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Tips On How To Set Up A Business In The UAE

Date: 2022-05-23

Dubai is fast becoming one of the most popular business destinations in the Middle East, and even the world at large. With its proximity to India, Africa and Europe, Dubai has become an attractive option for entrepreneurs looking to set up a business in the UAE.

No doubt, many people are planning to set up their own business in the UAE, given the Dubai 2020 Expo which has begun, but it’s not always so easy. 

Starting up your own business or setting up an existing business can be very rewarding, but it also requires a lot of work. There are several things that you need to consider before starting or setting up your own business in Dubai or anywhere in the UAE.

You should identify what kind of business you want to start and what niche you want to work in. Research the market and think about how you can create something new or different from what is already available in the market. 

More so, if you are only planning to set up a branch of your existing business in Dubai, you also have to research how existing businesses like yours are fairing and what unique problem will your business be solving there.

The one question that should be in your mind is;

Is there a way that you can stand out from the competition? 

Use these tips when deciding what market to enter or outshine your competitors

 

What are the benefits of setting up a business in the UAE? 

UAE is a very attractive destination for foreign investors and entrepreneurs thanks to the country's high level of development, as well as its growing economy. It offers a number of incentives to attract international businesses. So, let’s look at a few benefits of starting or setting up a business in the UAE.

100% foreign ownership

100% repatriation of capital and profits

100% exemption from corporate, personal and income taxes

100% free transfer of funds, and no foreign exchange controls

Exemption from all import and export duties

Low freight charges

Abundant and inexpensive energy

Inexpensive workforce, and easy recruitment procedures

Efficient communication procedures and single-window administration

Liberal government policies and legal framework

The timely and streamlined immigration process

Sponsorship and visas for an affordable skilled workforce

Flexibility to operate 24/7

Freehold offices available for sale or lease

Ready-made offices, factories, and warehouses

Easy start-up and licensing procedures

Unique industry clustering and purpose-built infrastructure

3-year UAE residence visa

No restrictions on hiring expatriate

Now, we know the various benefits of setting up a business in the UAE. 

 

What are some challenges of running a business in Dubai or other cities in the UAE?

Many times people get discouraged by these challenges, and they give up the idea of starting or setting up their business in Dubai. Although starting a business anywhere other than the UAE will be challenging, no new business can begin without any challenges.

Finding a reliable UAE Partner

If you want to start your business on the mainland, you will require a local UAE partner. The partner will hold 51% ownership of your company. So the challenge here is to find a reliable, trustworthy partner. 

The above will only happen if you are setting up or starting your business on the mainland.

However, when you consider starting a business in one of the free zones in the UAE, you can be sure of having a 100% ownership of the company and choose to give your local partner whatever percentage the partners will agree upon.

Applicability of VAT

UAE follows the vat system from 2018. VAT refers to the indirect tax that applies to all goods and services.

The tax applies at a 5% rate and simplifies the taxation for business. The challenge is to get accustomed to that VAT. Those who fail to comply with the taxes have to pay penalties.

Culture Challenges

The culture is very diverse and somewhat complicated. To run a business successfully in Dubai, Abu Dhabi, Sharjah, Ajman or other cities in  the UAE, just like every other country, it is essential to understand the UAE business culture. Understand some basic norms related to business and the impact your business can have there.

Obtaining the Work Permits

Foreign entrepreneurs need to get a work permit to start a business in the UAE. It is very challenging to obtain a work permit and the visa norms. 

The company has to cope with the regulations set by the general directorate of residency and foreign affairs. It is very challenging to get work permits and visas.

Even if you have the right set of knowledge, it can be challenging to start a UAE business. It is best to take the help of some business setup consultants. They have a unique insight into the UAE market. Taking their support will make your process more comfortable and hassle-free.

 

Business licences and permits, how to get them?

Documents Required to Set Up a Business in the UAE

Below are a number of documents required to be translated into English, attested, and notarized by the Gulf Cooperation Council (GCC) or the Arab Embassy.

General Documents

Duly filled application licence form

Business card of the contact person

Copy of business plan

Notarized and attested Memorandum of Association (MOA) and Articles of Association (AOA)

Passport copies of the partners and business managers

Original bank reference letters and licence of the partner’s existing company, if applicable

Documents for Consultancy Licence

A copy of the degree or diploma certificate mentioning the desired activities, or the experience certificate [any of these documents is a must]

Documents for Industrial Licence

Business feasibility study

Existing company profile

Duly filled form for the investor’s project profile

Documents for Branch of Companies

Attested copy of the registration certificate, incorporation certificate, and the Memorandum and Articles of Association (MAA)

Original Board Resolution that guarantees financial commitment of the branch

Original Power of Attorney of a legal representative, and their passport copy

Last 3 months’ bank statements of the parent company

 

Choose a Business Activity

Now, we’ve looked at the benefits, challenges and documents you will need to set up a business in Dubai, Ajman or other cities in the UAE. Let’s look at the various business activities and entities you can set up.

The first step in getting your UAE free zone business start-up or set up is deciding on the business activities you wish to carry out, as this will impact where you can register your company. 

The type of licence you apply for will also depend on the activities you wish to carry out – such as professional services, commercial, trading, etc.

Below are some business activities you can set up in the Dubai free zone.

Types of business activities you can conduct

 

In twofour54, you can carry out the following businesses:

Content production

Advertising

Animation

Corporate Film production

Corporate Print Material

Digital content production (e.g. CGI, 3D etc)

Educational content material

Film production

Gaming development

Graphic design

Illustration

Mobile media (e.g. content for interactive media services on mobile phones)

Music production and recording

Music videos

Online electronic content production (e.g. websites, e-books, travel guides etc.)

Performing arts and theatre

Photography/videography

Print content production (e.g. magazines, journals, periodicals, newsletters, guides, and handbooks etc.)

Radio content production

Script writing

Software development (e.g. applications)

Songwriting and composing

TV production

Web design and development (e.g. portal, search engine, community site, web production, online library)

Other business activities

Branding Agency

Events/Festivals

Exhibitions/Conferences

Information Services (e.g. media related market research)

Marketing Communications

Media content management (e.g. digital archiving)

Post Production (e.g. Film, TV, editing services)

Professional Association (e.g. non-profit)

Public Relations

Rights Management

Training (media related)

Publishing and broadcasting

publish a book

publish a magazine

publish a newspaper

broadcast a satellite/terrestrial television channel

broadcast a satellite/terrestrial radio channel

In this case, you would need to apply for a dissemination licence.

In DMCC, you can choose from over 600 business activities ranging from over 20 sectors such as energy, commodities, gold and diamonds, technology, constructions, FMCG, healthcare, aviation, shipping, education, media, professional services, financial services and personal and community services. Refer to the list of businesses you can conduct in DMCC.

In DIFC, you can conduct financial and non-financial businesses. Financial businesses include banks, insurance, wealth management and capital markets. Non-financial businesses include retail shops, restaurants, five-star hotels, art galleries and academic institutions. Read more on the page about areas of business in DIFC.

Accordingly, some types of business licences are:

Commercial/trade

Consultancy/services

Industrial

Educational

Media

eCommerce

Offshore

Freelancer

Warehousing

Manufacturing.

Dubai Multi Commodities Centre (DMCC) allows establishing 'single family offices'. These have the standard Free Zones LLC structure. They can provide services to a family member, family business, family entity (corporate structure) or family trust. It can be owned by one or more individuals or a corporate entity where all shareholders are of the same family.

 

Choosing A Free Zone to Set up

Once you’ve decided on your business activities, the next step is to determine which free zone is right for you to start your new business or set up an existing business.

There are several factors you must consider when making this decision – starting with whether you wish to set up in a sector-specific free zone. Healthcare, ICT, production, design, outsourcing, media, maritime, science and finance are just some industries catered to by Dubai’s industry-specific free zones.

Alternatively, there are also many broader free zone options available. For example, free zones such as Dubai South and DMCC are open to a wide range of activities.

You also need to consider the location of your chosen free zone. As well as taking into account considerations such as access to main highways, if you rely on international trade or travel, you should also be mindful of proximity to both ports and airports.

Here below are the lists of various free zones in Dubai to start your business or set up an existing business.

1. Dubai Free Zone

Jebel Ali Free Zone (JAFZA)

Dubai Airport Free Zone (DAFZA)

Dubai International Financial Centre (DIFC)

Dubai Healthcare City (DHCC)

Dubai World Trade Center (DWTC)

Dubai South Free Zone

Dubai Knowledge Village

Dubai Logistics City

Dubai Media City (DMC)

Dubai Silicon Oasis (DSO)

Dubai Academic City

Dubai Biotechnology & Research Park (DuBiotech)

Dubai Car and Automotive City Free Zone (DUCAMZ)

Dubai Design District

Dubai Gold and Diamond Park

Dubai Industrial City (DIC)

Dubai International Academic City

Dubai Internet City (DIC)

Dubai Multi Commodities Centre or Jumeirah Lakes Towers Free Zone

Dubai Outsource Zone

Dubai Studio City

Dubai Techno Park

Dubai Technology and Media Free Zone

International Media Production Zone

Economic Zones World

Dubai Flower Centre

Meydan Free Zone

International Humanitarian City

2. Abu Dhabi

Abu Dhabi Airport Free Zone (ADAFZ)

Abu Dhabi Global Markets (ADGM)

Khalifa Industrial Zone Abu Dhabi (KIZAD)

Twofour54

Abu Dhabi Ports Company (ADPC) – Khalifa Port and Industrial Zone (KPIZ)

Industrial City of Abu Dhabi

Higher Corporation for Specialized Economic Zones (ZonesCorp)

Masdar City Free Zone

3. Sharjah

Hamriyah Free Zone

Sharjah Airport International Free (SAIF) Zone

U.S.A. Regional Trade Center (USARTC) Free Zone

Sharjah Publishing City Free Zone

Sharjah Media City Free Zone

4. Ajman

Ajman Free Zone

5. Fujairah

Fujairah Free zone

International Free Zone Authority (IFZA)

6. Ras Al Khaimah

Ras Al Khaimah Investment Authority (RAKIA)

Ras Al Khaimah Economic Zone (RAKEZ)

Ras Al Khaimah Media Free Zone

RAK Maritime City

7. Umm Al Quwain

Umm Al Quwain Free Trade Zone (UAQFTZ)

 

 

Type of Business Entities to set up.

There are mainly three types of entities one can set up in the UAE free trade zones, namely,

Branch of a foreign or local company

Free Zone Establishment (FZE), with a single shareholder

Free Zone Company (FZC), with 2 to 5 shareholders

Types of Licences Available in the UAE Free Zones

Business formation in the UAE free zones is incomplete without procuring a business licence. 

The following types of business licences can be obtained by applicants in the UAE free zones:

1. General Trading Licence: Allows investors to trade in all kinds of products

2. Trading/Commercial Licence: Grants a time-limited authorization to perform industrial, commercial, or consulting activities

3. Service Licence: Allows law firms, accounting firms, and business consultancy firms to operate

4. Industrial Licence: Permits importing raw materials, manufacturing goods, and exporting finished products, across global boundaries

5. Warehousing Licence: Investors can avail this   to avail warehousing facilities on lease for distribution, packaging, and storage of goods

6. Manufacturing Licence: Permits applicants to manufacture products in the UAE

 

How to start or set up your existing business

When you set up a company in free zones, you are not subject to the commercial company’s law. These Free Zones in the UAE are outside the jurisdiction of the UAE and have rules and regulation set by concerned free zone authorities. These free zones offer an excellent business opportunity for investors from all around the world and provide a liberal working environment and easy company setup procedures. The procedure is plain and simple.

 

Procedure for UAE Free Zones Company Setup

1. Determine the type of legal entity

Determine which type of entity you want to set up in any of the free zones. The capital requirement for such entity depends upon that particular free zone where you want to form a company; for example, there is no minimum capital requirement for setting up a business in twofour54, whereas in Dubai Airport Free Zone (DAFZ) you are supposed to have a minimum share capital requirement of AED 150,000.

 

2. Choose a Trade Name

After deciding the type of legal entity, choose a trading name for your company. Note that you ought to cross-check with the respective free zone authority about the permitted trade names and whether the intended name has already been registered.

 

3. Apply for a Business Licence

After choosing a trading name and registering the same in the free zone authority’s portal, you have to apply for a business licence. The list of the different business licences issued by the free zone authorities has been stated above. The type of business licence depends on the primary activity of your business. You need to submit the supporting documents while applying for the licence .

 

4. Choose an Office Space

Free zone authorities provide flex-desk office service to support start-ups. You can either buy or lease office spaces in free zones. Office requirements depend on the number of employees and type of business activity of your company.

 

5. Get Pre-Approval, Register your Business, and Get the licence 

Get the initial approval and the related business approvals from the specific authorities, register your business at the portal, and get your licence . It will merely take 2-4 weeks to get done with this process. Once you get the licence , you are good to start your business.

 

Wrapping up things:

And that’s it. It really is that simple. You now have all you require to know before you start a new business or set up an existing business in UAE Free Zones. 

Of course, just like any business decision, there are potential pitfalls along the way. But provided you go in with your eyes open and seek out the right guidance and advice, in most cases, you’ll have your business set up in just a matter of weeks.

If you need further help, quickly reach out to us on info@fainajsxpress.com

 

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