How to Setup a Business in the UAE? Available Options for Investors
- Process of Setting Up a Business in UAE
How to Setup a Business in the UAE? Available Options for Investors
UAE is a major business hub and it attracts global investors from across the world. The business licenses issued in UAE are on a spike despite the downturn due to Covid-19. The process of setting up a business in the UAE involves a set of steps to be followed by the investors to secure the business license successfully.
Reports indicate in 2020, almost 42,640 new business licenses were issued by the Dubai Economy. With the Free Trade Zones offerings special discounts and competitive company formation packages, the growth in the new business license is on a spree.
Where to Begin Registering a Company in UAE?
There are multiple options available to open a company in UAE for entrepreneurs who have a business idea. Setting up a business in UAE depends on various factors especially the Business Jurisdiction where the company is formed.
Each free trade zones come with a unique set of advantages, similar is the case with mainland company formation choices, depending on the investor business requirements, nature of the business activity, employee size, budget, etc.; the right choice is to be made.
Where to Setup the Company?
There are umpteen options for investors in UAE to set up a company. Choosing the business jurisdiction is the first and most important step in company formation.
The Mainland, Free Zone, and Offshore jurisdictions are where the companies are formed in UAE. Setting up the business in these jurisdictions has distinct advantages for the investors.
The most important difference across the three jurisdictions is the complete ownership for the ex-pat in the case of Free zone company, The Free Zone companies are more flexible and fully protect the 100% ownership of the business.
However, when it comes to mainland business setup, there is a new amendment in the Companies Law allowing 100% ex-pat ownership in mainland companies and eliminating the need for the UAE national as the sponsor.
Almost 122 business activities are listed where there is 100% ex-pat ownership allowed.
Business License Categories
There are broadly six types of business license categories to set up a business in UAE and those are:
- Commercial (General Trading, Contracting, Real Estate, Transportation, etc.)
- Agricultural Sector (Farms, Fisheries, etc.)
- Occupational/Craftsmanship (Carpentry, Blacksmithing, Printing, etc.)
- Professional (Consultants, Lawyers, Auditors, etc.)
- Industrial Sector (Factories, Manufacturing, etc.)
- Tourism (Hotels, Travel Agencies, Restaurants, etc.)
Legal Forms of Business
The legal status of a business is defined by the following:
- Sole Proprietorship/Individual Establishment
- Business Corporates / Companies
- Limited Liability Companies (LLC)
- General Partnership Company
- Public Joint Stock Companies
- Private Joint Stock Company
- Branch of a Foreign Company
The economic departments or authorities require some additional approvals depending on the business activity.
For example, for certain special business activities such as setting up a law firm in UAE, the best choice is Dubai International Financial Centre.
However, there is a strict compliance process in DIFC for issuing the legal practice license after thorough due diligence through KYC and compliance checks.
Post the approval from DIFC, the investor must acquire approvals and permits from the Dubai legal Affairs department to successfully practice law in UAE.
Special Approvals for certain Business Category
Similarly, opening a cafeteria or restaurant in UAE requires special approval from the Dubai Municipality and the Department of Food Safety in some cases.
Strategic industries such as Finance, banking, healthcare, tourism, etc.; will require a special permit from the ministry and other government authorities to start operating in UAE.
Documents Required for Setting up a Company in UAE
The following documents are required to be submitted to the respective authority or business jurisdiction to obtain the business license and set up the company in UAE.
- Shareholder’s and manager’s valid passport copy
- most recent entry stamp into the UAE, UID number (on tourist visa copy) or UAE residence visa, and Emirates ID copy (if already a resident of UAE)
- Certain Free Zones and activities in the mainland require a business plan with a detailed description of the business activities
- Duly filled-in license application form, pre-approvals (if applicable), attested professional qualifications, or university degrees.
Cost of Business License in UAE
Business License cost in UAE varies across business jurisdictions, type of business license chosen, office space requirements, capital requirements, local sponsor fees, and more.
The most cost-effective option for setting up a company is the Free Trade Zones of UAE.
Especially the Free Zones in the northern emirates like Sharjah, Ajman, and Ras Al Khaimah has the cheapest company formation offers for the investors.
Varying Business Setup Costs
A company can be registered in the Sharjah Media City for as low as AED 9,200 for a zero visa quota package.
There are multiple company formation packages available in the Free Zones of UAE. Investors can choose their desired business package based on the business requirements.
For setting up the company in the mainland of UAE, the most popular option for the investor is to register an LLC Company.
It is the Department of Economic Development of the respective emirate in UAE that is the business license issuing authority. Mainland business is gaining investor traction in UAE as there is 100% expatriate ownership currently as per the latest amendment in Companies Law.
Should I rent Office Space?
In UAE, there is no mandatory requirement for having a physical office space for all business categories. Few strategic activities require mandatory office space as a requirement.
Consultancies and other smaller business activities such as computer servicing, etc.; can operate virtually without having an office space.
The Free Zones in UAE have multiple cost-effective options like Flexi-Desk, Shared Desk, Shared Office, etc. These office spaces can be availed by investors to keep the overall cost low.
As of now, the Free Zones facilities can be availed by the investors who have a company registered within the free zone. Also, companies with more than 3 visa quotas for employees are to be required to take dedicated office space.
Choosing a Bank Account
UAE Banks have various options for investors to open an account and operate their business.
The corporate banks in UAE have strict KYC policies and compliance requirements. There are various requirements from the bank such as depositing the minimum share capital, maintaining a minimum balance, etc.; depending on the company structure, nature of the business activity, shareholder profile, etc.
Hiring a Business Consultant
Company formation in UAE involves a well-structured procedure and included a lot of government department’s approvals to get the business license issued.
Also, there are certain compliance requirements to be met for the investors to successfully incorporate the company in UAE.
Hence, it is best advised to take the assistance of an expert Business Consultant who is well aware of the business processes across free zones and the mainland of UAE, the residence visa rules, and more.
To know more about Company Formation in UAE, connect with our team right away!
Contact Us: Aurion Business Consultants
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