Business Setup in Abu Dhabi

Abu Dhabi is the largest Emirate and the capital of the UAE, located on the south-eastern side of the Arabian Peninsula, besides the Persian Gulf. The city constitutes more than three-quarters of the area of the country of UAE, and is the second most crowded Emirate in the federation, after Dubai. Notwithstanding the 10% of the world's oil reserves and is one of the largest oil producers, Abu Dhabi has been expanding its economy outside of oil export since 2009. The city has been funding heavily in real estate, industrial development, retail, and tourism.

Abu Dhabi is one of the fastest-growing and wealthy markets in the world. For a businessperson wishing to start a company in the Middle East, Abu Dhabi is a viable location of choice. The corporate norms and business procedures in the Emirate are simple, and it takes only a few days for setting up a company in Abu Dhabi.

Why Set Up New Business in Abu Dhabi?

Abu Dhabi, being the administrative capital of the UAE, is one of the most sought-after offshoring places in the world. It accounts for 95% of the country's total oil reserve and offers diverse investment occasions to almost all economic sectors.

Apart from the fact that it is prosperous and safe, setting up a business in Abu Dhabi is much preferred due to its transparent and flexible business setup procedures. Unlike in a few countries, it just takes a few days to set up a new company or open an offshore branch of your company in Abu Dhabi. For that, you must fulfill the required guidelines correctly.

Here are a few other advantages of setting up a business in Abu Dhabi:

  • Abu Dhabi occupies a prominent location between Europe, Asia, and Africa – and thus has close access from the rest of the world
  • The Emirate allows for 100% foreign ownership and provides an exemption from corporate and personal income tax
  • There are no foreign exchange controls, quotas or trade barriers
  • The living standards in Abu Dhabi are top-notch, with world-class facilities in healthcare, residences, recreation, education, and transportation.

Company Formation in Abu Dhabi

Commitbiz is conversant with the company formation laws and regulations in Abu Dhabi and can help you set up your business here, availing the required licenses. You can choose from among a free zone or a mainland company in Abu Dhabi.

Here is a brief description of each:

Free Zone Company Abu Dhabi

Free Zone company formation offers single-window administration and is authorized as an independent jurisdiction that allows an expatriate businessperson to own a company wholly (100%). There is no requirement to appoint a UAE national as a service agent of a branch or as a partner if the business is set up in a free zone. Setting up a business in the UAE has certain restrictions, so, free zones act as a gateway to carry on international business trade. However, local (UAE) supply of goods has to be channeled through local distributors, and the business is supposed to pay a 5% customs duty for it. Abu Dhabi Free Zone authority provides a perfect gateway for smooth registration of companies in the Emirate.

Free zones in Abu Dhabi issue licenses:-

  • Commercial Trading
  • Consultancy
  • Branch of a Foreign Company

To know more about free zones in Abu Dhabi, click here.

Mainland Company Abu Dhabi

Abu Dhabi has a list of mainland's which are commercialized geographical areas that fall under the UAE government and its authorities. They have regularized policies and legal guidelines, which makes the city one of the most developed economies in the UAE. A mainland company in Abu Dhabi can carry out business across the UAE but permits maximum foreign shareholder equity capped at 49%.

To know more in Mainland Company in Abu Dhabi, click here.

Abu Dhabi Offshore Company

Companies may legitimately move offshore Abu Dhabi for tax avoidance or to enjoy relaxed regulations. If one wants to protect its assets, then overseas Abu Dhabi company formation can be a viable option. Abu Dhabi offshore companies are non-resident companies, which precisely means that the shareholders get no visa, and there is no physical office. The businesses in Abu Dhabi are also not issued with an operating license and only get an official Certificate of Incorporation. It is because they cannot conduct manufacturing, trading, or business within the Emirates.

Company Incorporation in Abu Dhabi

Abu Dhabi Economic Department is the licensing department that assigns licenses for all kinds of businesses in Abu Dhabi, except for the free zones. A company in Abu Dhabi can take one of the following legal forms:

Sole Proprietorship

An investor can set up a new business in Abu Dhabi as a sole trader. One needs to appoint a UAE national with 51% shares as a service agent. Doctors, lawyers, and engineers mostly use this type of corporate structure.

Limited Liability Company (LLC)

LLC is one of the most common entities that an investor chooses for company setup Abu Dhabi. It is a separate legal entity, i.e., separate from its owner, shareholders, and the persons who run it, the directors. An LLC company formation in Abu Dhabi must appoint a minimum of one director and two shareholders.

Partnership

Under this, foreigners are strictly prohibited from forming a partnership company in Abu Dhabi. This type of business structure is limited only to the UAE nationals.

Public Shareholding Company

PSC is also called as Joint Stock Company in Abu Dhabi. It is suitable for large projects or operations, involving a significant investment of funds or raising private or public capital. A PSC in Abu Dhabi can have a minimum of ten founders of which at least 51% must be owned by a UAE national

Joint Ventures

A joint venture is a contractual arrangement between a foreign party and a regional party licensed to engage in the desired business activity. The joint ventures in the UAE are established in the form of an LLC. In practice, joint partners are seen as allowing a suitable structure for companies working together on specific projects.

Branch of a Local (UAE) Company

Unlike a foreign company branch office, UAE registered companies having a chapter in the UAE can sell or distribute goods in the country.

Branch of a Foreign Company

An Abu Dhabi branch of a foreign company is allowed to invoice the UAE customers, sign local sales contracts, and receive income from customers. Here, a local UAE agent must be appointed to sponsor visas and licenses.

Free Zone Company

Free Zone Companies Abu Dhabi are formed for tax benefits. They have advantages like 100% repatriation of capital and profits, 100% foreign ownership, no currency restrictions, and so on.

Foreign Representative Office

A foreign representative office in Abu Dhabi is wholly owned and controlled by a non-UAE national. Even though the entity is foreign-owned, it does not have a legal right to make direct sales within the UAE. A representative office is usually formed to do market research of that particular region.

Things to Know Before Company Registration in Abu Dhabi

Before a new business set up in Abu Dhabi, one must know guidelines, features, facts, and regulations so that there wouldn't be any problem in the future.

1. Local Sponsor

Local Sponsor in general terms refers to the local service agents and the nominee shareholders in the Mainland companies in Abu Dhabi with foreign investment. A sponsor must be an Emirati (UAE national) with a family membership card. If an individual wants their business to start in Abu Dhabi mainland, then they must have a local sponsor. A local sponsor in Abu Dhabi is mandated to own 51% of shares in the business, while foreign investors will own the remaining 49%. While choosing a local sponsor, it is essential to understand what one wants from them. Here are a few questions to consider-

  • Do you want an actively engaged sponsor or a nominee sponsor?
  • If your sponsor promises opened doors, contracts, and introductions, how will you ensure that they follow through?
  • Will your busy, high profile sponsor be feasible for document signings upon request?
  • What happens to the 51% share of your business in Abu Dhabi if the Sponsor should die?
  • What is your departure strategy, and is it enforceable?

2. Chamber Membership

Law No. (7) of 1998 requires all the nationals and foreigners, involved in any commercial, industrial, professional, or vocational activity within Abu Dhabi Emirate, whether they are individuals, branches or companies, must join the Abu Dhabi Chamber of Commerce and Industry and obtain its membership as a prerequisite to acquiring a business license in Abu Dhabi.

3. PRO Services

Every company in Abu Dhabi requires the services of a Government Liaison Officer, otherwise known as a Public Relations Office or PRO. Abu Dhabi PRO services refer to all activities related to processing governmental documents and paperwork, such as visa applications, company trade licensing documentation and approvals, and labor cards. PRO services in Abu Dhabi include-

  • Document attestation
  • Visa renewals and cancellation
  • Trade license
  • Regulatory approvals
  • General document clearance
  • UAE certified legal translation

What is the Procedure for Business Setup in Abu Dhabi?

Below are the steps to be followed for starting a company in Abu Dhabi.

1. Determine the Type of Economic Activities

It behaves you to gain a clear understanding of your intended business activity before initiating the procedures, since legal proceedings and fee may vary depending on the character of your business.

2. Find a Local Sponsor

As per the UAE jurisdiction, foreign companies need a local sponsor (a service agent or a company owned by UAE nationals) to open a branch office in Abu Dhabi. A local sponsor will facilitate the necessary licenses for the branch office without bearing any liability to capital contribution or losses.

3. Determine the Legal Form of Business

Rules and regulations are different for different ownership types and business establishments. You need to select a legal entity type to run your business.

4. Register Your Trade Name

A trade name distinguishes a company and describes its nature and legal form. We help our clients in not only setting up a business in Abu Dhabi but also in registering a trading name from the list of registered trade names provided by the Department of Economic Development (DED).

5. Fulfill Licensing Requirements

The various types of licenses issued by the Abu Dhabi licensing authority are:

  • Agricultural License
  • Commercial License
  • Industrial License
  • Professional License
  • Tourism License
  • Vocational License

We help our clients get a permit, avail No-Objection Letter from the deemed jurisdiction and also get their legal documents translated into Arabic by a licensed translator.

6. Get Special Approvals

  • A foreign investor is required to obtain approvals from the following authorities:
  • Abu Dhabi Customs Authority
  • Abu Dhabi Distribution Company
  • Abu Dhabi Education Council (ADEC)
  • Abu Dhabi Foo/d Control Authority
  • Central Bank
  • Medical Council
  • Ministry of Agriculture and the Department of Health
  • Ministry of Civil Aviation
  • Ministry of Economy
  • Supreme Petroleum Council
  • Telecommunications Regulatory Authority

7. Obtain the Initial Approval

An approval from the General Directorate of Residency and Foreigners Affairs - Abu Dhabi (GDRFA) is necessary for international investors before making the initial approval. An initial approval certificate is expected to continue with the business licensing formalities that permit foreign nationals to practice their desired business activity in Abu Dhabi. We help our clients get all the necessary approvals from the concerned officials, including the DED, and help them pay legal the fee for getting a business license issued.

To get a complete guide on business setup in Abu Dhabi, click here.

Cost of Setting up a Business in Abu Dhabi

There is undoubtedly a cost involved at every step. Be it a free zone company or a mainland company in Abu Dhabi; there is a cost involved. The business setup cost in Abu Dhabi for different jurisdictions are as follows

Mainland Setup Cost Abu Dhabi

The cost varies depending on the business structure, business activity, office space, and several visas. Apart from these, few prices that you must be aware of are-

  • Incorporation fees (submitting the required documents, arrangement of approvals/inspection –one time)
  • Sponsor fees (annual)
  • Legal fees (one time)
  • Government and third-party taxes (trade license, notary fees, legal translation, typing centers, a mix of one time and annual fees)
  • Visa per person (usually lasts for two years)

Abu Dhabi Free Zone Cost

Costs also vary depending upon the free zone, business structure, number of visas, and office space. Few costs one must be aware of are-

  • Registration Fee (one-time fee)
  • Name reservation fee (one-time fee)
  • Annual License Fee
  • Share Capital
  • Yearly rental for premises
  • Visa per person (lasts for three years)

Business Licenses in Abu Dhabi

As mentioned in Step 5 of the company registration in Abu Dhabi, for business setup in Abu Dhabi one has to obtain a specific license depending on the business activity. Few of the business licenses are mentioned as follows-

  • Commercial License – This license is issued to the companies engaged in general business activities like public trading companies, hospitals and clinics, construction and real estate, and business contractors
  • Occupational License – This license is issued to the businesses which involve individuals using their mental and intellectual capabilities, talents, and abilities to serve clients. Examples for an occupational license are law firms, accounting and audit firms, research and development firms
  • Professional License – This license is issued to artisans and other professionals who personally engage in the practice of a particular craft. These individuals may work alone or work up to five people. Examples for professional license include carpentry, smithery, and steelwork
  • Industrial License – This license is issued to the businesses who wish to set up manufacturing operations in Abu Dhabi. The Higher Corporation issues the license for Specialized Economic Zones (ZonesCorp)
  • Tourism License – This license is issued by the Abu Dhabi Tourism and Cultural Authority (TCA). This license is granted to companies offering tourism-related services like hotels, travel agencies, boat rentals, etc.

There are a few steps involved in obtaining any of these licenses mentioned above in Abu Dhabi.

How to Obtain a Trade License Abu Dhabi?

Now that the types of trade licenses are known, the steps involved in getting the needed license is also something one has to look forward to. The procedure is as follows-

  1. The applicant has to approach either to the DED Abu Dhabi, ZonesCorp, or Abu Dhabi Tourism Authority as per the type of requested activity
  2. Attach the required documents as mentioned in the application for obtaining the license
  3. The concerned authority reviews the application, and sometimes additional documents are requested
  4. Once the review is completed, the applicant is referred to the Abu Dhabi Chamber of Commerce for its membership
  5. A field visit is done by DED or Abu Dhabi commercial register to know if all the terms and conditions of acquiring the license are fulfilled
  6. Once they are satisfied, the permit is issued

The license is renewable yearly. The Abu Dhabi trade license fees may vary depending on the type of license and business activity involved. There are different activities involved in every trading license. The Abu Dhabi trade license activities list with the authority from whom the approval is needed is as follows-

  • Executive Council – Charter Trading, Travel And Tourism, Car Clubs, Charter Air Transport, Foreign Company Branches
  • Ministry Of Interior – General Transport, Driving Schools, Used Auto Parts, Fire Equipment, Alarm And Safety Systems, Organizing Festivals And Festivities
  • Ministry Of Justice – Law Firms, Legal Translation, And Legal Consulting
  • Ministry Of Labor – Societies, Nurseries, And Manpower Recruitment
  • Ministry Of Communication – Land Transport, Telecommunication Equipment, And Maintenance
  • Ministry Of Economy – Insurance, Brokers, Damage/Loss Assessors
  • Ministry Of Culture – Software Import, Export, Cinema Houses And Theatres, Distribution And Sales, Issuing Publications And Periodicals, Music, Printing Works, Logo And Gift Items, Printing Services Office

There are many more such authorities and activities that one needs to get approval before the business setup in Abu Dhabi

Benefits of Starting a Business in Abu Dhabi

The procedure of how to start a small business in Abu Dhabi is clear. Knowing its advantages can give a push needed for actually doing business in Abu Dhabi. Few benefits are mentioned below-

  • For LLC registration in Abu Dhabi, it is easy to acquire an Emirates trade license, local visas, renting a premises, and opening a bank account from the Chamber of Commerce and Industry of Abu Dhabi
  • The investor can become a partner in the firm
  • The investor can run the business without the day-to-day interference of the local, national partner
  • Abundant and inexpensive energy supply
  • Competitive freight charges
  • Competitive real estate costs
  • Easy to open global corporate bank accounts

Most of the things related to business setup in Abu Dhabi are covered under this. But a foreigner investing for the first time in Abu Dhabi may not know where to invest and earn profits. Hence, understanding the booming sectors in Abu Dhabi is much needed at this stage.

Business Industries Booming in Abu Dhabi

Abu Dhabi has everything that an investor dreams of while thinking of starting a business. It is an ideal location for every entrepreneurial dream. Not only does it provide the necessary services and infrastructure needed for business setup, but it also possesses an increasing number of tourists from all around the world. It is well-known that tourism is blossoming over the past few years in the Emirate. Apart from it, there are two main business sectors, which have been meeting high-end in their approach toward being the best. They are-

  1. IT Sector – Since the UAE aims at establishing itself as a Smart Nation, the government of Abu Dhabi has taken several initiatives toward IT sector in the region. Abu Dhabi Hyperloop, which is set with a vision to bring a robust economic shift driven by technology and automation. Information Technology Sector in Abu Dhabiis increasing the steps to excel in the field of technology and innovation and to blend the same in all possible business sectors.
  2. Hospitality Sector – The Middle East, especially Dubai and Abu Dhabi, are considered as GCC's leading cities in terms of the growth in the hospitality sector. They are not just growing in terms of tourists and infrastructure but also in terms of employment and business in the public and private industries. Hospitality Sector in Abu Dhabi has seen tremendous growth over the years due to government initiatives, festivals, and strategic location and so on and it will continue to grow

Now that the sector to invest in is known, which businesses to invest in those sectors is mentioned below-

  • Restaurant Business
  • Travel and Tourism Business
  • Retail

If you want to know in-detail information on the booming business opportunities in Abu Dhabi, click here.

Things to do After Company Formation in Abu Dhabi

Once a business has been registered in Abu Dhabi, there are a few things that must be taken care of. Like,

Company Card (Labor Card)

Every company operating in the UAE has to be registered with the Ministry of Labor and the Department of Immigration. Without these cards, a company will not be Sponsor (or legally employ) staff. The Ministry of Labor or Labor Department in the UAE administers all employment-related issues. The MOL is accountable for issuing labor cards and compelling labor bans on those who are permitted to one.

Visa

People from different countries have to satisfy different criteria to get a valid visa to enter the UAE. Depending on your requirements, you have to apply for the type of visa. Different visas available in the UAE are-

  • Work visa
  • Travel visa
  • Visit visa
  • Tourist visa
  • Transit visa

Our Business Setup Services in Abu Dhabi

It can be challenging to go through all these steps alone in a foreign land. Hence it is advised to get help from company formation consultants in Abu Dhabi. We at Commitbiz are business setup consultants in Abu Dhabi and can help you with the following business setup services in Abu Dhabi:

  • Company setup
  • Company registration
  • Local sponsorship
  • Public Relations Officer (PRO) services
  • Accounting and bookkeeping
  • Auditing
  • Tax consulting
  • Value Added Tax (VAT) registration
  • Legal advisory
  • Setting up a branch office in Abu Dhabi
  • Intellectual property protection

Why Commitbiz?

Commitbiz helps businesspeople and organizations in setting up a company in Abu Dhabi through company registration, incorporation, and legal consulting services. Our experts take care of the banking, visa, legal, and licensing formalities, following the UAE laws. We help you through your company formation, with your business objectives at the center of our ecosystem.

We help you in planting your business in this booming economy. It includes handling all the legal procedures to help your business gain a foothold, establish open trade agreements, and avail all the state-of-the-art amenities of the region. For business setup services in Abu Dhabi, contact us – we'll be glad to assist.

Frequently Asked Questions (FAQs)

1. How to start a small business in Abu Dhabi?

To register a business in Abu Dhabi follow these steps:

(1) determine the business activity,

(2) find a local sponsor,

(3) register business name,

(4) get initial approval,

(5) get Certificate of Incorporation and Business License,

(6) register with the Chamber of Commerce, and

(7) get external approvals required for your business.

2. How to apply for a freelance visa in Abu Dhabi?

Freelance Visa is issued in Abu Dhabi free zones. The process may vary according to the free zone chosen. However, the standard process includes application submission for provisional approval, if approved - you will receive a customer confirmation letter, sign letter and submit the documents for final approval, pay fees, sign the free zone sponsorship agreement. You will obtain freelance permit along with residence visa.

3. What are the documents required to obtain a freelance visa in Abu Dhabi?

The documents for provisional and final approval of a freelance license in Abu Dhabi are:

  • Business plan
  • Passport and visa copy
  • Bank reference letter
  • Sponsor/Employee NOC (if you have a work permit and a residency visa)
  • Portfolio
  • Credentials and certificates
  • Other necessary documents depending on the free zone

4. What are ‘baqalas’ in Abu Dhabi?

Small groceries, or baqalas, are a ubiquitous feature of the UAE’s urban landscape. On average, a baqala operates for 18 hours a day, seven days a week, and replete with delivery men to extend its wares to every doorstep in the immediate neighborhood.

5. What is the cost of business setup in Abu Dhabi?

The cost of starting a company in Abu Dhabi depends upon various factors including business activity, number of employees, and commercial space. However, the costing generally includes:

  • Incorporation fees
  • Sponsor fees
  • Legal fees
  • Government and third-party taxes
  • Visa fees per person

6. How many directors are required for company formation in Abu Dhabi?

In Abu Dhabi mainland, you need 2 directors, and in Abu Dhabi free zone, you need 1 director, for company registration.

7. What is the minimum capital required for registering an Abu Dhabi company?

There is no minimum capital requirement.

8. How to obtain a trade license in Abu Dhabi?

Approach the concerned department according to the business activity, file an application and submit the documents, get the membership from Chamber of Commerce once the application is approved, a permit will be issued after a field visit by DED or Abu Dhabi Commercial Register.

9. What are the types of business entities available in Abu Dhabi?

  • Sole Proprietorship
  • Limited Liability Company
  • Partnership
  • Public Shareholding Company
  • Joint Ventures
  • Branch of a Local or Foreign Company
  • Representative Office

10. What are the business licenses available in Abu Dhabi?

  • Commercial License
  • Occupational License
  • Professional License
  • Industrial License
  • Tourism License