How To Start A Business In UAE: Step by Step Guide to Company Formation
There are countless reasons to opt for establishing or expanding your business in the UAE. The United Arab Emirates continues to hold its position as the premier business destination in the Middle East.
- 100% Foreign Ownership
- Easy Business Setup
- World-Class Infrastructure
- Unlimited Potential
Starting a Business in the UAE or on a global scale is a significant decision that requires careful planning, thorough research, budgeting, and effective decision-making. It is imperative to seek guidance on selecting the appropriate trade license, particularly for new entrepreneurs. Explore the essential steps involved in establishing a business in the UAE. The United Arab Emirates, renowned as a preferred destination for investors, offers an investor-friendly environment, favorable tax policies, and business-friendly practices, solidifying its status as a business hub in the Middle East. The supportive rules and regulations implemented by the government further incentivize and support business owners.
Why Business Setup in UAE ?
The United Arab Emirates provides a supportive business environment, witnessing the launch of over 20,000 new businesses last year. Notably, a significant portion of these ventures was initiated by overseas entrepreneurs, considering that 80% to 90% of the UAE workforce comprises foreign nationals.
The outlook is promising, with the IMF projecting the UAE to lead Gulf economic growth at 2.5%, surpassing Saudi Arabia's forecasted 0.4%. If the prospect of starting a business in the UAE intrigues you, rest assured – the process doesn't have to be complicated.
Benefits of Establishing a Business in United Arab Emirates
Benefits of UAE Business Setup in Offshore
- The option to appoint a non-UAE, UAE, or corporate resident as a director or shareholder provides a high degree of flexibility, eliminating the necessity for a physical office in the UAE.
- The flexibility to maintain deposits and bank accounts either in the UAE or globally is a key feature for offshore entities.
- Offshore companies benefit from robust asset protection jurisdictions, offering investors a reliable and secure platform.
- The Double Taxation Avoidance Agreement (DTAA) enables taxpayers to avoid paying taxes in two countries—the source country and the residence country.
- Lawsuit protection in the formation of an offshore company safeguards your assets in the event of a legal judgment.
Benefits of UAE Business Setup in Mainland,
- Registering as a mainland company in the United Arab Emirates grants you the freedom to engage in trade without restrictions on partners or locations within the UAE.
- UAE mainland registration empowers your business to participate in international trade.
- The flexibility to expand your company and team comes with UAE mainland registration, allowing you to apply for unlimited visas and extend your business presence to various regions of the United Arab Emirates.
- With a UAE mainland license, you gain the capability to diversify your offerings, and the administrative process becomes smoother, faster, and less restrictive.
- Another potentially appealing aspect of mainland registration in the UAE is the opportunity to tender bids for lucrative government contracts.
Advantages of Establishing a Business in UAE Free Zones
- Full ownership by foreign nationals with no requirement for a local sponsor.
- Exemption from personal income tax.
- Minimal start-up and operational costs.
- Accelerated licensing and business setup processes are possible when applying for a Free Zone license.
Registration Process for a Company Formation in UAE
Establishing a Business in United Arab Emirates involves several steps:
Embark on the journey of opening a business in UAE by partnering with Smart Zones® UAE. Our adept company formation specialists will guide you through the business license application and setup process, liaising with relevant government and municipal authorities on your behalf.
When selecting a business activity for your entrepreneurial venture, it is essential to evaluate the practicality of the chosen activity within the context of the UAE market. Prior to establishing a company in the UAE, conduct comprehensive research on the feasibility and profitability of the chosen activity. Subsequently, identify the optimal time to commence your business in the United Arab Emirates.
The UAE market is divided into distinct economic zones – Mainland, Free Zone, and Offshore, commonly referred to as jurisdictions. Each jurisdiction is governed by its unique set of laws and regulations tailored for business setup, addressing diverse business needs. The choice of a jurisdiction for your business is contingent upon your specific business requirements and the nature of your chosen business activity.
Choosing the legal structure for your company is a pivotal decision when initiating a business in the UAE. This decision establishes the framework for handling profits and losses, as well as organizing resources and assets. It is crucial to determine the legal form or structure for your company during the initial planning stages, as it serves as a blueprint for your business. The application for business licenses is contingent upon finalizing the company's legal form. Here are various legal forms or company structures under which you can register your business in the UAE:
- Limited liability company (LLC)
- Sole establishment
- Civil company
- Local company branch
- GCC company branch
- Foreign company branch
- Free zone company branch
- Holding company
Prior to commencing the company setup process in the UAE, it is imperative that the Department of Economic Development (DED) approves the trade name for your company. During this stage, both your company name and the chosen business activity undergo thorough scrutiny for approval. Once these approvals are obtained, proceed to submit the requisite documents to apply for your UAE trade license, thereby initiating the process of establishing a company in the United Arab Emirates.
There are four types of trade licenses in the UAE, also referred to as business licenses, for you to consider:
- Commercial License
- Professional License
- Industrial License
- Tourism License
When planning to initiate a business in the UAE mainland, you have the option to apply for any of these trade licenses. However, it's essential to note that the licensing structure in UAE free zones varies and is contingent on your company's chosen business activity.
The registration and licensing of the company take place concurrently, although the comprehensive documentation and approval process advances through distinct stages. During this phase, secure all necessary approvals from pertinent government authorities as stipulated by the Department of Economic Development. It is crucial to note that the requisite documents may differ based on the company type and chosen business activity.
In the past, establishing a business in the UAE necessitated securing a local partner. The local partner or agent must be a UAE national. While identifying a reliable local agent may pose challenges, a business setup consultant can facilitate connections with companies that provide corporate sponsorship. This arrangement enables you to have documented authority and full ownership of your business, eliminating the need for a local partner.
The Department of Economic Development (DED) may necessitate additional approvals from various government or non-government entities, contingent upon your business activity. For instance, certain businesses may require approvals from the municipality, specific banks, embassies, and other relevant authorities.
Comprehending the intricacies of a Memorandum of Association (MoA) is essential when embarking on a business venture in the United Arab Emirates. Prior to drafting the MoA, it is advisable to seek expert advice. The MoA should align with the mandates of the UAE government and carefully reflect your business interests before commencing the establishment of a company in the UAE.
Tailor your choice of workspace to meet your business requirements, whether it be renting an office unit or opting for a shared workspace in a business center. It's worth noting that the chosen office space can also influence the number of visas you are eligible to request from the Department of Economic Development (DED).
As you commence your business in the UAE, acquiring an ejari may be necessary. This tenancy contract serves as the agreement between you and the real estate agency for the office unit or shared workspace you plan to rent. Governed by the Real Estate Regulatory Agency (RERA), ejari ensures fairness and transparency in the leasing process. Activation of your Ejari account requires the submission of your tenancy contract and additional documents, a crucial step for obtaining or renewing visas for family members and/or employees.
Prior to obtaining your business license for commencing operations in the United Arab Emirates, secure initial approval from the Department of Economic Development (DED). This approval signifies that the UAE government has no objections to your business establishment in the country. Without this approval, progression to the subsequent steps in the application process is not possible.
For the acquisition of your UAE trade license, kindly submit the following documentation:
- Memorandum of Association (MoA)
- Trade license application
- Relevant government forms
- Trade name reservation certificate
- Initial approval certificate
- External approvals (if any)
- Tenancy contract
- Ejari registration certificate
- Passport copies of partners
- NOC for partners (if any)
- Any other requirements stipulated by the Department of Economic Development (DED) (if applicable)
Conclude the procedure by initiating the setup of your corporate bank account for your UAE business through Smart Zones® UAE. This ultimate step marks the pathway for the successful establishment of your business.
Keep in mind that the procedure may differ based on your selected jurisdiction and business activities. It is highly advisable to seek guidance from legal and business experts well-versed in the business setup landscape of the UAE.
Looking for a seamless business setup experience? Trust Smart Zones® Dubai to pave the way.
Documents Required to Start a Business in United Arab Emirates
Companies established within free zones adhere to the regulations of their respective free zones. Consequently, the documentation required will vary based on the specific free zone to which you submit your application. The necessary documentation may include:
- Completed application form
- Business plan
- Copy of the current trade license/registration certificate (if applicable for local companies)
- Colored passport copies of the company’s shareholder/s and the designated Manager/Director for the new company
- Specimen signature of the company’s shareholder/s and the appointed Manager/Director for the new company
- Two years’ audited financial reports for corporate entities or a certificate of reference from the personal bank of the individual shareholder
- No Objection Certificate (NOC) from the current sponsor (for individuals)
Submission of incorrect documents can result in immediate rejection. Our consultants at Smart Zones® UAE ensure that you have the correct documents, preventing any complications in the process.
Cost of Establishing a Company in the United Arab Emirates
While various factors come into play, you can expect a trade license to be priced in the range of AED 15,000 to AED 25,000. However, this figure is more of an approximate estimate. The costs for establishing a company in the UAE vary depending on factors such as the chosen location, whether premises are acquired, the size of the workforce, and various other considerations. You can contact Smart Zones® UAE.
For example, the expenses associated with company formation in UAE's free zones are often considerably lower compared to establishing a presence in the mainland. Similarly, if you decide to utilize a co-working space instead of securing a permanent office, your setup costs are likely to be reduced.
Establishing a business in UAE Free Zones involves a series of steps. Begin by choosing your business activity, followed by finding a suitable Free Zone. Select a unique company name, organize your required documents, and proceed with the application. The final step includes opening your corporate bank account.
In most free zones, a single license allows the operation of two activities.
A single license in UAE Mainland permits the management of up to 10 activities. However, it is crucial to align these activities with the standards set by the Department of Economic Development (DED).
The cost of setting up a business in the UAE varies between free zones and Mainland. Additionally, the total cost is influenced by factors such as the chosen business activity and location. Providing a precise estimation is challenging due to these variables.
Setting up a business in UAE free zones typically takes about 3 to 10 days. However, the timeline may vary based on the completeness and attestation of legal documents. If undertaken without proper consultation, the process might extend to several weeks due to the time-consuming nature of legal procedures.
The Mainland of UAE offers various potential jurisdictions for new company setups. Some noteworthy locations include Sheikh Zayed Road, Business Bay, Deira, Al Qusais, Al Quoz, among others.
Issuing a Trade License in the UAE requires crucial information such as business category and activity, nationality and number of business owners, trade name, and other details specified in the application form. Additionally, the submission of conditional documents, including certifications and the Memorandum of Association, is necessary.
Offshore Company Formations in the UAE have certain limitations, including the inability to issue residency visas, restrictions on trading within the UAE, and the incapacity to lease or rent a local premise.
Yes, an Offshore Company can open a bank account in the UAE. However, the company owner must physically visit the UAE to complete the required paperwork with the bank. The bank evaluates the business activity, company profile, and makes a decision accordingly.
PRO services are imperative for companies in the UAE, irrespective of their size. These services facilitate the submission of legal documents to various government authorities, ensuring the necessary clearances for the seamless operation of the business.
Want to know more, talk to Smart Zones® Dubai advisory team they will be happy to help. Ready to invest in your future?
