The UAE is strategically located in the middle of Africa, Asia and Europe. Due to investor-friendly law-making, tax and financial environments, as well as an large-scale double tax treaty (DTT) network and well-confirmed infrastructure, the UAE may be an absolute business location for multiple grounds:
- Trading, creating holding, support platform(s) for a group's international business, financing
- Operating regional business from a hub in the UAE
- Doing local business in the UAE
There are several immediate and long-term initiatives intended to foster the business environment and promote development within the Emirates—in particular, Vision 2021. The UAE has also taken on several initiatives to create a robust tax environment.
This guide seeks to provide you with initial and practical information on doing business in the UAE.
Setting Up A Business Entity In UAE
Once a foreign investor (individual or Company) decides to set up a business in the UAE, the first settlement to make is whether the investor should set up an entity in a Free Zone or outside the Free Zone (usually referred to as Onshore or mainland entity) in one of the Emirates in the UAE.
Every entity set up in the UAE (Onshore or in the Free Zone) is provided a 'license' for its activities. The license types or categories can be broadly classified into the following models:
- Service license
- Commercial or trading license
- Industrial license
- Professional license
The Onshore entities are governed by the UAE Commercial Company Law issued in 2015, and the licensing authority of every Emirate (usually the Department of Economic Development) provides the list of licensed activities allowed within each Emirate.
Every Free Zone has its governing laws and regulations of an entity set up in their jurisdiction and also provides a list of licensed activities allowed within their respective Free Zone.
The investor would have to determine the most relevant license activity (or activities) they would require and then narrow down on the Emirate or Free Zone where they can operate from.
Company Incorporation Process
We have attempted to describe the Company incorporation process for the different jurisdictions below:
The incorporation of a Limited Liability Company (LLC) is broadly divided into the following steps:
1. Name Registration and Initial Approval
The prospective partners (the applicants) have to apply to the relevant authority (Department of Economic Development in Dubai, Abu Dhabi) for setting up a company by submitting an application in the prescribed form. A few documents such as passport copy of partner(s), if it is a company, and national ID card of the UAE domestic partner(s) have to be submitted along with this form.
2. Activity Approval
Certain activities require approvals from relevant Ministries or Government departments in the UAE. For instance, any Company planning to carry out the operation of construction has to obtain a permit from the Dubai Municipality. Such a license from the Dubai Municipality will indicate as to what type and size of construction projects the Company can undertake.
3. Incorporation Document
After getting the initial approval, the partners have to execute an incorporation document commonly known as the Memorandum of Association. This document should be in Arabic or English, and Arabic. It has to be implemented in front of the Notary Public in the UAE, and all partners or their representatives or power of attorney holders have to be present before a Notary public to sign this document.
4. Office Space
A suitable commercial space for the business has to be rented. The lease agreement of the premises has to be submitted to the relevant authority at the time of the final application for registration.
5. Bank Account
A bank account has to be opened with a bank in the UAE, and the initial minimum capital has to be deposited in the account. This amount is not available for use until the Company is formally established.
A certificate from the bank and a certificate from a UAE registered auditor have to be submitted to the relevant local authority at the time of the final application for registration.
6. Invoice and Application for License
On completing all the above processes, all the above documents in the original have to be submitted to the applicable local authority along with the Application for License. The body will issue an Invoice for the registration and licensing charges. The partners have to pay the invoice in the prescribed period.
7. Issue of Commercial / Trade / Service License
Once the partners pay the amount invoiced by the local authority, the authority will issue a Trade / Commercial / Service License. At this stage, the Company can commence operations.
The Company's license has to be submitted to the bank to remove the freeze on the capital, and this capital can then be used for the Company's business.
8. Registration with the local Department of Immigration and the Federal Ministry of Labour
A UAE national has to be designated as the Public Relations Officer (PRO), who will deal with the Immigration and Labour department on behalf of the Company. The UAE national, who is the majority partner, can act as the PRO of the Company. Else one of the partners, has to attend in person.
9. Application for Manager Visa
When the Immigration department issues such as a visa, the manager can enter the UAE on this visa. Upon entering the UAE, the manager has to undergo a medical examination, and upon receipt of the result of the medical examination, his/her visa is stamped on his passport. Once the permit is stamped on the passport, the manager cannot be out of the UAE for an uninterrupted period of six months, or else his visa will expire.
10. Application of Employee Visas
For every new employee, the Company has first to apply to the Federal Department of Labour for approval. The employee's educational certificates duly attested by the UAE Embassy in the country of origin and re-attested by the Ministry of Foreign Affairs in the UAE have to be submitted at the time of labor permit. Educational certificates are not required for specific categories of employees, such as laborers, sales associates, etc.
After receiving the department's approval, the Company has to apply to the Immigration Department for an employment visa.
Who Can Assist You?
If you’re planning to set up a company in Dubai, it would be best to consult a company formation master who might come in handy and would help you with the full procedure of incorporation and registration. We at Commitbiz have professional advisors who can help you undergo the entire process without any hassle. Contact us today for availing the services.