you, whether you need additional approvals, and sometimes whether full foreign ownership is available.

Write down, in plain language, what the company will actually do: trade goods, provide consulting, develop software, run e-commerce, offer financial services. Then map it to the activity lists of the relevant authority. If your business spans several activities, check whether they can sit on one licence.

Why it matters: an activity that does not match your real business can cause problems with banks, customers, tax treatment and visas later.

2. Choose your jurisdiction: free zone or mainland

The second decision is where the company will be licensed.

• Free zones are designated economic zones with their own authorities and rules. Many are built around sectors: media, technology, commodities, logistics, finance.
• Mainland companies are licensed by the emirate's economic department and can generally trade directly across the local market.

Since 1 June 2021, the UAE has permitted 100% foreign ownership of most mainland companies, with exceptions for activities of strategic impact. Dubai's economic department said at the time that more than 1,000 commercial and industrial activities were open to full foreign ownership.

The right answer depends on who your customers are and where you will operate. I go through the trade-offs in Dubai free zone vs mainland.

3. Decide who owns the company, and how money moves from India

This is the step Indian founders most often leave too late.

If you are an Indian resident, sending money abroad to start or acquire a foreign company is regulated under India's foreign exchange rules. The RBI's overseas investment framework sets out separate routes for Indian companies and for resident individuals, with different limits, reporting and restrictions.

Questions to settle with an Indian adviser before you remit anything:

• Should the Indian company own the UAE entity, or should founders hold it personally?
• What reporting is required, and by when?
• How will profits, dividends or service fees flow back to India?
• How will transfer pricing between related entities be documented?

I summarise the framework in ODI rules for an Indian company opening a UAE subsidiary.

4. Plan banking early

Opening a corporate bank account in the UAE can take longer than incorporation. Banks apply thorough know-your-customer checks, and they will want to understand your business model, source of funds, expected transactions and substance in the country.

Prepare a clear business profile, ownership chart, contracts or letters of intent, and evidence of the founders' background. A coherent public footprint helps here too.

5. Understand the tax position

The UAE is no longer a "no tax" jurisdiction for businesses. Federal corporate tax applies to financial years starting on or after 1 June 2023. According to the Federal Tax Authority, the standard rates are:

• 0% on taxable income up to AED 375,000
• 9% on taxable income above that

Qualifying free zone companies can benefit from 0% on qualifying income, but only if they meet specific conditions. VAT at 5% applies once taxable supplies cross the registration threshold. On top of this, Indian tax rules may apply to the founders and to the Indian parent.

More detail is in UAE corporate tax basics for Indian founders. This is an area for professional advice, not for guesswork.

6. Plan visas and people

A UAE company can usually sponsor residence visas for owners and employees, subject to its licence and premises. If you plan to relocate, consider:

• residence visa for yourself and family
• health insurance obligations
• employment contracts under UAE labour law
• longer-term options such as the Golden Visa for entrepreneurs, which has its own criteria

7. Build substance, not just a registration

A company that exists only on paper is increasingly a liability. Banks, tax authorities and serious customers look for real activity: people, decision-making, contracts and premises consistent with the business. Plan the minimum genuine presence the business needs and build from there.

A decision sequence you can use

1. Activity defined in plain language.
2. Customer and operating location identified.
3. Jurisdiction chosen (free zone or mainland).
4. Ownership route and Indian compliance agreed with advisers.
5. Banking pack prepared.
6. Tax position understood in both countries.
7. Visa and people plan made.
8. Only then: apply for the licence.

My view

Dubai's efficiency is real, and it is one of the reasons the city has become such a strong base for Indian entrepreneurs. But efficient incorporation can hide the decisions that actually determine whether the company works. Founders who settle those decisions first tend to spend less, move faster later and avoid painful restructurings.

For a wider view of the expansion journey, see how Indian startups can expand to the UAE. If you want to discuss a specific situation, you can reach out here.

This article reflects my personal views and is general information, not legal, tax or investment advice. Requirements change and vary by authority; check official sources and take qualified advice in both India and the UAE.