The IT and software sector has recently gained a lot of prominence. Over the last few years company formation in the UAE IT industry has gained prominence. Dubai is home to local IT companies as well as branches of famous international IT companies. The government of Dubai aims to develop the country’s IT and software sectors and so encourages business setup in Dubai.
There are mainly two types of IT companies, service-based and product-based. Service based companies provide expert professional assistance over a range of IT systems such as computer systems, networking programs, and software systems. These companies are usually client based. Product based companies design or create products and applications. The products are then opened to the market and consumers.
Investors thinking of a company set up in Dubai IT sector have two options. They can either open a Mainland company or a free zone company. Both have their own unique advantages.
Mainland Company Formation in UAE
Mainland companies are provided the license to operate by the Department of Economic Development. The benefit of setting up an IT company is that investors are allowed to trade openly within the UAE and internationally as well. This is more advantageous for service based companies who will not be restricted in where or with whom they conduct business. Moreover, Mainland companies are also able to take up government and public contracts. The government of UAE aims to promote the technology and IT industry in the country and so investors on the Mainland can find lucrative deals. Mainland company formation in UAE can also help investors expand and diversify their businesses if they so choose.
The steps to starting a Mainland IT company include:
- Applying for the initial approval
Companies must submit an application with the Department of Economic Development (DED) and obtain an initial approval. In this stage companies can also choose the type of legal entity they wish to establish. A limited liability company, sole proprietorship, or a civil company all are options that investors can consider. In order to get the initial approval companies must pay the initial approval fee and submit a number of documents including;
- Application form
- Business plan
- Passport copies of all the shareholders
- No objection letter (NOC)
- Passport sized photographs of all shareholders
- Register trade name
Companies must then register a unique trade name with the department. The trade name must follow the rules and regulations set by the Department. To register trade names a fee must be paid which is AED 620 for an Arabic name and AED 2000 for foreign name.
- Apply for the license
For business setup in Dubai IT industry companies must apply for the relevant license. Since IT companies operate on academic skill and knowledge they require a professional license. An application for the license must be submitted to the Department along with the required documents and license fee.
Free zone Company
Dubai has a number of free zones that are dedicated towards technological advancement and IT. All of these free zones can make ideal locations. The most popular free zone for company set up in Dubai IT industry is the Silicon Oasis. The free zone not only has favorable laws and regulations but also state of the art infrastructure for IT and technology. Dubai Internet City is part of the TECOM group and provides a range of opportunities to companies wishing to engage in ecommerce and internet technology. Dubai Techno park is famous for technology companies of all kinds. Moreover, free zones provide the opportunity for complete ownership of the company as well as exemption from corporate or income taxes. However, companies established in the free zones cannot conduct business activities outside but for product based IT companies this should not be a problem. Company formation in any of the above free zones is a quick and easy process and involves the following steps;
- Apply for initial approval
Before being allowed to set up a company in the free zone, investors must obtain an initial approval from the free zone authority. During this process investors can also choose the type of legal structure that best suits their needs. Most free zones offer the option of Free Zone Company and free zone establishment.
- Apply for the license
Companies must then apply for the specific license that best suits their company needs. In order to receive the license they must pay the required fee and submit a few documents that include;
- Copy of passport, visa page and Emirates ID
- Application form
- No Objection letter
- Articles of association
- Memorandum of association
Establishing an IT and technology company in the UAE is a good option for investors and can bring a lot of benefits.