Steps to start a business in UAE

Select business activity and jurisdiction

Before starting your entrepreneurial journey in UAE, you should do a thorough research on the feasibility and profitability of the business activity with respect to the UAE market. Once business activity is decided, you should select a jurisdiction based on the business needs or requirements. UAE has 3 different jurisdictions or economic zones: Mainland, Free Zone and Offshore. Each jurisdiction has its own set of laws and regulations pertaining to busine`ss setup.

Determine company structure

Before applying for a business license in UAE, it is required that you determine the company structure or the legal form. Choosing the right company structure is a crucial step as it will significantly affect your business' legal and operational risk, asset protection, tax obligations, legal costs and clientele. UAE offers a number of legal forms or company structures under which you can register your business. These structures include:

  • Limited Liability Company (LLC)
  • Sole Establishment
  • Civil Company
  • Local Company Branch
  • GCC Company Branch
  • Foreign Company Branch
  • Free Zone Company Branch
  • Holding Companies

Apply for trade license and register your business

Once the Department of Economic Development (DED) approves your business name and activity, you can apply for the trade license and start the process of company registration in UAE.

  • Commercial License
  • Professional License
  • Industrial License
  • Tourism Licenseh

If you’re planning to start your business in UAE Mainland then you have the option to choose any of the above 4 licenses. For UAE Free Zones, licensing structures differ from above and depends on the business activity you’re planning to undertake.

Simultaneously, you will be asked to take required approvals from different government or non-government authorities by DED. The documentation and approval stages differ with respect to business type and activity.

Find local partner or sponsor

UAE commercial law doesn’t allow a business owner to hold more than 49% in the company shares if the business is being setup in UAE Mainland. So, it is required that you should find a UAE national to be your local partner or sponsor.

There are 2 types of sponsorships you can avail: Local and Corporate.

Since finding a trustworthy local partner or sponsor could be challenging so you can opt for a corporate sponsorship. Here, you will get 100% business ownership along with proper documentation.

Draft Memorandum of Understanding (MOU)

Memorandum of Understanding (MOU) is a nonbinding agreement that defines the responsibilities of each party in an agreement, provides the scope and authority of the agreement, clarifies terms and outlines compliance issues.

Taking into consideration UAE government’s mandates and business interests, you can draft a Memorandum of Understanding (MOU) for your business.

Get approval from DED and rent an office

It is mandatory for you to get an Initial Approval Certificate from DED. This approval states that your company is legally allowed to perform a particular business activity or offer a product.

Once this is done, you can rent an office space or a shared workspace. This will also ascertain the number of visas you can request from DED.

Looking to register, launch and expand your UAE business?

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Setting up a business in UAE: FAQs

Benefits of starting a business in UAE

  • Economically diverse
  • Well established infrastructure
  • Free zone to offer 100% ownership
  • Ranks first in ease of doing business (in the MENA region)
  • Tax favourable environment
  • Custom duty free area
  • Regional leader in protection of IP rights
  • High % of expatriate workforce
  • No exchange control restrictions
  • Safe and secure family environment

Cost of setting up a business in UAE

a) Mainland business setup cost
Cost of setting up a business in UAE Mainland depends on a number of factors: Some of these factors are: business activity, location of office, number of visas you require. Besides, following are some mandatory fees imposed by government while setting up a business in UAE Mainland:

  • Notary fees
  • Trade License
  • Registration at the government department

b) Free zone business setup cost
There are a total of 37 Free Zones in the entire UAE region. Cost of setting up a business in the UAE Free Zone depends on the business activity, number of visas you require, type of building and office space you select. Besides, couple of other applicable one time fees include:

  • Fee for company registration in the city
  • Fee for trade name-reservation

c) Offshore business setup cost
Cost of setting up an Offshore business includes nominee fee, business maintenance fee, bank account fee, company registration fee, agent fee, registered office fee and standard share capital fee.

What is the difference between Mainland, Free Zone and Offshore companies in UAE?

# Jurisdiction/Economic Zone Ownership Cost of setup Visa Requirement
1 Mainland 49% to business owner, remaining 51% to local sponsor highest Yes
2 Free Zone 100% ownership cheaper than Mainland and higher than Offshore Yes
3 Offshore 100% ownership (if business resides outside UAE) cheapest No

What is a LLC company in the UAE?

LLC, which stands for Limited Liability Company, is the most common form of business in the UAE. An LLC can be created by a minimum of two shareholders and a maximum of 50 shareholders.

What is meant by the Free Zone or Free Trade Zone in UAE?

Free Zones or Free Trade Zones are economic areas which were established within the UAE region to promote international business. Here, a business owner gets 100% company ownership and can trade goods and services at privileged tax and custom rates. Companies in each free zone can trade only within the same freezone and nowhere else in UAE.

How many Free Zones are there in UAE?

There are total of 37 Free Zones in UAE

What are PRO services?

While setting up a business in UAE, every company needs the services of Public Relations Officer (PRO). PRO services include all activities related to processing of government (e.g. visa applications) and company related (e.g. trade license) documentation and approvals.

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

As a mainland UAE company, you get certain benefits which Free Zones don’t provide:

  • Your scope to do business is ample as you can trade with any country of your choice
  • You don’t have to restrict yourself to a specific building/ area while setting up the office- can easily rent an affordable office space at any location of your choice

What are the benefits of a business setup in UAE Free Zones?

Most important benefit is that you get 100% ownership of your business. Some Free Zones also provide exemption from paying taxes and import/export duties.

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