Business Setup in UAE
The UAE is an economic powerhouse for entrepreneurs around the world. Its thriving economy, robust governance, world-class infrastructure, and business-friendly policies set the stage for a flourishing international business. Choosing this nation for business endeavours can be a game-changing decision.
The business setup in UAE requires strategic planning, a thorough understanding of local laws, and a firm grasp of applicable paperwork. If you miss out on any of these requirements, you won’t be able to start your business journey. With that being said, this article seeks to ease the incorporation quest in the UAE by discussing the required details step-by-step.
8 Steps Guide Concerning Business Setup in the UAE
Ensuring a hassle-free business setup in UAE requires following the given steps carefully:
Step 1: Choose an ideal business structure
The formalities concerning business setup in UAE start with choosing the right legal structure. You have plenty of options to choose from when selecting a business structure. Some common structures available in the UAE are as follows:
Limited Liability Company (LLC):
Being a partnership-based model, LLC is an ideal structure for small and mid-sized entities. It requires at least two shareholders for incorporation. The government allows for foreign ownership amounting to 49 per cent in such entities.
Free zone company refers to entities that belong to the dedicated Free Zone. Entities in these zones enjoy 100% overseas ownership, tax discounts, and minimal compliance. Some widely-known free zones include Jebel Ali Free Zone (JAFZA), Dubai Multi Commodities Centre (DMCC), and Abu Dhabi Global Market (ADGM).
Branch of a Foreign Company:
International companies can open a branch office in the UAE, either to extend business operations or promote products and services.
Step 2: Go for Trade Name Registration
Post selecting an ideal structure, the next step is to register the business name. It requires careful analysis of the UAE’s naming guidelines and thorough inspection of the name database to avoid any trademark conflicts. The name approval is granted by the Department of Economic Development (DED).
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Step 3. Select the ideal location
The business place has everything to do with the business’s success and fate. Therefore, selecting an ideal location is incredibly important. The UAE has a variety of locations dedicated to business affairs, including free zones and the mainland. Free zones, in particular, are more favourable to foreign businesses since they offer 100% overseas ownership and tax exemptions.
Step 4: Secure Initial Approvals
This step requires securing initial approvals from the authorities like the Department of Economic Development (DED) and the concerned free zone authority.
Step 5: Draft the Memorandum of Association
Known as a founding document, the Memorandum of Association (MOA) entails constitutional information about the company, including its ownership, structure, and undertakings. MOA must be drafted in line with the UAE laws and norms. To avert complications, get in touch with a subject-matter expert or a professional firm like Adviso.
Step 6: Secure VISA if applicable
Obtaining the necessary visas is vital to ensure a hassle-free business setup in UAE. While applying, you will come across the following categories of VISA:
This visa is primarily acquired for those running the companies, including owners and partners.
This visa is required for the person employed in the UAE-based company. The grant of employment VISA is not possible unless the company sponsors the same.
Freelancers who run their business affairs in the UAE are required to get this visa.
Each visa category adheres to distinct legalities and paperwork, and it is advisable to contact a trustworthy service provider to ensure a seamless application process.
Step 7. Business Licensing in UAE
A business license legitimizes the business’s existence and makes companies operational from a legal standpoint. UAE facilitates the following types of business licenses depending on the nature of the business and activities being carried out.
A professional license spans service-based entities, including legal firms, dental clinics, hospitals, and consultancy firms. Securing this license requires application filing with relevant authority and adherence to underlying criteria.
A commercial license spans businesses belonging to the trading sector wherein the transaction of goods takes place. It legitimizes businesses to stay operational in the local market and carry out the import and export of products.
From automobile manufacturers to smartphones OEMs, businesses serving the industrial sector are required to secure this license.
Step 8: Banking and Financial Considerations
For a successful business setup in the UAE, you also require emphasizing the banking and financial aspects, which include:
Opening a Business Bank Account
Having a bank account for your business is a mandate in the UAE. You can visit any designated bank in the country for bank account opening. However, it is advisable to approach banks offering a plethora of services including online banking, mobile banking, and trade finances.
Get accustomed to the taxation system
Although the UAE embraces a favourable tax structure, knowing the applicable corporate taxes can help sort finances. The tax applicability and rate shall vary depending on the nature of the business and revenue threshold. For example, most businesses operating in the free zones are eligible for nil taxes.
List of documents required for establishing a business in the UAE
- Trade Name Reservation
- Initial Approval Certificate
- Memorandum of Association (MoA)
- Articles of Association (AoA)
- Shareholder(s) Passport Copies
- Local Sponsor Agreement
- Office Lease Agreement
- Business Plan
- Bank Reference Letter
- NOC from the Current Sponsor
- Regulatory Approvals
Conclusion
To ensure a seamless business setup in the UAE, knowing the above steps is imperative. UAE does not offer too much resistance in the name of legal formalities for business establishment. However, there are still some conditions that an applicant must abide by for a hassle-free incorporation journey.
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