Company Formation in UAE

Setting up a company in the UAE is like a paradise for investors and entrepreneurs all over the world. Thanks to the government of UAE, which has paved a business-friendly environment for whoever wishes to do business setup in UAE. 

This guide will help you understand all about company formation in the UAE. 

Know the Economy for Setting Up a Company in the UAE

Setting up a company in the UAE is directly connected with the growing economy of the UAE. As per the Dubai Chamber of Digital Economy, the UAE’s digital economy is about to hit $140bn by 2031, and the country’s GDP may increase by 20%.

Setting Up a Company in the UAE - Overview on UAE

The UAE consists of seven emirates, as listed below;

Emirates

Jurisdiction

Dubai

Mainland

Freezone

Offshore

Ras Al Khaimah

Mainland

Freezone

Offshore

Ajman

Mainland

Freezone

Offshore

Abu Dhabi

Mainland

Freezone

-

Sharjah

Mainland

Freezone

-

Umm-Al-Quwain

Mainland

Freezone

-

Fujairah

Mainland

Freezone

-

I. Mainland Company Formation in the UAE

Except for the following, the UAE Federal Law No. 2 of 2015 on Commercial Companies, as amended, applies to any economic entity that engages in any commercial, financial, industrial, agricultural, real estate, or other types of economic activity on the mainland:

  • Accordingly, the UAE Cabinet has decided to exclude some corporations.
  • Firms entirely owned by federal or municipal governments and corporations held in whole by such companies, providing the company's memorandum has a unique clause.
  • If a stipulation to that effect is included in their Memorandum of Agreement, companies functioning in various oil, gas, and power sectors in which the federal or municipal government owns 25% or more.

  II. Free Zone Company Formation in the UAE

  • Another alternative for foreign investors is to start a firm in a Free Zone. A Free Zone is a defined region inside the UAE where foreign investors can own up to 100% of their business and benefit from tax and tariff exemptions. To entice international investment into the UAE, free zones have been developed.
  • In the UAE, there are over 40 Free Zones, each with its own set of laws and regulations and agencies in charge of licensing and registration for international companies wishing to set up shop in that particular Free Zone. In addition, in the UAE, free zones are often formed to support certain businesses. 

In Dubai, for example, specific Free Zones cater to enterprises in the technology, media, finance, and import/export industries. The following are some of the most popular UAE Free Zones:

  III. Offshore Company Formation in the UAE

A few Free Zones, such as JAFZA and RAKFTZ, allow foreign investors to set up offshore firms that can operate as holding companies within their group structure and cannot conduct business in the UAE (Free Zone or mainland). The appropriate Free Zone's offshore regulatory rules and regulations control offshore companies in the UAE.

If you want to learn more about new tax laws and regulations in the offshore company formation service industry.  

UAE offers you seven Emirates with different jurisdictions as listed above. You can choose your preferred jurisdictions as per your business requirement and feasibility. Each jurisdiction has its own advantages and set of laws that need to be adhered to.

After doing adequate research and your business preferences you can start a company in the UAE which can give a kick start to your entrepreneurial journey.

If you wish to start a company in the UAE, this blog will guide you through the necessary information before you invest.

Benefits of Company Formation in the UAE

Have a look at the advantages of business setup in the UAE;

Starting a company in the UAE gives you the privilege of holding 100% ownership of your business.

Due to its strategic position, robust financial reserves, significant sovereign wealth funds, and continued government investment, the UAE has tremendous economic stability and a favourable business climate.

In 100 global development indices, UAE is among the top countries in the world due to the presence of doing business in the Emirates.

It has direct aircraft flights to over 250 destinations worldwide and is a prominent participant in international commerce networks, having shipping lines to over 400 places.

Over 40 free zones offer competitive advantages and capabilities that attract long-term investments. In addition, the country enables foreign ownership to be 100 percent.

With the exception of oil firms and international bank branches, it does not levy income tax on people, investors, or corporations.

The UAE promotes private sector growth and competition while also enforcing anti-monopoly laws. It has strong relations with significant regional and international trade groups.

In the UAE, customs charges range from 0% to 5%. In addition, the United Arab Emirates has a 10-year Golden Visa program. The long-term residence program is for investors, company owners, and critical industry experts. Now, you set up a business in Dubai, and now you need a visa. Learn more about visa services in Dubai.

Stages Setting up a Company in the UAE

The stages for the company formation in the UAE are as follows:

There are hundreds of possible actions to select from, and you must include all of them on your licence application.

Failure to identify each of your anticipated actions might lead to later problems. You can consult with some business professionals. Such professionals know allowed activities and may recommend those most appropriate for your company.

Now that you've detailed your business operations, it's time to pick a company name. When naming a company in the UAE, a few factors to consider. First, you must follow a set of naming rules that are both stringent and simple to follow. This is another phase where a company setup specialist may assist you.

As mentioned above, there are three types of business jurisdictions in the UAE, mainland, offshore and free zone. Select the appropriate one based on your business requirements.

Learn more about business setup in UAE free zone.

Get the required approvals from the respective government authority and submit all the relevant documents.

You can apply for the mainland trade licence, which varies from the UAE free zone business licence. It depends on the business activities you carry out.

If you open your companies in the UAE mainland, get yourself a local agent, as he or she will be holding 51% of the share of your business. 

A UAE visa is another essential need for starting a small business. The application process for your visa and that of your staff are unique yet simple.

If you have a UAE company licence, you can also sensor others. For example, a domestic worker, such as a housekeeper, might be a spouse, parent, or kid.

If you want to know more about vias, learn about visa services in Dubai, for example. 

Lastly, open a bank account for your future transactions.

Thriving Business Sectors in the Emirates 

Business setup in the UAE based on the sectors listed below will help you move towards the success of your business. So before investing read and do research on the selected sector to have better understanding.

  • Information technology
  • Manufacturing business
  • E-commerce business
  • Logistics business
  • Digital marketing
  • Digital printing
  • Travel and tourism
  • Consultancy services
  • Food & Beverages
  • Cloud kitchen
  • Construction business
  • Real estate agencies
  • Health sector 
  • Beauty Salon
  • Cleaning services

Different Business Entities in UAE to Start a company in the UAE

To start a company in the UAE you need understand the different business entities in the UAE along with their features;

Sole Proprietorship

  • An individual is eligible to be an owner of a sole proprietorship.
  • In case the owner is not a UAE national, an LSA or Local Service Agent is appointed to open this type of company
  • The LSA is supposed to overlook licence requirements and government-related matters for the business.
  • A sole proprietorship has no minimum need for business capital.
  • The name of the company must be related to the type of business activity.
  • A sole proprietorship can have just one manager.

Limited Liability Company

  • This company cannot conduct professional or consultancy activities except for insurance, banking, and any kind of investment.
  • An LLC can conduct any commercial or industrial training.
  • In some cases, you need to appoint a local sponsor who is a UAE national and will hold 51% ownership, and the remaining 49% can be owned by the investor.
  • LLC formation requires a UAE-accredited auditor
  • Shareholders count: A Minimum of 2 and a maximum of 50.
  • As an operational business structure, LLCs must appoint one to five managers, which the legal partners can also elect.

Private Shareholding Company

  • An approval from the Ministry of Economy must be obtained to establish a private shareholding company.
  • The company must appoint one manager
  • The minimum capital required is AED 5,000,00
  • The company can have more than one branch. 
  • A UAE national must own at least 51% of the shares
  • A GCC national can hold up to 100% of the shares

Public Shareholding Company

  • Partners can practise any industrial, commercial, or professional business activities under DED business regulations
  • The company must have a maximum 5 appointed managers as per DED business regulations
  • A Public Shareholding Company must have at least five founding members who are UAE Nationals, owning between 30% and 70% of the capital shares
  • The company can have one or more branches

Civil Company

  • If a foreign company invests as a partner in a civil company, it must be from the same type of business activity
  • Like a sole proprietorship, an LSA is required for the company incorporation if the owner is a foreign national.
  • Partners from any nationality can start this business
  • In some cases, like engineering companies, you need to appoint a local sponsor who is a UAE national and will hold 51% ownership and 49% can be owned by an investor.
  • In the case of professional consultancy, the owner should hold the same specialty as the business activity.

Partnership Company

There are two main types of Partnerships. They are,

  • General Partnership- The general partners, who must be UAE nationals, are liable for the partnership's debts
  • Limited Partnership- Partners are responsible for their debts only up to the value of their contribution to the capital. Furthermore, the limited partner can neither be part of the management nor have his name be included in the partnership's name.

Branch of a Foreign Company

A branch of the foreign company requires the company to have a UAE national. The branch must conduct the same business activity as its parent company. A branch cannot manufacture, import, or export products to/from the UAE.

Representative Office

A representative office in the UAE is not a business structure in its own right but is a business activity that a branch office can conduct. Its criteria include to market and promote the business of the parent company. It is not authorised to conduct business operations on its own. 

The representative office needs to have a local service agent, who should be a UAE national.

Business Licences in the UAE

The nature of the economic activity determines the legal structure of the firm and the type of licence necessary. There are six types of business licences available for different activities, which are as follows:

  • Industrial licence
  • Commercial licence
  • Crafts licence
  • Tourism licence
  • Agricultural licence
  • Professional licence

Documents Required for Company Formation in the UAE

Check below for those:

  • The Business Plan Application Form
  • The authority has officially notarized the MOA and AOA.
  • Passports of the Company's Executives
  • Sponsor's passport, proving that he or she is a UAE national
  • Sponsor's approval
  • Each shareholder will receive a bank reference letter.

Aside from the above documents, the following documents must be given for an industrial licence:

  • Feasibility Report Copies
  • Existing Business Profile
  • Information concerning the Investor
  • Establishing Branch Offices
  • Copy of the Certificate of Incorporation, MOA, and AOA that has been attested
  • Resolution of the Company's Board of Directors
  • Three months' worth of bank statements for the parent firm
  • Original Power of Attorney and a copy of your passport

Tax Scenario in the UAE 

The emirate government has set the tax structure to benefit the business in several ways. 

  • There is no income tax in the UAE. 
  • For taxable income surpassing 375,000 UAE dirham ($102,000), the country's statutory tax rate will be 9%.
  • To "help small firms and start-ups," taxable income up to that level is nil.
  • The federal corporate tax is a profit tax distinct from the cost of the business in the UAE, including licences, visas, health insurance, and other running expenses. As a result, companies in the UAE will face corporation tax rates ranging from 0% to 15%, computed depending on their net taxable revenue.
  • The UAE has 123 double tax treaties in place or in the works that benefit expatriates and businesses.

UAE Company Formation Cost

  • UAE Mainland Company Formation Cost Starts From: AED 18,000- 20,000
  • UAE Offshore Company Formation Cost Starts From: USD 5500 (Registered Office Fee is included)
  • UAE Free Zones Company Formation Cost Starts From: AED 5,750 (Registered Office Fee is included)

*All the prices mentioned above are average pricing. Cost can vary depending on the business activity you choose and the jurisdiction you wish to start your company in UAE.

Our Business Setup Services in UAE

Business Setup Worldwide offers a wide range of services regarding your business setup process in the UAE. Have a look at some of the services provided by our consultancy:

  • Company Formation Services
  • Accounting Bookkeeping
  • Visa Processing
  • Assisting in bank accounting
  • Virtual Office Space Setup
  • Intellectual Property Services

Learn more about company formation services offered by Business Setup Worldwide.

Why Business Setup Worldwide?

We at Business Setup Worldwide can assist you with the required services regarding your company formation in the UAE.

Contact us for further queries; we’d be glad to help you. 

FAQs

Which are the cheapest free zones in the UAE to do business?

Ajman Media City (AMC) Sharjah Media City free zone (SHAMS) Raz Al Khaimah free zone(RAKEZ) International Free zone Authority, Dubai

Which are the best free zones in the UAE for business?

Jebel Ali Free Zone Authority (JAFZA) Dubai Multi Commodities Centre(DMCC) International Free Zone Authority (IFZA)

What are the top industries in Dubai for business?

Import and export Healthcare Real estate Information technology E-commerce

What is the UAE’s GDP?

427.93 billion in 2022.

Does one need a local sponsor for business in Dubai free zone?

No.

What is the lease period of the land provided by Dubai TechnoPark?

The lease period of land in Dubai Techno Park is 15 years, and it is renewable.

Scroll upScroll up

Scroll downScroll down

Get your company incorporated in popular business locations @ best prices*

Seychelles Price BVI Price IFZA Price SRTIP Price

Chat Now

*Prices valid till