How Can You Start Your Company in UAE? (Basic Steps Required in Detail)

Starting Your Business in UAE:

Any Foreigner can start a business in United Arab Emirates. UAE welcomes investors and business owners from overseas. Starting a business in the Emirates is quite easy. In fact, almost anyone can do it. UAE has made it easier than ever for entrepreneurs from every corner of the globe to do business in the UAE.

Foreign businesspeople take advantage of the UAE’s 0% tax rate on corporate and personal income. They are also now free to retain 100% business ownership in most cases. Furthermore, To start a business you don’t have to be a full-time resident in the UAE. In fact, living abroad is no barrier to success in the Emirates. Most UAE business owners choose to reside in the UAE to make the most of the amazing climate, attractive business incentives, and thriving communities.

Doing business in the UAE is considered a fairly easy process by the World Bank’s standards, whilst the Index of Economic Freedom classifies the country as ‘mostly free’ from excessive administrative interference in business matters.

What are the Factors to be considered before starting up a business in United Arab Emirates?

Starting a business in ordinary ways involves a series of steps and before you start a business you must consider below factors :

  1. Identifying a business activity: You will need to decide your business activity before start up your process. Not all business activities are allowed in the UAE! Various consents are required before you start your business in UAE. Thus, the first thing to do business is to decide whether your business fits in as per the UAE standards. They are 6 types of licence which includes industrial, commercial, professional, tourism, agricultural and occupational and you can choose more than 2,000 business activities in UAE.
  2. Select the Right Jurisdiction: Business jurisdictions in UAE are segregated zonally to increase the competence as well as productivity of a business. UAE offers mainland business setups, freezone company formations, and offshore business establishments. Opting for the right jurisdiction depends on the business activity and the nature of the business you would like to conduct.
  3. Selecting an appropriate legal form :The legal form depends mainly on the business requirements and is basis for identifying applicable laws and regulations. In the UAE, an investor can select one of these legal forms:
    • General partnership
    • Limited partnership
    • Limited liability company (LLC)
    • Public joint stock company (PJSC)
    • Private joint stock company (PrJSC)
    • Civil company
    • Local company branch
    • GCC company branch
    • Foreign company branch
    • Free zone company branch
    • Sole establishment
    • Holding companies.
  4. Registration of your Trade Name: The trade name acts as an identity of your business. A trade name distinguishes one business from another. It also reflects the nature and the form of the business. An investor can apply for the trade name through the economic department in each emirate, through its website or mobile application. The trade name must be followed by the business structure such as LLC, EST, PJSC, PrJsC and not violate the public morals or the public order of the country. The trade name must be compatible with the required type of activity and the legal status of the company or business entity and not contain any name of religion or governing authority and not have been previously registered. The local department of economic development registers the trade name, while Ministry of Economy registers the trademark. Trade name certificates are renewable. It takes around three days to register a trade name, and it is valid for a period of six months.
  5. Find a Local agent if required: Earlier to open a business in UAE it was required to have local partner. An Emirati or partner must be a UAE National Only. However, as per new guidelines you can set up a business with 100% ownership.
  6. Initial approval: An initial approval means that the UAE Government has no objection for the business to be established in the country. It also allows the investor to proceed with the next steps in setting up a business. It does not, however, grant the authority to run or practice the business activity.
  7. Prepare MOA and LSA: Depending on the legal form of a business, a completed and signed Memorandum of association (MoA) or a local service agent agreement (LSA) of the business is required. UAE-based law firms, courts and notary public prepare and attest MoAs and agreements. It should be drafted according to the UAE Government mandates.The memorandum of association is required for the following business legal forms:
    • Limited partnership
    • Limited liability company (LLC)
    • Public joint stock company (PJSC)
    • Private joint stock company (PrJSC).
  8. Select a business location: Depending on your business requirement you can select a rental or shared space for your business activity. All businesses in the UAE must have a physical address to operate. The business premises and location must comply with the requirements defined by the respective emirate’s Department of Economic Development, as well as the land planning regulations of the local municipalities. Office and warehouse rental agreement must be provided. It ensures fairness and transparency between both the parties.
  9. Get an additional approvals if required: In some cases you may need to get additional approvals from government entities governing certain business activities are required. For example:
    • activities related to general transport (driving schools, fire equipment, used car dealers, used auto parts, car rental, alarm and safety systems you may need to have the approval from Ministry of Interiors.
    • activities related to legal consultancy you may need to have the approval from Ministry of Justice
    • activities related to architectural and engineering affairs you may need to have the approval frmom Local municipal department
    • activities related to telecommunications and digital government regulatory authority you may need to have the approval from Telecommunications and Digital Government Regulatory Authority (TDRA)
    • activities related to Travel and tourism, general services, charter trading, ship and maritime agencies, car clubs, charter air transport and foreign company branches you may need to have the approval from executive council
    • Ministry of Economy
    • activities related to Insurance activities and insurance consultancy you may need to have the approval from Ministry of Economy
    • activities related to Health-related activities you may need to have the approval from local health departments.
    • activities related to Onshore and offshore gas and oil-field services and onshore and offshore oil drilling operations you may need to have the approval from Supreme Petroleum Council.
  10. Collect your trace licence: After completing the above steps, investor can collect the business licence from service centres of the economic departments or through their websites. The following documents are required for getting a licence for all legal forms:
    • Initial approval receipt and all the previously-submitted documents
    • Copy of the lease contract duly attested by the Real Estate Regulatory Agency (RERA) in Dubai
    • Duly attested memorandum of association (for all types of companies)
    • Trade name reservation certificate
    • Approvals from other government entities concerned, as may be required
    • Duly attested service agent contract (for civil establishments and companies that are 100% owned by non-GCC nationals), the UAE involving a local service agent.
    • Passport copies of partners
  11. Employing staff when starting a business in the UAE: Once your business is off the ground, you may want to start employing staff. You should know that many industries must meet local employment quotas. If you plan to employ UAE nationals, there are a few things you should note. Firstly, you must notify the labor department within 15 days of the employee’s start date. Moreover, you have to provide the same social security and pension that government employees receive. Additionally, if you have more than 100 employees, you must employ a UAE national to act as a go-between between the company and the MHRE.
  12. Business banking in the UAE : Setting up a business bank account is important. However, to do this, you first have to register your business and get your license.To open a bank account for your business, you will need to attend an in-person interview at your bank of choice.
  13. Business insurance in the UAE:To protect your company, you should think about getting insurance while setting up a business in the UAE. There are different type of insurance available in Emirates such as Worker’s compensation,Personal accident insurance,Health insurance,Travel insurance.

The government offers several schemes for financial support for starting a business in the UAE. However, these are only available to Emiratis, so your company’s local partners or shareholders will have to apply for this. Most of the programs come under the umbrella of the Khalifa Fund for Enterprise Development.

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