When you are thinking of expanding your business and setting up your company in the Middle East, there are a number of different steps you should take, the following article should help you with any key decisions and answer any questions in relation to starting a company in the UAE.
- Why the UAE:
The United Arab Emirates offers unique tax planning for the investors and presents preferable services, infrastructure, and business networks. In addition to these key factors, it is a booming place for startup business as well as the construction, manufacturing and hospitality service sectors.
Types of business entities allowed in UAE:
1. Establishment or Sole Proprietorship.
2. General Partnership Company.
3. Limited Partnership Company.
4. Joint Stock Company.
5. Public Joint Stock Company.
6. Private Joint Stock Company.
7. Limited Liability Company.
- Business Jurisdictions in the UAE
1.Free Zone Registration
UAE has more than 45 Free Zones and offers 100% ownership of the business, unlike the mainland companies. They also provide 100% import and export tax exemption, 100% capital repatriation of capital and profits. It is important to note that when you own a free zone company, you can only do business in the free zone. A free zone also provides the facility of office space or warehouse. The types of companies available within free zones differ, but the basic types available are:
Branch office and Representative Office- Companies of foreign origin may establish branches or representative offices to carry out business activities. However, the companies are not allowed to manufacture or sell goods locally. Some examples of freezones are companies with suffix DMCC, JLT, FZ-LLC, FZE, FZCO.
2. Offshore Company
When you set up a UAE offshore company business operation is not allowed in the UAE. However, UAE as a base is utilized to do business in the rest of the world. An offshore company can be set up in Dubai, but in most cases, it is better to set up an offshore company in RAK with a registered office in Dubai.
3. Onshore Jurisdiction
Ruled by federal laws and regulations, the most common types of businesses within the onshore jurisdiction for corporate clients are:
- Representative office
- Branch office
- Limited Liability Company (LLC)
- Sole Establishment
- Steps to start your company in the UAE with a Mainland license
1. Select the category of business:
The type of business structure you choose will further determine the license required for the business. However, before you choose the type, research into what is acceptable according to the government in the UAE and what is not. Certain activities are only allowed in certain jurisdictions.
2. Ownership of the Business
Firstly, if you are a foreign national and want to have 100% foreign ownership of your company, then you can do so by opting for a license and location in one of the many free zones of the UAE or a mainland license with certain activities. There are nearly 45 free zones in the UAE you can choose from. Recently new laws have been implemented to allow the 100% ownership of mainland licenses as well which previously required a local sponsor to own 51%. This is in select activities but has made the UAE an even more attractive place to open a company.
3. Select a Name for the Business
This is a very important legal procedure and you must make sure your business name is unique to avoid any copyright.
4. Initial Approval
Under this step you need to obtain a “no objection” from the Department of Economic Development. Once you get the initial approval, you can resume your company setup process.
5. Prepare your documents/agreements
Based on the legal form of your business, you might need to create and sign a Memorandum of Association (MOA) or a Local Service Agent (LSA) / Corporate Agent agreement with a local support (UAE national). Also, at this stage you will have to finalize a physical address for your company.
6. Select the Premises
Once you get all your legal procedures and forms ready, the next step is to select the premises. Free zone authorities in the UAE can help you find one depending on your requirements. Once you finalize your physical address, more than half of the process will be completed.
7.Submit your Documents and Get the License
Once everything is done, you just have to submit all the documents and process all the payments. You have to pay for your trade license within 30 days of receiving a payment voucher. In case of nonpayment for six months, the transaction is automatically cancelled.
8. Open a bank account
Once your paperwork has been returned, you will have all the documentation you need to open your corporate bank account.
Setting up your own business has never been easier. Our professional corporate team at Kashwani Law Firm in affiliation with Spencer West takes care of it all so you can focus on what is important when building your business. For more information about company formation in the UAE mainland or free zones, please contact us we will be grateful to assist you. In the upcoming articles we will be writing about the freezones and new E-trader license that makes the UAE an even more attractive place to start a company!