Dubai, known for its dynamic business environment, offers numerous opportunities for Indian businesses looking to expand internationally. Setting up an Indian subsidiary company in Dubai can be a strategic move to tap into the thriving Middle Eastern market. This guide provides a clear, step-by-step process for establishing your subsidiary, ensuring you comply with local regulations and make the most of Dubai’s business-friendly ecosystem.
Understand the Basics
What is a Subsidiary Company?
A subsidiary company is a business entity controlled by another company, known as the parent company. In this context, your Indian business would be the parent company, and the Dubai-based entity would be the subsidiary. This structure allows your Indian company to maintain ownership while operating in Dubai’s market.
Why Dubai?
Dubai’s strategic location, robust infrastructure, and favorable tax regime make it an attractive destination for international businesses. The city’s free zones and well-established legal framework also contribute to a smooth business setup process.
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Determine Your Business Structure
Choose the Type of Subsidiary
In Dubai, you can establish a subsidiary as either a Free Zone Company or an Onshore Company.
- Free Zone Company: Located in one of Dubai’s numerous free zones, this option offers benefits like full ownership, tax exemptions, and simplified procedures. However, it restricts you to operating within the free zone or internationally.
- Onshore Company: This type of subsidiary can operate throughout Dubai and the UAE. Recent reforms have allowed 100% foreign ownership in certain sectors, but it requires a local sponsor or partner for compliance.
Select a Business Activity
Identify the specific business activity your subsidiary will engage in. Dubai’s Department of Economic Development (DED) requires a clear description of your business activities to issue a license.
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Prepare Required Documentation
Documentation for Free Zone Company
- Application Form: Available from the respective free zone authority.
- Passport Copies: For all shareholders and managers.
- Proof of Address: For all shareholders.
- Business Plan: Outlining your objectives and operational plans.
Documentation for Onshore Company
- Local Sponsor Agreement: A UAE national who will act as a local partner.
- Memorandum of Association (MOA): Drafted with the help of a legal expert.
- Trade Name Reservation: Approved by the DED.
- Lease Agreement: For your office space.
Choose a Business Name
Your company name must adhere to Dubai’s naming conventions. It should not be offensive, include any religious references, or infringe on existing trademarks. Ensure the name is available and reserve it through the DED or free zone authority.
Register Your Business
For Free Zone Company
- Submit Application: Complete the necessary forms and submit them to the free zone authority.
- Pay Fees: Fees vary depending on the free zone and the size of your business.
- Obtain License: Receive your business license and any additional permits required for your specific activity.
For Onshore Company
- Submit Documents: Provide all required documents to the DED.
- Sign Agreements: Complete agreements with your local sponsor and finalize the MOA.
- Get Approvals: Obtain approvals from relevant government departments.
- Receive License: Once approved, you’ll get your trade license and can proceed with other formalities.
Open a Bank Account
Open a corporate bank account in Dubai. You’ll need to provide your business license, MOA, and other required documents. Choose a bank that offers services suited to your business needs and provides support for international transactions.
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Arrange for Office Space
Free Zone Office
Most free zones provide ready-to-use office spaces, which can be rented on a flexible basis. This option often includes various amenities and support services.
Onshore Office
For onshore companies, you’ll need to lease office space that complies with Dubai’s regulations. This lease must be in the name of your company and will be required for license issuance.
Hire Employees
If you plan to employ staff, ensure compliance with UAE labor laws. This includes obtaining work visas, setting up payroll systems, and adhering to labor regulations. You can use local recruitment agencies to find qualified candidates.
Comply with Taxation and Accounting
Understand Tax Obligations
Dubai offers a favorable tax regime with no corporate or personal income tax, but you must comply with VAT regulations if your business’s taxable supplies exceed a certain threshold. Keep abreast of any modifications to tax legislation.
Maintain Accounting Records
Proper accounting is crucial. Ensure that your subsidiary maintains accurate financial records and complies with local regulations. You may need to hire a local accountant or accounting firm to manage this aspect.
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Ensure Compliance with Local Regulations
Regular Updates
Stay informed about any modifications to local laws that could have an impact on your company. This includes business registration renewals, changes in visa regulations, and compliance with industry-specific standards.
Engage Local Advisors
Consider engaging business consultants or legal advisors to navigate the regulatory landscape efficiently and ensure all compliance requirements are met.
Call +971 4 240 6939 for Setting up a Company in Dubai
Setting up an Indian subsidiary in Dubai offers significant business opportunities due to the city’s favorable business environment and strategic location. By following this guide, you can navigate the setup process smoothly and position your business for success in the Middle Eastern market. Ensure that you stay informed about local regulations and seek professional advice to optimize your subsidiary’s operations and compliance.