How to set up a business in UAE

The UAE is one of the biggest commercial hubs with great infrastructure, a competitive economy, and incredible business opportunities. The UAE has signed 193 Double Taxation Agreements (DTA) and Bilateral Investments Treaties (BIT) to attract foreign investors. The total foreign direct investment in UAE in 2022 was 23 billion.

The UAE is also well-connected with major countries and has a relatively large consumer base that is still growing. If you start a business in UAE, you do not have to pay personal tax, income tax, nor capital tax.

This article describes the steps of forming a company in mainland, freezone, and offshore.

Wondering how to start a business in UAE? Scroll down to find out!

Step-by-step guide to start a business in UAE mainland

Here are detailed step-by-step instructions that you can follow to start a business in UAE Mainland without facing too much difficulty.

Step 1: Reserve your tradename

Choosing a trade name is subject to certain terms and conditions. The company name has to be unique and should not share any similarities with the names of already registered corporations.

The company name should retain the legal entity abbreviations as suffixes, such as LLC, PJSC, etc. Make sure to choose a name that does not affect public sentiment. You should be careful not to choose names of rulers, government agencies, or names and logos of government bodies.

The Ministry of Economy and the Department of Economic Development must approve the tradename. There is a need to renew the trade name certificates whenever required. Choose a company name that describes your products and services and get it approved online immediately without any delay.

Step 2: Choose your business activity & submit for initial approval

The second step to starting a business in UAE is to select your business activity. It is best to thoroughly research the market and know the businesses in high demand and with growth potential in the UAE.  In the Mainland, business activities are organized in six types, including occupational, tourism, industrial, commercial, agricultural, and professional economic licenses. The Mainland offers more than 2,000 economic activities.

You should obtain an initial approval from the Department of Economic Development of the Emirate where the company will be registered. This approval is essential in order to proceed with the next steps of setting up a business.

The required documents include:

- Passport Copy
- Emirates ID
- Last Entry Stamp to UAE

In the case of a corporate shareholder, the documents required should be translated into Arabic, attested by the UAE embassy in the country of origin and by the Ministry of Foreign Affairs in the UAE, and such documents include:

- Memorandum of Association
- License and Incorporation certificate
- Partner list / Share certificate
- Board Resolution

Additional third-party approvals such as governmental or ministerial approvals may be required depending on the chosen business activity. For instance, the ministry of economy’s approval is required if the business activity involves insurance activities and insurance consultancy.

Step 3: Choose your business location

It is mandatory for all companies registered in the Mainland to have a physical address to conduct business. The location of the company must adhere to the emirate’s Department of Economic Development requirements. The company must also comply with the zoning policies and regulations of local municipalities or other competent authorities. In Dubai, The tenancy agreement of the premises must be registered with Ejari, the authoritative body overseeing real estate.

Step 4: Drafting the MOA

In order to register your company in the UAE, drafting a Memorandum of Association (MOA) is required.

You may choose the standard MOA which can be signed electronically through the Department of Economic Development portal or draft a customized MOA that must be attested by the notary public.

Step 5: Payment

In this step, you need to pay the registration fees and business license fees. Based on your company's structure, the registration and license costs will vary.

Step 6: Issue establishment card & immigration card

Issuing an establishment card is made through the competent authority.

The documents required for the issuance include:

1. Commercial license, and if it is a limited liability company, the license shall be attached to it indicating the stakeholders.
2. Signature approval letter.
3. A copy of the power of attorney in the event of another person’s power of attorney.
4. Memorandum of Association in case of partnership.

Step 7: Apply for a residency Visa

When establishing a company in the Mainland as an investor, you can apply for the 5 year green visa, subject to certain requirements and approvals. This is done through the competent authority.

In addition, when hiring foreign employees, you must apply for their visa.

Before you can apply for visas, you must ensure your firm is registered with the immigration and labor department. There is no restriction to the number of visas you can request.

Step 8: Apply for a bank account

The last step is to open a bank account. There are numerous banks to select from, including national and international. Therefore, selecting a reliable bank that satisfies your firm's necessities and offers the best terms and conditions is recommended.

When opening a corporate business bank account, the bank may ask you the following details or documents, which will help the bank assess your creditworthiness and determine the type of account that is right for you. They include:

• Main business activities
• Total deposits
• Expected currency volume
• Current revenue
• Primary suppliers and consumers

Click here to set up your company in the UAE Mainland.

Step-by-step guide to start a business in UAE freezone

Starting a company in one of UAE’s 40+ freezones, comes with lots of benefits such as duty-free operations and unrestricted profit transfer.

Here is a step-by-step guide to start your company in one of UAE’s freezones with an expedited setup procedure.

It should be noted that this guide is general, and the establishment of the company is subject to the laws and regulations governing the respective UAE freezone authorities.

Step 1: Choose your business activity

The first step to starting a business in the UAE Freezone is to select your business activity. By choosing the business activity, you can apply for the business license. There are many types of businesses licenses in UAE freezones including commercial, media, warehouse, consultancy/service, E-commerce, innovation, industrial, offshore companies, manufacturing, educational, and freelancer licenses.

Step 2: Choose the legal form

The company form varies in each UAE freezone. It is recommended to inquire about the available legal form for the business activity from the relevant authority of the UAE freezone.

The following company legal structures are available in all UAE freezones:

1. Freezone limited liability company
2. Freezone company
3. Freezone establishment
4. Branch

Step 3: Reserve your tradename

Choosing a trade name is subject to the terms and conditions of the relevant UAE freezone.

The conditions for tradename registration in freezone include:

- Choosing a tradename that is unique and does share any similarities with the names of already registered companies.
- Retaining the legal entity abbreviations as suffixes, such as FZE, FZ LLC, etc.
- Choosing a name that does not affect public sentiment, and making sure the tradenames do not include names of rulers, government agencies, or names and logos of government bodies.

Step 4: Selection of business offices and facilities

You can rent an office in UAE freezones. Having a virtual office is usually accepted in different cases.

The relevant UAE freezone authority decides the office space based on the number of employees and the type of business activity in operation. The authority provides the lease contract.

The UAE freezone may offer offices ready for business operation or offices that are not wholly equipped.

Every UAE freezone provides certain services and facilities, and they generally include providing secretarial services, assistance in recruitment, and telecommunications.

Step 5: Submit for initial approval

You should obtain an initial approval from the relevant UAE freezone authority. This approval is essential in order to proceed with the next steps of setting up a business.

Some required documents include (always depends on the authority):

- Passport Copy
- Visa/Last Entry Stamp
- Business Plan
- CV
- Bank Statement (For Source of Wealth)
- Utility Bill

Additional third-party approvals such as governmental or ministerial approvals may be required depending on the chosen business activity.

Step 6: Payment

In this step, you need to pay the registration fees and business license fees. Based on the type of license, the registration and license costs will vary.

Step 7: Apply for a residency visa

Applying for the visa should be made through the relevant free zone authority.

Step 8: Apply for a bank account

The last step is to open a bank account. There are numerous banks to select from, including national and international. Therefore, selecting a reliable bank that satisfies your firm's necessities and offers the best terms and conditions is recommended.

When opening a corporate business bank account, the bank may ask you the following details or documents, which will help the bank assess your creditworthiness and determine the type of account that is right for you. They include:

• Main business activities
• Total deposits
• Expected currency volume
• Current revenue
• Primary suppliers and consumers

Click here to set up your company in one of UAE’s Freezones.

Step-by-step guide to start a business offshore

An offshore company can be defined as a legal company that functions abroad in countries other than where it is registered. Registering an offshore company in the UAE comes with plenty of advantages, including exemption from income tax, securing confidentiality due to 100% foreign ownership, protection of assets and wider global access.

RAK International Corporate Centre (RAK ICC) is considered one of the fastest-growing government-owned corporate registries that has a stellar reputation for adherence to the law and providing professional services of highest quality.  The UAE is the ultimate choice for registering companies, due to its strong economy and professionalism in business operations. Registering a company whether in the mainland, freezone, or offshore, is a fast and hassle-free process.

There are plenty of benefits concerned with registering an offshore company in the UAE, some main benefits are:

- 100% foreign ownership. RAK ICC does not apply any rule regarding local ownership, instead the shares can be fully owned and controlled by foreign shareholders.
- Privacy. It is not required to put the names of the directors or the shareholders on a public register.
- Ease of setup. Forming an offshore company in the UAE requires minimal paperwork and capital as well as quick company registration which takes about one week.
- Capital requirement. No minimum capital is required.
- Access to global markets. Setting up an offshore company is a gateway to global markets.
- Access to global funding.
- Separate ownership of assets.
- Flexibility. Companies can have residents, non-residents, corporates, and inhabitants as investors or executives.

Here is a step-by-step guide to start your company in one of UAE’s offshore with an expedited setup procedure:

Step 1: Choose your company name & business activity

The first step to starting a business offshore is to select your company name & business activity. It is mandatory to comply with the guidelines of RAK ICC when choosing the name of the company.

Step 2: Prepare the required documents

The required documents for company registration include

- Name of directors and shareholders
- Passport copy of shareholders and directors
- Copy and original bank statements of the past six months
- Latest Proof of address
- Business Plan

Step 3: Signature and submission

In this step, you need to sign the company documents and submit them to RAK ICC authority through the registered agent.

Step 4: Apply for a bank account

Once you have completed the registration process, you can proceed with opening a bank account with any corporate bank in UAE and use it for your business’s operations. It is not mandatory to open a bank account in the UAE, though most companies choose the UAE to open a bank account due to the huge benefits of opening accounts inside the country.

Click here to set up your offshore company in RAK ICC.

Bottom line

Starting a business in the UAE is relatively beneficial as it offers certain tax exemptions with unlimited business opportunities and growth potential. It is best to conduct market research and choose the form of company you want to set up. Follow the above-mentioned steps to start a business in UAE now.