The UAE’s free and open economy makes it a top attraction for entrepreneurs and investors to start their ventures. The country has spared no effort in making its business landscape the best in the world by introducing encouraging reforms and placing crucial laws to ensure investor protection. The UAE’s latest FDI laws allow foreigners to own 100% of the Mainland company, alleviating the need to have a local partner, which was previously mandatory.
Setting up a business in Dubai can be highly rewarding if done with the right approach. Creative Zone shares 5 crucial elements to keep in mind when setting up a business in the UAE.
Business Activity – The first and one of the most important steps when setting up a business in the UAE is choosing your business activities. These will determine where you can set up and what license you require. For example, some free zones only allow certain types of activity, such as media, medical or transport, and aside from the restrictions, it often makes sense to set up in close proximity to businesses in the same sector. Dubai’s Department of Economic Development (DED) lists thousands of activities that you can choose from. One can select more than one, but it is vital to list every activity the business undertakes, both in freezones as well as mainland. Failure to do so could lead to licensing issues further down the line.
Company License – There are several licenses available in the UAE. The one that is right for you will depend almost entirely on your chosen business activities. If your business activities fall into the category of industrial or manufacturing, then you will require an industrial license. If you are in the commercial sector, i.e., the buying and selling of goods, then you will require a commercial license – and so forth.
Company Name – Choosing a company name is a hugely important step in establishing a business based in the UAE. There are a few things to keep in mind when making this decision. It is crucial to pick a business name that does not match any other company’s in Dubai. Any company name that coincides with an existing one will not be accepted. After the name is approved it needs to be registered with DED. This process usually takes three days and the registration is valid for a period of six months.
Free zone or Mainland – There are two common business jurisdictions in the UAE – mainland and free zone. There are many advantages to both. Freezones offer benefits such as a quick and easy incorporation process, ongoing business support and financial incentives such as 0% corporation and personal tax, 100% company ownership, 100% repatriation of capital and profits, no currency restrictions and 100% import and export tax exemption. Meanwhile, mainland businesses can trade directly with the UAE market and take on potentially lucrative government contracts. Along with giving you the flexibility to adapt your business and allowing you to penetrate key foreign markets, mainland setups also give you the freedom to expand your business’ branches to other parts of Dubai and across the UAE.
License Application – The most pivotal step in your company formation is applying for your license. Your business setup partner can make and manage your application for you – applying either to the relevant Department of Economic Development or the managing authority of your chosen free zone. Whether applying yourself, or through a company formation agent, one is required to provide a few details and some basic documentation, including:
Completed application form
Passport copy of the proposed owner or owners
Two colour passport size photos
In conclusion, if you’re armed with the right knowledge, setting up a business in the UAE is not an overly complicated procedure. However, it is important to note that the application process is only straightforward if your license application is complete at the time of submission and free from errors.
