Step by Step Process Guide to Set Up Your Business in UAE

The United Arab Emirates is one of the largest global business hubs in the world. A naturally resource-rich region, the UAE has long strived to distance itself from a reliance on oil as their main economic driver, choosing instead to shift to tourism and commerce as a way to make up the difference. This has been a fruitful endeavor that has brought the Emirates to the forefront of national attention.

The UAE has developed its economy by introducing extensive tax and business incentives and flexible immigration policies that draw thousands of foreign investors to the region. This has invigorated the market, transforming the area into one of the biggest economic markets on the planet. As part of this push, the business setup in UAE has been highly streamlined to make handling business a straightforward endeavor.

If you want to start a company or plan to expand your business in the UAE, our experts will help you out with each and every step of the set-up process for your business. Our business formation process is quick, simple, and easy.

Why Start Your Business in the Emirates?

There are many reasons forming a business in the UAE could be a fantastic business decision. Between the booming market and a rich multi-cultural environment, an abundance of opportunity awaits. Here, you’ll have access to:

1. A Flourishing Economy

Even with the adverse economic effects of the pandemic, the UAE market continues to push forward. Your business will become part of an expanding, stable economy that will remain steady even when faced with economic uncertainty.

2. Legal Framework

The UAE has placed a heavy focus on developing business opportunities in the region. Therefore, they have designed their legal structures to allow foreign investors to conduct business more efficiently. This structure has little to no paperwork, a simple licensing procedure, and minimal red tape.

3. Infrastructure

The regional government has invested ample time and energy into developing its infrastructure by crafting a world-class transportation system, office spaces, and internet connectivity.

4. Manpower Availability

The UAE is home to a large population of skilled workers from all over the world. This gives business owners the power to quickly find a talented workforce to help run their business. With low taxes and high wages, the Emirates is a favorable environment for new companies.

5. Relaxed Taxation

A big issue for foreign investors opening a new business is having a thorough grasp of another nation’s business and tax laws. The Emirates offers various business ownership packages, including those from the free zones that feature 100% tax exemptions. This allows investors to keep their initial capital and profits without having to pay the local government. This is a lucrative opportunity for bourgeoning business enterprises hoping to streamline their profit margins.

6. Ranked Globally

The Emirati business environment is ranked as the 26th most favorable in all of the Gulf Cooperation Council (GCC), ahead of many European nations like France and even the Netherlands. This presents an accurate assessment of the UAE business market and the type of opportunities therein.

7. Exciting Business Opportunities Thanks to Dubai’s 2020 Expo

The world expo 2020, set for October of this year, is predicted to bring in nearly 25 million investors and businesses to the region. This provides a ton of networking possibilities and business opportunities. Businesses centered in real estate, tourism, and hospitality will also see a massive influx of business throughout the event. Many companies will benefit from foot traffic alone.

8. Robust Healthcare and Education

The UAE prides itself on having a robust and effective healthcare system. This sector is ripe with opportunities for doctors, nurses, and healthcare providers. Additionally, the Emirates emphasizes the development of education sectors, with many well-known institutions like MIT and NYU already present.

9. Strategic Geographic Location

The Emirates finds itself in a prosperous geographic location, situated between three major continents and located just a short flight away from a considerable portion of the world. This allows efficient trade and easy travel to and from the region for foreign investors.

Business Setup in the UAE: Mainland, Free Zone, and Offshore

Forming a company in the Emirates offers many incentives, including a hardy infrastructure and a favorable business environment. Combined with flexible regulations, substantial tax benefits, and a streamlined application process, forming a business in the region is easy and profitable for any investor. Let’s discuss the formation of companies in different sectors of the UAE:

1. Mainland Company Formation

Forming a company in the mainland is a fantastic way to sell your products or services within the Emirates. The easy application process, abundant office spaces, and relaxed immigration regulations make it a lucrative area to conduct business. 

2. Free Zone Company Formation

The free zones have become an incredibly popular sector due to their relaxed ownership regulations. Investors can own 100% of a business and are allowed full repatriation of profits and capital.

3. Offshore Company Formation

An offshore company is an enterprise that is owned by individuals that are non-residents of the UAE. This company may not occupy office space within the UAE and is usually used to minimize the various taxes for which a company is responsible. This business sector offers complete confidentiality and protection for financial transactions.

Setting-up a Company in the UAE

The process of company setup in the UAE is a big step, but it has been streamlined to provide an easy, relaxed procedure for applicants. However, you will need to carefully plan and research your business sector, the product, and the market surrounding it. Once you’ve covered that, the application process is a breeze. You will need to:

1. Select a Business Activity

The business activity you choose will largely dictate the sector where you’ll be operating. There are many different options to choose from, including manufacturing and service industries. Again, you will want to carefully investigate which sector offers the best incentives and market for your new enterprise.

2. Select Your Jurisdiction

As mentioned earlier, your business activity will play a significant part in where you found your company. The UAE is divided into numerous economic zones with its own set of laws, regulations, and policies regarding business formation. Therefore you’ll need a clear idea of your business requirements and the laws of the particular jurisdiction you choose.

3. Choose Your Legal Structure

The legal structure of your business will dictate exactly how it operates and how profits, losses, and assets are handled. Investors will want to decide their legal form early in the process to help choose the most suitable overall company layout. Some of the legal forms companies can structure themselves under are:

• Limited Liability Companies (LLC)

• Sole establishments

• Local branches for a larger legal entity

• Civil companies

• GCC company branches

• Foreign company branches

• Holding companies

• Free zone companies

4. Receive Company Name Approval

Once you’ve decided on your product, the market it will enter, and the best legal form for it, you’ll need to choose a company name. The Department of Economic Development (DED) will need to approve your trade name before continuing the application process. Investors will want to take care not to choose any taken, restricted, or banned names for their enterprise, as they will be denied.

5. Apply for Your Trade License

After you’ve sent your company name off for approval, you’ll need to apply for your trade license. This trade license type will vary depending on your chosen business activity.

• Commercial License

Commercial licenses are issued to business owners that engage in business activities such as general trading, real estate, healthcare, and transportation.

• Professional License

This license type is issued to individuals who engage in careers requiring specific talents, skills, and intellectual prowess. These can include lawyers, consultants, and scientists.

• Industrial License

Industrial licenses are typically issued to owners of manufacturing and industrial companies.

• Tourism License

This license type is given to business owners that specialize in the travel and tourism industry. These businesses can include hospitality, travel agencies, tourist facilities, and restaurants.

6. Register Your Company

Registering a company and applying for a license is designed to be a simultaneous process. However, at this point, you will need to secure all necessary approvals from the relevant government bodies. For example, if your business is a taxi service, you will need to acquire approval from the transportation authorities.

7. Secure Any Necessary External Approvals

Depending on your business activity, the DED may require you to complete additional approval steps that include approval references from specific banks, embassies, and regional government officials.

8. Rent Office Spaces

There are several different office space options available to new investors. These offices include private units or shared workspaces, depending on your need. Additionally, the office space size will dictate the maximum number of visas you can request for your staff.

9. Procure Tenancy Contract, or Ejari

When you rent your office spaces, often you will need to obtain an Ejari, a tenancy contract between you and the real estate agency that owns your office space. The Ejari can be found via an online portal that ensures fairness and transparency for all involved parties. Your Ejari will be needed as documentation whenever you seek to renew visas for you, family members, or employees.

10. Receive Initial Approvals

Before receiving your full business license, you’ll need to secure an initial approval from the Department of Economic Development. This approval shows that the government doesn’t object to your company or chosen business activity. Obtaining this approval is required for the completion of your business license application.

11. Collect Your License

Once you’ve fulfilled all the previous requirements, gathered your necessary documentation, and paid any fees, you’re free to submit your application. The return time for this process is quick but can vary depending on the region and business activity. After you’ve received your final approval, you are now free to conduct business!

Documents Required for Business Setup in UAE

During the aforementioned application process, there are a number of documents you’ll need to have ready. These include:

• License form

• Technical Evaluation Report

• Memorandum of Association (MoA)

• Trade name certificate

• External approvals

• Relevant government documents

• Tenancy contract

• Ejari certificate

• NOC for any partners

• Copies of passports for all partners

• Emirati ID (if applicable)

Choosing Where to Form Your Business in the UAE

Picking out your business location is a big step! No matter where you go, you’ll have access to a world-class economy, a profitable and friendly business atmosphere, and a well-built infrastructure. But location matters! Let’s look at some of the options available to new entrepreneurs.

1. Business Setup in Dubai

Dubai is the largest of the Emirates, an enormous tourist destination, and a world-renowned business hub. With over 30 different free zones that cater to almost any business activity, this region has a fast-paced, friendly, and competitive business environment. Business setup in a UAE free zone is an efficient process that suits many new investors.

2. Business Setup in Sharjah

Sharjah is one of the most rapidly growing Emirates in the UAE. The region places a significant focus on the service, trade, and manufacturing industries. With a prosperous economy and favorable governmental policies for entrepreneurs, Sharjah is a fantastic place for new investors to conduct business.

3. Business Setup in Abu Dhabi

The capital of the United Arab Emirates, this area is the primary commercial hub and a global staple in commercial industries. The city is dedicated to improving its global commercial presence and creating an ideal environment for entrepreneurs.

4. Business Setup in Ajman

Despite being the smallest emirate, Ajman is brimming with business opportunities. It is located near Dubai and Sharjah, making it an opportune position to conduct business between the regions. Ajman is one of the most cost-effective sectors and features a substantial, modern infrastructure, and lucrative tax incentives.

5. Business Setup in Fujairah

Fujairah is the only emirate located on the eastern side of the UAE. A combination of its location and stable economy make this city an enticing area to set up trading businesses. It features a modern infrastructure and sophisticated facilities that make it an excellent strategic location to conduct business throughout the Emirates.

6. Business Setup in Umm Al Quwain

Umm Al Quwain is a profitable option for investors planning to trade within the Emirate. This mainland sector requires the assistance of a UAE national, but there are numerous advantages to choosing this location. Umm Al Quwain features numerous business activity options, cost-effective warehousing and office spaces, a streamlined application and renewal process, and an investor-friendly environment.

7. Business Setup in Ras Al Khaimah

This sector is a quickly growing emirate and one of the first entities to take part in the registration of International Business Companies. It is lauded for its guaranteed safety, confidentiality, and stable political environment. Ras Al Khaimah also provides state-of-the-art infrastructure and a thriving economy ripe with business opportunities for investors. This is a great location for those that are interested in offshore business setup in the UAE.

Types of Legal Forms for Companies Operating in the Emirates

One of the most critical aspects of forming a business in the UAE is choosing the proper legal form for your company. This choice may depend on several factors, including your business type, location, and your particular business goals. Choosing the correct legal form for your business enterprise will allow you to efficiently manage your assets, investments, and profits. Below, we’ve listed some of the most notable legal forms under which many businesses operate.

1. Sole Proprietorship

A sole proprietorship is owned and operated by a single individual where there is no legal distinction separating an owner and the business entity. A sole proprietor receives all profits and has unlimited responsibility for any losses or debts.

2. Civil Company

A civil company is a business partnership between professionals like doctors, accountants, and lawyers. All partners share 100% ownership of this enterprise yet will most likely need to seek out a service agent to assist.

3. Limited Liability Company (LLC)

An LLC is one of the more common forms of business entities in the UAE. It is often recommended for businesses hoping to make sales in the region. LLCs must also appoint managers with a Memorandum of Association. This legal form allows for a minimum of one manager and a maximum of five.

4. Private Shareholding Company

A private shareholding company is a privately owned business that maintains a controlling interest in the assets and investments of other companies. This company doesn’t produce any services or goods on their own.

5. Public Shareholding Company

Much like the former, a public shareholding company is owned by numerous investors that control its operation. Opening a public shareholding company requires a minimum of 10 founders, at least three board directors, and at least AED 10 million.

6. Branch Office

A branch is a smaller entity that has the same legal identity as its much larger parent corporation. These branches can take several forms, including:

• Foreign Company Branch

A foreign company branch is a branch of a corporation that operates in a different nation.

• UAE Company Branch

This is a branch of a company located within the UAE.

• Free Zone Company Branch

This type of branch contains companies that operate within the many UAE free zones.

• GCC Company Branch

A GCC company branch is the branch of a company that is part of the Gulf Cooperation Council (GCC), an economic union of Arab nations.

Benefits of Business Formation in the UAE

Choosing to form your business in the UAE comes with a large assortment of benefits and advantages.

1. No currency restrictions

There are no restrictions on the use and exchange of different currencies when conducting business. Many banks are capable of handling the many different currency types that tend to be present in the region.

2. A large assortment of business activities and licensing types

There are a substantial amount of different business activities available in the region. From manufacturing sectors to service-related industries, there is an abundance of business opportunities to be found.

3. A lucrative mainland market

The mainland market, including Dubai, is home to a booming economy that is empowered every day by new investors and businesses coming to the region.

4. No corporate or income taxes

In most parts of the UAE, you are not currently responsible for paying any corporate or income taxes, including capital gains taxes. This empowers your business to run more efficiently and brings you maximum profits.

5. 100% repatriation of capital

Foreign investors are given the ability to return all profits and capital to their home nation, free of taxes or fees.

6. Easy visa availability

The UAE is home to some of the most relaxed immigration policies in the world. Investors coming to the area can easily apply for visas for their board members, shareholders, employees, and family. These visas can vary from 5 years to lifetime visas depending on the applicant and their business contributions.

7. A stable government, straightforward processes, and hassle-free legal procedures.

The UAE has a steady, progressive political environment that has placed significant resources into streamlining the business application process.

Frequently Asked Questions (FAQs)

  • What is the difference between Mainland, Free Zone, and Offshore?

    The Mainland is on land in one of the UAE cities. You will have to have a physical office space for a Mainland business. On the Mainland, you can do business in the local market as well as outside the UAE without any restrictions.

    In the UAE Free Zone, you can’t do business outside of its area. A Free Zone business can be run with or without a physical office.

    In an Offshore company, entrepreneurs get full ownership of a company. A physical office is not allowed, and you can also do business outside of the emirates.

  • Is a local sponsor mandatory for setting up a business in the UAE?

    A local sponsor is not required for setting up a business in the UAE.

  • What is the corporate income tax in the UAE?

    There is no corporate tax rate in the UAE.

  • Is it mandatory to have a local office to set up a business in the UAE?

    Yes, a physical office is required for a company to be set up in the UAE on the Mainland.

  • How can I setup my business in UAE?

    Choose your business activity, submit applications to the DED, apply for a trade license, get the company’s Memorandum of Association notarized, register the trade name, apply for the establishment card, get initial approval, get the MOA and lease agreement notarized, secure a location, get documents processed, receive your trade license, and hire employees.

MSZ Consultancy is Here to Help!

1. MSZ Consultancy is a one-stop-shop for everything business. We have an innate, thorough knowledge of UAE business practices and are dedicated to providing thoughtful consultative assistance for all your business needs. With over a decade of experience in business operations throughout the Emirates, we have the know-how to help you supercharge your business.

2. Our team of experts are knowledgeable about local business operations and can help investors navigate the terrain of business setup in the UAE mainland, trademark registration, licensing applications and renewals, PRO services, and much, much more! We can help businesses of any type and size, from smaller startups to larger corporations. Our client base includes trading executives, real estate agencies, technology sectors, and more.

3. With over 32,000 happy customers, we have a reputation for getting the job done and doing it right. We understand the many nuances of conducting business throughout the Emirates and can provide you with the inside knowledge you need to succeed in the business world. By choosing MSZ Consultancy, you’ll have an expert working knowledge of business practices in the mainland, offshore, and even throughout the many free zones.

Give us a call today at +971 52 544 1248 and let our team of experts help jumpstart your new business!

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