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.
|#||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|
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:
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:
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.
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.
Similar to other countries, UAE was also affected by the pandemic, though the scale of impact was comparatively less. To mitigate the adverse impact of pandemic on SMEs (Small and Medium Enterprises) which constitute 92% of UAE business ecosystem, UAE announced a stimulus package for them. Right now, life in UAE is coming back to normal and UAE is gearing up for Dubai Expo 2020 which couldn’t happen last year due to the pandemic. Dubai Expo is scheduled to start from 1st Oct’21.
Renting a physical office is not mandatory for business setup in Dubai. Mainland jurisdiction offers virtual offices at a very minimal cost. Similarly, in Freezones, virtual offices, co-working spaces, sharing desks, physical offices, warehouses etc. are easily available.
There are 3 key business licenses available in the UAE while forming a company. These are- Commercials, Professional and Industrial. Based on your business activity, you can choose these licenses. E.g. trading businesses can go for commercial license, consulting companies can avail professional license and manufacturing entities can avail industrial license.
Company formation in UAE involved a number of steps. These are- selecting the business activity and jurisdiction (Mainland, Free Zone and Offshore), determining company structure, applying for business license and registering business entity, drafting MoU (Memorandum of Understanding), getting required approval from DED and renting an office.
Company formation in the UAE could be challenging for foreign entrepreneurs or investors as various offerings have been provided by different jurisdictions in the UAE. Also, liasoning with Govt. Authorities for approvals, availing licenses require help from a credible agency. All these things necessitate the need of availing services of business setup consultants like MBG Corporate Services in the UAE.
There are 3 types of companies in the UAE – 1) Free Zone Company 2) Mainland Company 3) Offshore Company
Mainland company formation in Dubai has its own advantages. Some of the key benefits include: trading access in Dubai Mainland, other parts of UAE and GCC countries. Mainland companies can also expand their reach by opening new branches, actively participate in govt. tenders or bids and projects and recruit a number of office employees without any restrictions.
Time required to register a Mainland company in UAE depends on the business activity an entrepreneur is going to choose. For some business activities, approvals may take longer than usual. But, in an ideal situation, 3-4 days is what it takes to register your Mainland company in the UAE.
Limited Liability Company or LLC is the most common legal structure entrepreneurs use while forming a Mainland company in the UAE. This legal structure provides required flexibility for business expansion. Earlier, there was a need to have a UAE local as partner to own majority shares (51%) in the company formation but with the recent 100% FDI law, this is not mandatory for a number of sectors.
Yes. While registering your Mainland company, you must possess a rented office space and tenancy contract in the company name. While issuing the company license, authorities review the tenancy contract.
Foreign nationals such as Doctors, CAs, consultants, legal advisors can incorporate a Mainland company in the UAE with 100% ownership. This is called Civil Work Company. Here, instead of a local sponsor, they need to appoint a Local Service Agent (LSA) as POC (Point of Contact) of Civil Work Company to liaise with the government authorities. The LSA neither owns company shares nor takes part in business activities of the company.
Yes, Mainland companies need to pay 5% VAT to the Federal Tax Authority (FTA for all the transactions that are initiated in Mainland.
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.
There are total of 37 Free Zones in UAE
Business setup in Dubai Free Zone has a number of advantages. Some of them are: 100% foreign ownership, 100% repatriation of profits, no import/export duties, no corporate tax, easy company incorporation, world-class infrastructure.
UAE Free Zones allow establishment of following types of business entities: Free Zone Limited Liability Company, Branch of an International Company, Branch of a Company already operational in Dubai, Free Zone establishment- Single Shareholder and 2 to 5 Shareholders.
To incorporate a trading company in UAE Free Zone, you will have to-
Yes, a Free Zone company can do business with the Mainland entities. For the same, Free Zone company is advised to-
Yes. The Free Zones in the UAE are governed by various jurisdictions and each jurisdiction has different policies and regulations. Hence, company registered under a specific Free Zone can rent office space only in the respective Free Zone.
Free Zone offers 100 % foreign ownership. Hence, it allows 100% repatriation of profits. Free Zone companies are also exempted from all import and export duties and no corporate tax is applicable on them. Only 5% VAT is applicable on all domestic transactions conducted inside UAE by the Free Zone company.
Unlike Mainland and Free Zones, Offshore company formation in UAE comes with a few limitations. These are- Offshore companies can’t actively trade within UAE, they can’t rent or lease a space in the UAE for trading, even the company owner can’t issue residency visa, they must have a company registration agent for completing the registration.
Yes, an Offshore company can open a bank account in the UAE. For the same, the company owner has to visit UAE to complete the necessary paperwork or documentation. Further, this will be strictly reviewed by bank officials under the KYC process.
Offshore company formation in UAE is comparatively easy as compared to Mainland or Free Zone company formation and usually takes 2 working days. Entrepreneurs can apply for an offshore company registration through an online form and upload required documents. Most of the time, physical presence of the company owner is not necessary for the offshore company formation.
No, Offshore companies are not permitted by UAE legal laws to purchase any commercial property in the UAE.
There are multiple ways for foreign nationals to obtain Residence Visa in the UAE. These ways include: applying for a job, investment in real estate or becoming a property owner, getting sponsored by the spouse, incorporating a company, and applying for the freelance permit.
Long-term Residence Visa was introduced by the UAE Government for promoting cross-border trade, economic activities and attracting quality talent from different regions of the world. Particularly for expats, the UAE Government introduced a 5-Year and 10-Year Long-term visa. This was instrumental in attracting global talent such as- entrepreneurs, academicians, scientists, HNIs, creative professionals etc.
Business Setup in Dubai involves a number of approvals and processing of government documents. PRO services refer to different support activities related to processing of government documents and paperwork, such as visa applications, labour cards, and company trade licencing documentation and approvals.
It takes 4-5 days to get e-visa once a person applies for UAE Residence Visa and submits all the required documents to concerned authorities in UAE. Post this, you can get the in-country status change and visa stamping done. On an average, it takes 8-10 days to complete the whole process of Residence Visa in UAE.
As soon as you incorporate a company in UAE, you become eligible to open a corporate bank account. You will have to go through the KYC process and meet other compliance requirements set by the bank. Also, a minimum monthly balance (in the range of 50,000-2,00,000 AED) is required to be maintained. The documents required for opening a corporate bank account in UAE are as follows:
Above is not an exhaustive list and based on the business activity, additional documents can also be asked from the bank as part of the compliance process.
Yes, foreign companies are eligible to open a corporate bank account in the UAE but for the same, they will have to take attestation from both UAE embassy in home country and UAE Ministry of Foreign Affairs. An easy route they can take is to set up a new company or branch office of the existing company in the UAE and open a corporate bank account.
If you have any queries related to business setup in UAE which are not listed above, then our company formation specialists would be happy to help! Start chatting and share your queries with us.