Setting Up a Business in DMCC

Globalisation is characterised by the free movement of capital across countries. But why does capital need to move?

It is almost like capital has a mind of its own. It tries to find opportunities where it can achieve the highest returns, which often means moving across borders to areas where resources are more abundant, labour is more cost-effective, or markets are expanding rapidly. This movement allows for more efficient allocation of resources, increased profits, and the fostering of economic growth in regions that may have otherwise remained underdeveloped. However, moving capital through setting up a business can be extremely expensive for investors, especially in the short term. And that’s exactly where the Special Economic Zones (SEZs) become important. Special Economic Zones (SEZs) create favourable conditions for investments to travel across geographical borders.

The UAE has been able to use these SEZs more effectively than most other countries to attract investments. In 2023, six out of the top ten free zones in the world were located in the UAE, making setting up a business in these free zones particularly appealing to investors. These free zones have helped establish the UAE as a hub for international trade, with the UAE’s foreign trade reaching almost 1.4 trillion AED just in the first half of 2024, along with a 25% growth in non-oil exports. Dubai has more than 20 free zones that offer companies 100% ownership of their businesses with 100% repatriation of profits. The free zones also provide exemptions from all import and export duties within the zone, with companies allowed to trade within the free zone and internationally.

In this blog, we will focus on the crown jewel of Dubai’s free zones, the Dubai Multi Commodities Centre (DMCC). We will discuss the importance of DMCC for companies and the process of setting up a business in DMCC.

The Financial Times is a globally recognised business and financial newspaper, headquartered in London. Its fDi Intelligence, which specialises in foreign direct investment, awards “Global Free Zones of the Year” annually. The UAE’s DMCC has been named the top free zone by fDi Intelligence for nine consecutive years, making it the “world’s leading SEZ.” Hence, setting up a business in DMCC is both prestigious for investors and helps companies tap into unparallelled growth opportunities that the free zone provides for them.

DMCC has over 24,000 companies employing more than 80,000 people across its various facilities. The DMCC offers a unique environment for business expansion in Dubai, with specialised facilities and “ecosystems” that cater to various sectors, including precious metals and stones, commodities, and technology. These specialised ecosystems help bring businesses and stakeholders into collaborative partnerships both within and across borders. It also offers unique spaces such as the DMCC Crypto Centre, which provides a world-class, purpose-built environment for businesses in the crypto, blockchain, and Web3 spaces, offering regulatory advice, access to capital, and mentorship. DMCC is also considered a qualified free zone under UAE Corporate Tax Law, the benefits of which we shall discuss later in the blog.

The world-class infrastructure and support systems provided by DMCC have made it one of the most attractive destinations for investors to set up a business in DMCC. This is evident in the increasing number of companies registered in DMCC each year. In 2010, there were 2,676 registered companies in DMCC. By 2023, this number had grown to 24,153, an increase of over 800%!

^{Source: DMCC Annual Report, 2023}

Follow AKW Consultants on WhatsApp Channels for the latest updates.

Businesses in the DMCC are regulated by the DMCCA Company Regulations, 2020. The regulations recognise two types of entities: companies and branches. Companies have legal personalities and have rights and responsibilities separate from their shareholders, with shareholders’ liability limited to the unpaid amount on their shares. A company may have one of the four different kinds of licences depending upon the business activities they are involved in. While setting up a business in DMCC, investors may apply for licences based on hundreds of approved business activities. The four types of business licences include:

a) Trading Licence: Involves buying and selling goods and may cover companies involved in export/import

b) Industrial Licence: For businesses engaged in manufacturing activities, such as gold or precious metals manufacturing

c) Service Licence: Primarily for service providers, such as medical services, repair services, etc

d) Dual Licence with the Department of Economy and Tourism (DET): Allows a company operating in DMCC to extend its presence and carry out some business activities in the mainland Dubai

Setting up a business in DMCC entails a three-step process:

1. Pre-approval
2. Registration
3. Licencing

For the first step, a company needs to select a name, which must immediately be followed by the suffix “DMCC,” as required by Article 6 of the DMCCA Company Regulations, 2020. During the pre-approval phase information on the shareholder, share value, share structure, and business activities needs to be provided to the Registrar along with the following documents:

1. Electronic Signature Undertaking document signed by each shareholder/officer
2. HR Signatory Appointment Letter signed by shareholders
3. Passport Visa page and Emirates ID of Consultant/POA/Shareholder/ Director/Manager/Secretary
4. Proof of residential address in the country of residence of shareholder/officer
5. Consultant’s Appointment Letter (mandatory only if a consultant
6. Power of Attorney (Optional)
7. Parent Company Documents (for subsidiaries)

After pre-approval is received, certain other documents and details need to be submitted, including the Articles of Association (AOA) and Shareholders’ Resolution for registering the company. It is important to note that DMCC offers a Standard Articles template that a company may choose to adopt during their registration process.

Once registration is completed, the DMCC issues a provisional approval letter and an introduction bank letter, among other documents, for a company to open a corporate bank account in the DMCC. On the final submission of some other documents related to property, either owned or leased, a licence to conduct business in DMCC is issued by the authority. It is important to note that business operations can be conducted in and from DMCC only if a company has a Certificate of Registration (for a company) or a Certificate of Establishment (for a branch), and a licence.

The DMCCA Company Regulations also detail the Officers Rules, the rules with which Directors, Secretaries and Managers of a DMCC entity must comply. 

The corporate tax rates for businesses operating in the UAE are the following:

Corporate Tax in the UAE	0% on taxable income up to AED 375,000
	9% on taxable income above AED 375,000
	0% for qualifying income of “Qualifying Free Zone Persons (QFZP)”
	9% for non-qualifying income of “Qualifying Free Zone Persons (QFZP)”

^{Source: Corporate Tax Guide for Free Zone Persons}

Setting up a business in DMCC allows one to benefit from a 0% corporate tax rate. DMCC is a qualified free zone under the UAE Corporate Tax Law. Hence, the corporate tax rate on the qualifying income of “Qualifying Free Zone Persons” is 0%. More information on availing the 0% Corporate Tax benefit on the qualifying income of a Qualifying Free Zone Person can be found in one of our previous blogs here.

Setting up a business in DMCC offers unparallelled growth opportunities, which have been a major point of attraction for investors worldwide. As the world’s leading free zone for nine consecutive years, DMCC has been an important contributor towards Dubai’s growth story, presently accounting for over 15% of Dubai’s FDI and 7% of its GDP. Collaborative opportunities, along with great infrastructural and operational support as well as tax advantages provide a strong incentive to investors for setting up a business in DMCC, especially in sectors such as precious metals, commodities, and technology.

The structured regulatory framework, coupled with the flexibility in business licences—especially the introduction of dual licencing—makes DMCC an ideal place for setting up a business. To fully utilise these benefits and grow in the process, ensuring compliance with regulatory requirements during business set-up is essential. Expert consultants can offer invaluable assistance in this journey, ensuring that businesses adhere to DMCC’s specific guidelines, do not miss any essential details, and maintain proper documentation for the future.

Discover how AKW Consultants can streamline the process of setting up your company in DMCC into a hassle-free experience. With our expertise in DMCC’s regulatory requirements and in-depth knowledge of its multiple business ecosystems, we can strategically align your business activities with the specific support structures provided by DMCC and help achieve your business objectives.