The United Arab Emirates (UAE) is one of the most popular business destinations around the world. It offers a stable economy and a vibrant entrepreneurial ecosystem. The country offers a wide range of opportunities for entrepreneurs to start, grow and expand their businesses in all industries.
The UAE is one of the most attractive investment destinations in the Middle East. It is home to some of the biggest companies in the world such as Etihad Airways, Emirates Airline and DP World. Businesses have flourished in this country due to its progressive laws and regulations that allow entrepreneurs to start their business at ease.
In this article, we will discuss how to setup a business in UAE by providing an overview of different types of companies available for registration, free zone services offered by various free zones in Dubai, Abu Dhabi etc., legal formalities involved with company formation and best service providers for business setup needs.
Types of Company Setup in Dubai
Free Zone Company Formation in Dubai:
Free Zone Companies (FZC) are set up by companies registered in free zones who have the authority to conduct business in the UAE. Companies registered as FZCs are not required to obtain a trade license or commercial registration and do not pay income tax or corporate tax, making them an attractive option for foreign investors. However, they must still comply with other government regulations governing commercial activity such as labor laws.
Setting up a business in a free zone is a relatively easier process. In comparison to alternative business setups, free zone authorities demand less documentation and a shorter processing time.
Below are the key steps to establish a business in a free zone:
1.Determine the type of legal entity:
a. Make a choice between a Free Zone Limited Liability Company or a Free Zone Company.
b. Consider the number of shareholders and whether they are natural persons or legal entities.
c. Note that not all free zones register both types of companies. You should contact the respective free zone authorities to confirm the available options. You can refer to the list of free zones and their authorities for more information.
2. Choose a trade name for your business.
3. Apply for a business license.
4. Select an office space within the free zone.
5. Obtain pre-approvals, register your business, and acquire your license.
Remember to follow these steps to establish your business successfully in a free zone.
Mainland Company Formation in Dubai:
The alternative to setting up an FZC is to form a company on the mainland of Dubai. This type of company is registered under the Ministry of Economy (MOE), which means that it doesn’t enjoy any tax benefits or incentives provided by the government like a free zone company does. However, you can still choose to incorporate.
Following are the steps to start a business in Mainland of UAE;
1. Identify the nature of your Business activity
There are 6 main types of economic licenses offered by the UAE government.
a. Occupational License
b. Tourism License
c. Industrial License
d. Commercial License
e. Agricultural License
f. Professional License
2. Determine your company’s legal structure
A Business should develop a structure for laws and regulations which the company must adhere to. These are the legal forms of businesses in UAE;
a. Limited Liability Company
b. Civil Company
c. Sole Establishment
d. Branch of a GCC Company
e. Branch of a Local Company
f. Holding Company
g. Public Joint Stock Company
h. Representative Office of a Foreign Company
i. Private Joint Stock Company
3. Trade name registration process
Trade name is the name of the company. It must be unique and not be similar to any other registered company. We can apply for a trade name through the website or application of the Department of Economic Development in the relevant Emirate. Whether you’re a small startup or a well-established mobile app development company in Dubai, this streamlined process can help you establish your presence in the business world. There are some terms and conditions for the trade name application. They are;
a. The business name should include a suffix (e.g., LLC, PJSC) indicating the legal form. It should avoid inappropriate or offensive terms. The name should align with chosen activities, excluding ruler, government, or agency names/logos. Uniqueness is vital. Approval from the Department of Economic Development and Ministry of Economy is needed for both the trade name and trademark.
b. Trade name certificates are subject to renewal.
4. Application for Initial Approval
This is basically a “no objection” for the business setup from the UAE Government. This approval allows you to proceed with the next steps to get the license issued. It is not the permission to start the business.
5. Create MOA or LSA
A memorandum of association is required if the legal form of the company is a civil company, limited liability company, public shareholding company, or private shareholding company. If it’s a sole proprietorship, obtaining a local service agent agreement (LSA) is necessary.
6. Choosing the location for your business
Every UAE business is required to possess a physical address for its operations. The location and facilities of the company must adhere to the standards set by the Department of Economic Development of the respective emirate, as well as comply with zoning regulations established by local municipalities or other relevant authorities. As far as Dubai is concerned, office or warehouse tenancy agreements need to be registered using the Dubai Land Department’s Ejari portal.
7. Applying for Additional Government Approvals
For some cases, additional government approvals may be required. Such as;
a. Ministry of Interior : Transportation services encompassing driving schools, fire equipment, alarm and safety systems, pre-owned car dealerships, used auto parts, and car rental.
b. Ministry of Justice : Legal activities and legal consultancy
c. Local Municipal Department : Architectural and Engineering Affairs
d. Telecommunications and Digital Government Regulatory Authority (TDRA) :Telecommunication activities
e. Executive Council : Included are travel and tourism, general services, charter trading, ship and maritime agencies, car clubs, charter air transport, and branches of foreign companies.
f. Ministry of Economy : Insurance activities and insurance consultancy
g. Local Health Departments : Health-related activities
h. Supreme Petroleum Council : Gas and oil-field services conducted onshore and offshore, along with both onshore and offshore oil drilling operations.
8. Document Submission
a. Upon receiving preliminary approval and copies of all documents previously submitted.
b. Copy of lease contract, duly attested.
c. Memorandum/s of Association, as required.
d. Approvals from other government entities, as required.
9. Fee Payment and License Collection
Customers can collect the license after payment of fees from any of the service centers of the Economic Department or through the website.
10. Registration with Chamber of Commerce and Industry
The company’s registration should be done in the emirate where it was incorporated.
Legal Formalities and the Best Service Provider
In order to start your business, you will need to complete several formalities with the local authorities. These include obtaining an operating license, opening a bank account for your business and registering your trade name with the Ministry of Commerce and Industry (MOCI). Also, you may need a residence visa for yourself and any other employees that work with you. In addition, it is important that your company has adequate insurance coverage before it starts trading operations.
When you are starting a new business in the UAE, it is inevitable to take care of the legal formalities and procedures. There are several steps involved in the process of starting a business in the UAE and they may sometimes cause a little bit of confusion for a first time entrepreneur.
The first thing that you should do is to make sure that your company name is available for registration. You can check this out from the Ministry of Economy or from the website of the Federal Tax Authority (FTA).
Next, you will need to choose between a Limited Liability Company (LLC) or a Branch Office. While going to operate as an LLC then you will need an authorized representative who can represent your LLC before courts and other authorities. If you want to run your business as a branch office then you will need an executive director who can sign all necessary documents on behalf of your company.
Once these formalities are duly taken care of, then there are two ways through which you can register your company – either by yourself or through an agent/representative (Individual/Company).
Some steps are involved for registration process. They are opening a bank account in UAE (most banks require minimum capital), applying for trade license etc.,
Company Formation Consultation:
Company formation consultants at Wordcraft, also provides legal translation in uae can help you for a business setup in Dubai, Abu Dhabi or any other Emirate in the UAE. We offer a wide array of corporate services, including business registration and licensing, accounting and tax planning and compliance, HR, payroll and health & safety management, payroll services.
If you want to start your own business in UAE, we can provide all the necessary information about registration of the company with Dubai Chamber of Commerce & Industry (DCCI) and other government authorities. Our company formation consultants will assist you in preparing the documents for registration of your company. We can also help you with obtaining the necessary local sponsor (Emirati) for opening a company in the UAE if required by law accordingly. Contact Wordcraft, the leading business setup service provider in UAE.