Company Formation in Sharjah

Company Formation in Sharjah

Sharjah is a United Arab Emirates constituent emirate. Sharjah has an international airport connected to Ras al-Khaimah and Abu Dhabi by paved road.

Sharjah has a thriving economy that draws in investors from around the world. Sharjah's government places a high value on trade and business inside the country. Sharjah offers a number of investor-friendly rules that make it easier to start a business in the region.

This treatise is for business professionals who want a thorough grasp of the many variables to consider when launching a business in the United Arab Emirates.

A Synopsis of Sharjah

After Dubai and Abu Dhabi, Sharjah in the UAE's third most populated city. It is a cultural and industrial hub that accounts for 7.4% of the UAE's GDP on its own. In addition, the fact that it is the only emirate having views of both the Persian Gulf and the Gulf of Oman on both sides, as well as the coastal cities of Kalba and Khor Fakkan, aids in the transportation of commercial products and freight.

 Sharjah is a federal emirate that shares legal, political, military, and economic functions with the other UAE emirates. Sharjah is also renowned as a health city by the World Health Organization (WHO) because of its strict anti-alcohol measures. It is also known as the UAE's cultural centre, and in 2019, it was crowned World Book Capital.

The Economic Growth in Sharjah

Sharjah accounts for around 4% of the emirate's overall GDP.

Tourist is a significant source of foreign cash and one of the foundations of the UAE's aim for a diversified economy; Sharjah accounts for 10% of the UAE's tourism sector.

According to figures from the emirate's Department of Statistics and Community Development, Sharjah's commerce industry contributed the most to GDP (23.8%), followed by construction and real estate, among other sectors.

In 2021, Sharjah's gross domestic product (GDP) increased by 4.8 per cent yearly to over $35.3 billion (AED 130.5 billion), up from $33.92 billion in 2020.

The emirate's economy grew, notably in non-oil industries, strengthening its rising prominence as a regional commercial, commerce, and investment powerhouse.

Business Sectors in Sharjah

The legal authorities provide full support and procedures to ensure that new enterprises feel at ease while forming their companies. As a result, Sharjah is one of the greatest, almost essential businesses and draws investors worldwide.

The popular business sectors in the city are as follows:

1. Real Estate and Business Services

Sharjah's real estate business is booming, according to the Sharjah Real Estate Registration Department. The first quarter of 2022 witnessed over Dhs6 billion in transactions, which is a promising sign of future business returns. According to forecasts, this activity will continue at the same rate, ensuring the sector's resilience. Over the last year, investors from 56 different countries have invested in the emirate.

2. The Manufacturing Industry 

Sharjah has been an industrial hub since the 1980s, with the emirate housing about 35 per cent of the UAE's manufacturing facilities and the non-oil sector accounting for 96 per cent of GDP in 2019.

Manufacturing is the second-largest industry by GDP at current prices, after wholesale and retail trade — a category that includes automotive and motorbike maintenance. According to Sharjah's Department of Statistics and Community Development's most recent "Statistic Annual Book," the industry contributed roughly Dh20.3 billion ($5.5 billion) to the GDP in 2019. (DSCD). This amounted to 16.3% of the emirate's GDP in that year, and 17% of non-oil GDP.

3. The Mining, Quarrying, and Energy Sectors

According to the Central Bank of the UAE, quarrying and mining operations in the UAE got Dhs4.3 billion in credit facilities in 2020, raising the total amount of loans secured by the industry to Dhs14.94 billion by the end of December last year. Sharjah also contributed to this GDP in a considerable manner. 

4. The Wholesale and Retail Trade

Last year, the wholesale and retail trade in the Emirate saw the greatest yearly growth rate of 10%. According to the DSCD report, the transportation and storage sector grew by 9.5 per cent, followed by the lodging, hotel, and food services business at 9.1 per cent, extractive industries by 9%, and health and social services by 7.6 per cent.

Advantages of Business Setup in Sharjah

Business setups in Sharjah are fruitful from the following standpoints:

• First, Sharjah has 19 industrial zones, accounting for about 48% of the UAE's total industrial production.
• International banks are well-represented, and modern communication infrastructure is in place.
• Sharjah is regarded as a tax haven. As a result, there are no taxes imposed on businesses.
• Import, export, and commercial duties are all exempt to 100%.
• For international enterprises, 100 per cent repatriation of profits and cash is permitted, as is the entire business ownership.
• Businesses can keep products for up to two months in a warehousing facility.
• It provides substantial government incentives to all types of investors.

Legal Business Entities in Sharjah

Business investors can choose from the following types of business entities to set up their business in the zone.

1. Limited Liability Company

Minimum 2 and 50 members are allowed under this business structure. The liability of the partners is equal to the shares invested in the company.

2. Partnership Company

This type of business structure is for UAE nationals only. After that, two or more individuals can start it.

3. Branch of a Foreign Company

This is for an established business outside the UAE wanting to have its branch in the UAE.

4. Branch of a Local Company

This is for an established company in the UAE wanting to have its branch in the Emirates.

5. Branch of a GCC Company

This is a branch of a corporation headquartered outside of the UAE in a GCC nation. Concerned parties must apply for a license to operate such a business.

6. Public Shareholder Company

It is a company with shared capital divided equally.

7. Local Service Agent

Just one person manages this business structure. Therefore, any company or professional economic activity in which the establishment owners carry all financial liabilities qualifies as a function.

Tax Scenario in Sharjah

Since Sharjah is part of the UAE, the tax imposition in the city will be the same as in the nation. Therefore, here is the tax scenario that will be applied in the UAE as well as in Sharjah.

On January 31, 2022, the Ministry of Finance stated that the UAE would establish a new corporate income tax structure that would apply to financial years beginning on or after June 1, 2023.

Except for Bahrain, the UAE's new corporate income tax would have the lowest rate in the region, at 9%.

Any business that begins its fiscal year on June 1, 2023, and ends on May 31, 2024, will be liable to corporate income tax starting June 1, 2023. Therefore, the first tax return submission is expected to occur towards the end of 2024.

Any business that begins its fiscal year on January 1, 2023, and ends on December 31, 2023, will be liable to corporate income tax on January 1, 2024, with filing due mid-2025.

Different Business Jurisdictions in Sharjah

The first step in picking where to open a business is to determine the specific type of commercial operations you intend to include in your company. Based on this, you may select the Sharjah jurisdiction that best meets your needs.

If you want to incorporate a business in any of the jurisdictions, then learn more about the business setup services in Sharjah. 

1. Sharjah Mainland

The most significant advantage of establishing a firm on the mainland is the ability to conduct business anywhere in the UAE. In addition, the Sharjah mainland imposes no business or personal taxes and places restrictions on work visas.

In June 2021, the Sharjah Economic Development Department (SEDD) announced a 100% foreign ownership policy for onshore or mainland enterprises to stimulate foreign direct investment. Under this policy, foreign investors or firms will own 100% of commercial and industrial companies and conduct business in the Emirate of Sharjah.

This ruling exempts international investors from any capital restrictions or additional costs while enabling foreign firms' branches to conduct business in the Emirate without requiring a foreign company's representative.

2. Sharjah Free Zone

Setting up a business in a Sharjah-free zone has many benefits. To begin with, it provides 100 per cent ownership, world-class infrastructure, no trade obstacles, tax exemptions, and no foreign tariffs. 

In addition, the Sharjah free zones allow company owners to muse the excellent infrastructure and strategic position, including quick access to warehouses, cargo airports, and seaports, making them a suitable option for various industries. In Sharjah, there are several free trade zones, including the Sharjah Airport International Free Zone and the Hamriyah Free Trade Zone.

Free Zones in Sharjah

Sharjah now has five free zones dedicated to manufacturing, trading, logistics, media, and commerce industries. Let's take a look at each one individually:

• Hamriyah Free Zone
• Sharjah Airport International Free Zone (SAIF)
• Sharjah Media City Free Zone (SHAMS)
• Sharjah Publishing City (SPC)
• USA Regional Trade Centre (USARTC)

Learn more about the free zones in Sharjah. 

Stages of Sharjah Company Setup

The steps for business setup in Sharjah are as follows:

1. Finalize the Business Type

To begin, you must determine the sort of business you intend to start and the jurisdiction in which you will operate. This is necessary to secure the company's ownership in the future.

2. Business Registration with DED

After deciding on the structure and local sponsor (in terms of the mainland), it is also required to register the company with DED; the application may be found on the Sharjah Chambers of Commerce website.

3. Application for the Appropriate License

The next step is to apply for the appropriate license based on the sort of business you want to run. Trade, professional, and industrial licenses are the three sorts of licenses available.

4. Register the Business Name

After registering the license and you must register the company's trade name. The name should be unique to the public and distinctive from all other businesses of a similar type. Municipality approval is required after all the above procedures have been completed.

5. Draft the Memorandum of Association (MOA) 

The applicant must submit all needed information in order to draught this. After that, the document must be notarized by the appropriate notary.

6. Leasing Agreement

According to Sharjah's government, lease agreements compel enterprises to recruit Sharjah residents and to have a physical office space in Sharjah.

7. Payment of the Licensing Fee

Once you've decided on a license, you'll need to pay the license fee. In addition, the corporation must give its consent for the name board. This brings the Sharjah business registration process to a close.

Types of Licenses in Sharjah

A Sharjah business license is required to start any business in the city. The sort of trade license you'll need is determined by the type of business you're creating and the jurisdiction. In Sharjah, there are three different categories of business licenses. These are the following:

Commercial License/General Trading License

This license allows you to distribute, combine, store, warehouse, import, and export specified items. This sort of license may only be issued by the Sharjah Economic Development Department (SEDD).

Service License

This permit is the bearer to provide the services indicated in the Sharjah regulating body's license. Applicants for this sort of license must have the necessary qualifications to back up their claims.

Manufacturing/ Industrial License

Entrepreneurs with a manufacturing or industrial license can assemble, process, redesign, and repackage locally created and imported items. This license requires approval from the Ministry of Labor, Ministry of Economy and Commerce, and other relevant authorities. All of these permissions must be presented together with the applications.

Documents Required for Company Formation in Sharjah

In order to register a business in Sharjah, you'll need the following documents:

• Company registration application form
• Contact person's business card
• The business plan
• Memorandum of Association that has been notarized and attested (MOA)
• Articles of Association that have been notarized and certified (AOA)
• Copies of the partners' and company managers' passports
• Original bank reference letters and, if appropriate, the license of the partner's current firm
• A lease contract
• Parent Company's Bank Statements (Last three months)
• Attorney-in-Fact (For representative)
• Resolution of the foreign parent company's board of directors
• Feasibility study for the project that will be implemented.

Sharjah Company Formation Cost

The following is an estimate of the costs of forming a business in Sharjah:

Business Jurisdiction	Company Formation Cost	License
Sharjah Free Zone	4,999	4,999

Our Business Setup Services in Sharjah

Business Setup Worldwide is a highly qualified professional team that takes the necessary procedures to provide customized company formation services. We offer a comprehensive range of business formation services from pre-incorporation to post-incorporation. Our team comprises highly qualified individuals who can help you with:

• Company Incorporation
• Virtual office/ Flexi Office
• Company Stamp
• MOA/AOA

Why BSW

Business Setup Worldwide offers a platform for establishing a company in Sharjah. Our Sharjah-based experts have extensive experience in this subject and local knowledge. They can help the procedure go as smoothly as possible. In addition, our extensive domain knowledge and understanding of Emirate legislation enable us to take care of our customers' passport, visa, and licensing needs, ensuring that their tasks are performed efficiently and without additional bureaucratic trouble. Contact us today to know more.