Team Dubai F1 - as it hopes to be known - has said it will set up an entirely new squad as opposed to buying an existing team, reports formula1.com.
It has already entered negotiations with McLaren and Mercedes regarding engine supply and other technical support.
The team plans to have a manufacturing base in England, but carry out longer-term development in Dubai. Work is due to start there next year on a wind tunnel and technical facility.
"Dubai is committed to developing and supporting world-class expertise in carefully-targeted high-technology industries," said Sheikh Ahmed bin Saeed Al Maktoum, a key backer of the team and president of Dubai Civil Aviation.
"Formula One, with its focus on technological and engineering innovation, provides us the perfect environment in which to develop and demonstrate our skills in these cutting edge areas."
Further details of the proposed team are expected to be revealed in November.
There are now 10 teams competing in Formula One racing, with one, Jaguar, currently seeking a new owner. The present regulations allow for up to 12 teams, each running two cars.
