How to Launch a Business in Abu Dhabi for Foreigners?

by Zaara 10, Dec 2020

How to Launch a Business in Abu Dhabi for Foreigners?

Abu Dhabi is the key option for a foreigner to start a business after Dubai. Abu Dhabi is the country capital and the headquarters of the Abu Dhabi Emirate. Abu Dhabi has one of the highest per capita GDP in the world and is the wealthiest emirate in the United Arab Emirates when viewed separately. It's a critical hotspot for global entrepreneurs and investors who want to develop new business, with over a trillion dollars invested in the city.

Why Invest in Abu Dhabi?

FDI inflows recovered considerably after a somewhat uncertain time between 2010-2013 due to the global economic crisis and regional stability. The United Arab Emirates saw its FDI inflows rise by 32% from 2018 to 2019 and reached US$ 13.8 billion. The FDI stock reached 154 billion USD at the same time. Abu Dhabi has particular regulations on the acquisition by foreigners of real estate.

The government-funded Strategic Plan Vision 2021 aims to support FDI. Foreign investors may hold 100 % of the shares of an undertaking in free areas. Abu Dhabi's strengths include its easy access to oil resources, its low energy costs, its desire to diversify the economy, and its high purchasing power. 

The country's undeniable assets are the absence of direct corporate taxation (excluding banks, oil firms and operators of telecommunications), direct income taxation; and trade regulations and any limitations on capital repatriation and the presence of a robust and financially viable banking sector, plus a vast pool of expatriate labor.

Setting up a Business in Abu Dhabi

When you decide to start a business in Abu Dhabi, the first move is to evaluate your business area in Abu Dhabi. You may choose to set up your company from the mainland, the free zone, or offshore. 

Free zones  

Free zones are the essential foundations of the stable economy of the UAE. They have generated remarkable foreign investment, creating thousands of jobs, and promoting the transfer of technology into the country. Business-friendly regulations, smoother processes for employment, and immigration and taxation systems are the most sought-after business areas in the UAE. Abu Dhabi alone has eight free zones, contributing significantly to the economy of the city. There are eight free zones in Abu Dhabi:

  1. Abu Dhabi Airport Free Zone (ADAFZ)
  2. Twofour54
  3. Abu Dhabi Ports Company Free Zone
  4. Abu Dhabi Global Markets Free Zone
  5. Industrial City of Abu Dhabi
  6. Higher Corporation for Specialized Economic Zones (Zones Corp)
  7. Masdar City Free Zone
  8. Khalifa Industrial Zone

Mainland 

mainland business is an onshore enterprise that is accredited to the related emirates by the Department of Economic Development (DED). Enterprises licensed in the UAE can do business without restriction both on the local and outside UAE markets. 

0ffshore 

An offshore company is a legal corporation working outside its registered jurisdiction to avoid taxes.

Free Zones are particularly popular with foreign entrepreneurs and with good reason. Among the incentives they offer are 0% corporation and personal tax, 100% company ownership, 100% repatriation of capital and profits, no currency restrictions, and 100% import and export tax exemption. Along with a bunch of advantages, there are some disadvantages. Operations of the companies registered in free zones must be conducted within the geographic limitations of their designated zones. Any business activities with mainland clients must be done through distributors or agents.

Business Setup Process in Abu Dhabi

Here are some of the steps involved for foreigners in setting up a business in Abu Dhabi.

Plan for the Future 

No matter what type of company you want to start, market research should be carried out on your idea. Market research will help you to quantify the city's needs and ultimately help you decide whether your business is worth the risk. Several companies can help you in this step (see box below), but before starting a company, market analysis is always a good idea to search for rivals. You can't operate your business without a license

The majority of start-ups are looking for a license. On the Abu Dhabi e-government pages, you can find an excellent resource under the section on the business. The license requirements vary by the type of business you open and the location of the business. A company in the Free Zone will have different operating rules than an onshore company; You can get your business license easily with the help of consultants such as Commitbiz.

Get an Address 

Based on the type of business, you may need a working space or a work address. In the case of working spaces, there is a bit of a legal paradox at play in obtaining the necessary documentation. You first need a lease to get your business license. But you can't get the office lease without a license! In order to solve this problem, the way forward is first to register their company as a ''Incorporation'' rather than an actual company and to obtain the Tawtheeq. The tawtheeq is a file that will contain all your details on the business venture and the lease requirements.

Find an Emirati/Local Sponsor

Are you all set to be your own boss? But a word of advice. Any foreigner living in Abu Dhabi needs to have an Emirati partner to register a company. Sole proprietorship of businesses here can only be done by locals. In any business, 51% of shares should come from one or more local residents. It does not, however, mean that 51 percent of the income goes to the premises; the arrangement may be changed to allow the ex-pat to make more of the profits.

Create Capital   

Everybody knows that without some capital, you can't start a business. In the past, an individual had Dhs150,000 in the bank to be able to obtain a small business license, but this rule was abolished in 2009. Although this law was officially removed, it is still common practice to require that sum before granting a business the right to operate.

Safeguard Yourself 

Patenting your ideas and copyright your material will be an essential part of your company. You don't want people to copy your idea, after all.

Why Commitbiz?

Since even just the idea of building a new business in Abu Dhabi seems strenuous, consulting companies in Abu Dhabi come into the picture. Our Advisors at Commitbiz provide all kinds of services required to start a company in UAE. Contacting us means that you wouldn't need to work hard on your side to have your company set up in Abu Dhabi. Our job is to make the process lighter for you.

Aside from finding out how to start a business in Abu Dhabi, we can also discuss with you all of your plans, such as your business ideas in Abu Dhabi whether you would like to know how to start a restaurant business in Abu Dhabi or even how to start a manufacturing business in Abu Dhabi. Contact us now, and we are ready to lend our hands to ensure that you are on the right track.