Starting a company in another country can feel exciting and overwhelming at the same time. The UAE is one of the most business-friendly places in the world, and many foreign investors choose it for its low taxes, strong economy, and global location. 

If you are thinking about how to start a business in the UAE as a foreigner, you likely want clear steps, real costs, and honest advice. You also want to avoid mistakes that can cost you time and money.

Keep reading to learn exactly how to set up your company in the UAE, what documents you need, how much it costs, and how to stay compliant with VAT and corporate tax.

Can a Foreigner Own a Business in the UAE?

Yes, a foreigner can own a business in the UAE. In many cases, you can have 100 percent ownership without needing a local partner.

The UAE updated its company laws to allow full foreign ownership in most business activities. However, ownership rules depend on whether you choose a mainland or free zone setup.

100 Percent Foreign Ownership Explained

In most sectors, foreigners can now:

• Own 100 percent of a mainland company
• Fully own a free zone company
• Open a branch of a foreign company

Some strategic sectors, such as oil and gas, defense, and certain regulated industries, may still require local participation. Always check your specific business activity before registering.

📌 Also read: Start-Up Companies in the UAE: Business Types, Rules, and Tips

Mainland vs Free Zone: Choosing the Right Setup for How to Start a Business in the UAE as a Foreigner

Choosing the right jurisdiction is one of the most important decisions you will make. It affects your costs, market access, and visa options.

Mainland Company Setup in the UAE

A mainland company allows you to:

• Trade directly within the UAE market
• Work with government contracts
• Open your office anywhere in the emirate

Mainland companies are regulated by the Department of Economic Development in each emirate. Office space is usually required.

Free Zone Company Setup in UAE

Free zones are special business areas created to attract foreign investors. They offer simple setup processes and flexible packages.

Benefits include:

• 100 percent foreign ownership
• Tax benefits
• Easy visa packages
• Flexi desk options instead of a full office space

Free zones are ideal for service providers, online businesses, consultants, and international traders.

📌 Also read: Qualifying Free Zone Person UAE Corporate Tax

Step-by-Step Process: How to Start a Business in UAE as a Foreigner

Understanding the exact steps helps you avoid delays and rejected applications. The process is straightforward if you prepare your documents correctly.

Step 1: Choose Your Business Activity

Your business activity determines:

• The type of license you need
• The approvals required
• Whether you can own 100 percent

Activities fall under commercial, professional, or industrial categories. Make sure your chosen activity matches what you actually plan to do.

Step 2: Select Your Legal Structure

Common legal structures include:

• Limited Liability Company
• Sole Establishment
• Civil Company
• Branch of a foreign company

Each structure has different liability and capital requirements. Most foreigners choose an LLC because it offers flexibility and limited liability.

Step 3: Reserve Your Trade Name

You must register a unique company name. The name must:

• not contain offensive words
• not refer to religious or political terms
• match the business activity

Approval usually takes a few days.

Step 4: Get Initial Government Approval

Authorities will review your application and confirm that you can proceed. This does not mean you are licensed yet, but it allows you to move forward.

Step 5: Secure Office Space

For mainland companies, a physical office is required. Free zones may allow:

• Shared office
• Flexi desk
• Virtual office options

Your tenancy contract must be registered before license issuance.

Step 6: Apply for Trade License

Submit all documents and pay the license fee. Once approved, you will receive your trade license.

This document legally allows you to operate your business in the UAE.

Step 7: Apply for a Residence Visa and Emirates ID

After receiving your license, you can apply for:

• Investor visa
• Emirates ID
• Medical test clearance

This allows you to live and work in the UAE legally.

📌 Also read: Business License in the UAE: Types, Cost, and How to Get One

Can a Non-Resident Open a Business in the UAE?

Yes, a non-resident can open a business in the UAE. Many free zones allow remote company formation.

However, you may need to visit the UAE for:

• Bank account opening
• Visa processing
• Identity verification

Bank compliance checks are strict, so proper documentation is important. Working with experienced accountants can make this smoother.

How Much Does It Cost to Start a Business in the UAE as a Foreigner?

Cost is one of the most searched questions about how to start a business in the UAE as a foreigner. The total expense depends on location, activity, and visa needs.

Mainland Company Costs

Typical expenses include:

• Trade license fees
• Office rent
• Government approvals
• Immigration card
• Visa costs

Costs can range from moderate to high depending on office size and number of visas.

Free Zone Company Costs

Free zones often offer package deals that include:

• License
• Shared office
• One or more visas

These packages are usually more affordable for small business owners.

Ongoing Compliance Costs

After setup, you must consider:

• Corporate tax registration
• VAT registration, if applicable
• Accounting and bookkeeping
• Annual license renewal

This is where many new business owners struggle. Staying compliant with FTA VAT regulations and corporate tax filing is mandatory in the UAE.

Outsource Prime Accountants and Bookkeepers (OPAB) helps businesses across Dubai manage:

• Corporate Tax Filing
• FTA VAT Compliance
• Accounting and bookkeeping
• Zoho Books, QuickBooks and Odoo setup

Having proper accounting from day one prevents fines and supports long-term growth.

Documents Required to Start a Business in UAE as a Foreigner

Preparing your documents in advance speeds up the process. Requirements may vary slightly by emirate.

Common documents include:

• Passport copy
• Visa copy, if applicable
• Passport-size photo
• Entry stamp for non-residents
• No Objection Certificate if employed in the UAE

Some activities may require additional approvals from specific authorities.

Do You Need a Local Sponsor to Start a Business in the UAE?

In most modern setups, you do not need a local sponsor. However, certain regulated activities may still require local participation.

Professional service companies may need a local service agent, but ownership can still remain with the foreign investor. Always confirm your activity classification before finalizing the structure.

UAE Business Taxes for Foreign Entrepreneurs

The UAE is known for being tax-friendly, but it is not completely tax-free. Understanding tax rules is essential for compliance.

Corporate Tax in UAE

• Corporate tax is 0 percent on taxable income up to AED 375,000 and 9 percent on taxable income above AED 375,000
• Registration is mandatory for eligible businesses
• Filing must be done annually

VAT in UAE

• VAT is 5 percent
• Mandatory registration if taxable supplies exceed AED 375,000 annually and voluntary registration applies if revenue
• Quarterly or monthly filing required

Failure to comply with tax regulations can result in administrative penalties. Maintaining proper accounting records is not optional under UAE law.

📌 Also read: How to Avoid Penalties for FTA Corporate Tax Filing?

Opening a Corporate Bank Account in the UAE

Opening a corporate bank account is often the most time-sensitive part of how to start a business in the UAE as a foreigner. Banks in the UAE follow strict compliance and anti-money laundering regulations, so preparation is key.

You will usually need:

• Trade license
• Shareholder documents
• Business plan
• Proof of address
• Visa and Emirates ID, if available
• Source of funds documentation

Banks may ask about your business model, expected transactions, client base, and international transfers. Approval timelines vary depending on the bank and risk assessment.

Keeping clean financial records from day one makes this process much easier. Many business owners work with professional accountants to prepare proper documentation and financial projections before meeting the bank.

How Long Does It Take to Start a Business in the UAE as a Foreigner?

The timeline depends on the type of company and how prepared your documents are. In many cases, it can be done faster than people expect.

Mainland Setup Timeline

• Trade name reservation can take a few days
• Initial approval may take several working days
• Office registration depends on Ejari processing
• Final license issuance follows document approval

On average, mainland setup can take a few weeks if all documents are ready.

Free Zone Setup Timeline

Free zone companies are often quicker. Some authorities can issue a license within several working days once documents are submitted and payment is completed.

Visa processing may take additional time depending on medical tests, Emirates ID biometrics appointment availability, and immigration approvals.

Common Mistakes When Learning How to Start a Business in UAE as a Foreigner

Many foreign investors rush the process and later face compliance issues. Avoiding these mistakes will save money and stress.

Common errors include:

• Choosing the wrong business activity
• Underestimating total setup and renewal costs
• Ignoring VAT registration requirements
• Delaying corporate tax registration
• Not maintaining proper accounting records

The UAE government has become stricter about tax compliance. Fines for late VAT filing, late corporate tax registration, or incorrect submissions can be significant.

Working with experienced accountants such as Outsource Prime Accountants and Bookkeepers (OPAB) ensures:

• Accurate bookkeeping
• On-time VAT returns
• Proper corporate tax filing
• Clear financial reports for better decision-making

This is especially helpful for real estate firms, sports academies, and service-based businesses in Dubai that need reliable accounting systems like Zoho Books, QuickBooks, or Odoo.

Final Checklist for How to Start a Business in the UAE as a Foreigner

Before launching your company, make sure you have completed the following steps:

• Selected the correct business activity
• Chosen mainland or free zone setup
• Reserved and approved your trade name
• Secured office space or flexi desk
• Received your trade license
• Opened a corporate bank account
• Registered for VAT if required
• Registered for corporate tax
• Set up a proper accounting system

Completing this checklist ensures your business is legally ready to operate in the UAE.

Conclusion

Learning how to start a business in the UAE as a foreigner is easier when you understand ownership rules, costs, tax requirements, and compliance steps. The UAE offers strong opportunities for foreign investors, but proper planning and accurate accounting are essential for long-term success.

For more helpful guides and expert support on tax, VAT filing, corporate tax compliance, bookkeeping, and accounting systems, consider working with Outsource Prime Accountants and Bookkeepers (OPAB). 

OPAB provides trusted accounting services in Dubai designed for growing businesses, helping you stay compliant while focusing on building your company. 

Contact the team for tailored accounting and tax solutions that support your business goals in the UAE.

FAQs About How to Start a Business in UAE as a Foreigner

How to start a small business in the UAE as a foreigner?

Start by choosing a low-cost business activity such as consulting or online services. Select a free zone if you want affordable setup packages and full ownership. Register your trade name, obtain your license, and open a bank account. Make sure you understand VAT and corporate tax rules from the beginning.

What is the cheapest business to start in the UAE?

Service-based businesses are usually the cheapest to start. Freelancing, digital marketing, consulting, and e-commerce often require lower setup costs compared to retail or manufacturing. Free zone packages can reduce initial expenses. Ongoing compliance costs should still be considered.

Which business is most profitable in Dubai?

Profitability depends on demand, competition, and your expertise. Real estate, tourism, e-commerce, logistics, and professional services are strong sectors in Dubai. The most profitable business is one that solves a real market need and is managed efficiently. Proper financial planning increases long-term profitability.

Can a nonresident open a business in the UAE?

Yes, a non-resident can open a business in the UAE. Many free zones allow remote registration. However, you may need to visit the UAE for bank account opening and visa processing. Compliance documentation is very important during this stage.

How much does it cost to start a business in the UAE?

Costs vary depending on mainland or free zone setup and number of visas required. Basic free zone setups are generally more affordable for small businesses. Mainland companies may have higher office-related expenses. Always budget for license renewal, VAT compliance if applicable, and corporate tax compliance.