For more than a decade, the United Arab Emirates (UAE) has been in the spotlight as a global hotspot and a hub for doing business in the MENA region.
The impressive business-friendly environment and infrastructure, balanced with an innovative and international cultural heritage, in the Emirates, particularly in Dubai and Abu Dhabi, UAE, attract foreign investors to the country’s thriving economy.
Company registration in UAE is straightforward and easier than in many other places. With a tax-friendly system of 0% personal income tax rate, the 9% corporate tax in the UAE is the lowest in the world.
For more information on how you can setup a new or wholly-owned business in the UAE, you can book a free consultation with our expert business advisors in Dubai, UAE.
Benefits of Company Registration in UAE
- Supportive government policies and a stable political environment
- Access to a vast market across Europe, Asia, and Africa
- A strategic location for international trade and mobility
- An ultra-modern transport and logistic infrastructure.
- The availability of a highly skilled workforce
- The availability of world-class hotels, malls, hospitals, schools, residential and office buildings
Business Setup in UAE: Advantages for Foreign Investors
The UAE offers many benefits to foreign investors and entrepreneurs who want to relocate or start a company in Dubai or any of the 7 Emirates.
Some of the business includes:
- A 0% personal income tax
- A 9% corporate tax rate ( lowest in the world)
- Multiple visa options for foreign investors
- 100% ownership of your company
- 0% currency restrictions
- 100% custom tax exemption
Business Entities in the UAE
What is a business entity?
A business entity is what defines the legal structure of a company, i.e., the way a company is managed, owned, and taxed.
The UAE has 7 common types of business entities.
Limited liability company (LLC): An LCC is the most common business structure in the UAE.
The features of an LCC include:
- An LCC involves the partnership of 2 to 50 shareholders
- The liability of the company is limited to its partners’ investment.
- A UAE national must have a 51% share of an LLC in the UAE.
- An LLC is not allowed to setup a professional or consultancy company.
Check out the related article to learn more on how to set up an LLC in Dubai, UAE.
Sole Proprietorship: A sole proprietor company has the simplest business structure in the UAE that can only be owned by a single individual. The features of a sole proprietorship business include:
- The owner has 100% ownership of the company
- The owner is responsible for all financial obligations of the company.
- A commercial or industrial sole proprietorship business in the UAE can only be owned by a UAE or GCC national.
- Soles proprietorship requires no minimum capital.
Partnership Company: A partnership company can be formed by an agreement between two or more partners. There are two types of partnership companies in UAE ( General and Limited Partnerships).
Some features of a partnership company include:
- The profits or losses of the company are shared among partners in an agreed-upon ratio.
- UAE nationals must own a general partnership company, while any nationals can own a limited partnership.
- There is no limitation on ownership and shares for a partnership company.
- A limited partnership company is not allowed to carry out management and administration activities.
Private Shareholding Company: This legal structure, also known as a Joint-stock company, requires a minimum of three investors.
Other features include:
- It must be approved by the Ministry of Economy and Tourism (DET)
- A GCC national can hold 100% or at least 51% of the company’s shares
- It does not allow the establishment of a professional service business.
- It can have multiple branches and must appoint one manager.
Public shareholding company: Also known as a public joint stock company (PJSC), this type of legal structure allows the company’s capital to be shared equally among partners, and each partner is only liable for their invested capital.
Some other features include;
- Partners can engage in any business activities following the regulations of DET.
- It can have multiple branches, with each conducting activities as specified in the main business license.
Civil Company: This type of structure permits the establishment of a company to carry out specific types of professional activities.
Some key features include:
- A civil company can be owned only by doctors, accountants, engineers, and lawyers
- The owners can have 100% ownership of the company
- A local service agent (LSA) is required to setup the company if the owner is a foreigner.
- In the case of carrying out engineering activities, a UAE partner is needed and must hold 51% of the company’s shares.
Branch of a Foreign Company: A branch office business setup in UAE allows the expansion of a foreign company’s business into the UAE. The branch office must maintain the parent company’s name and business operations.
This type of company registration in the UAE functions to expand the operation and reach of the parent company.
Types of Company Formation in the UAE
The UAE offers 3 main jurisdictions (Mainland, Freezones, and Offshore) for business setups of all types and sizes. In this section, we will look at the different types of business setup jurisdiction in the UAE.
Mainland Business Setup: Company registration in the UAE mainland is done by the Department of Economy and Tourism (DET). This type of business setup in UAE is subjected to regulations such as a 9% corporate tax in UAE ( for profits above AED375,000) and a 5% Value-Added Tax (VAT).
A mainland company in UAE can be owned by a local or foreign national and can open a branch office anywhere in the UAE without restrictions.
When setting up a mainland company in the UAE as a foreign investor, you may be required to have a local sponsor (UAE national) who will have a 51% share of the company.
Freezones Business Setup: There are over 50+ freezones across the UAE. These are designated areas within the UAE that offer 100% business ownership to foreign investors with other benefits such as 0% taxes, 100% custom duty exemption, no restriction to foreign exchange, and more.
Freezone company formation in UAE is restricted to conducting business only within the free zone jurisdiction and cannot have an office outside the freezone.
Company Formation in UAE Offshores: Offshore company registration in the UAE allows businesses to conduct trade and investment activities outside the country.
This means an offshore company in the UAE cannot do business inside the country but is subject to its tax and legal regulations.
Steps to Start a Business in The UAE
- Identify the Nature of Your Business Activity: There are four main types of business licenses in UAE (commercial, professional, industrial, and tourism). The type of business activity you conduct will determine the type of license you need.
- Determine Your Business Legal Structure: Your company’s legal structure is based on its needs and determines the laws and regulations it must follow.
- Choose Your Business Location: Choose your jurisdiction for company formation in UAE (mainland, freezone or offshore) based on your goals and objectives.
- Register Your Trade Name: Register your trade name and obtain a trade name certificate with the relevant authority in UAE (DET). The trade name should include an abbreviation of your legal structure.
- Apply for Initial Approval: Apply for initial approval from relevant authorities to proceed with the company registration process.
- Create LSA or MOA: Create a Memorandum of Association (MoA) or Local Service Agreement (LSA) if setting up a mainland company.
- Apply for Special Government Approvals: Some business activities may need special approval from different government entities, such as the Ministry of Justice, the Executive Council, or the Road and Transport Authority (RTA).
- Submit Required Documents: Submit all required documents to the relevant authority for business registration in UAE.
- Pay License Fees and Collect License: Once you submit all the documents and pay the license fee, wait for your business license. Once out, you can collect the softcopy of your license directly from the DET official website.
- Register your company with the Chamber of Commerce, Open a business bank account in UAE, and apply for employee visas.
Get In Touch With Our Experts in Business Consultants in UAE
Do you still have questions about starting a business in the UAE? You can book a free consultation with our expert business advisors in the UAE, who will guide you at every step of the way to ensure you get a seamless and reliable solution for business setup in the UAE.
Frequently Asked Questions
What are the required documents to setup a business in UAE?
To open a company in the UAE, you must submit the following documents;
- Complete application form
- Business plan
- Passport copies of shareholders
- Shareholders signatures
- Letter of intern
- Proof of address
Some specific activities may need special approvals and documentation from relevant authorities.
What is the cost of company formation in the UAE?
There is no specific cost for business setup in UAE. The company registration cost will depend on factors such as;
- Nature of your business.
- Types of business licenses needed.
- Types of business setup ( mainland, freezone, or office).
- Office space requirement.
- Number of shareholders.
- Number of visa requirements.