There are two jurisdictions in the UAE for conducting business: The ‘mainland’, and more than 30 free trade zones, which offer different advantages depending on your business activities. Wherever you decide to set up, you will not have to pay any business or personal takes. You will, however, face certain annual licence fees and charges that may take you by surprise.
All companies setting up outside a free zone must have a trade licence that determines which business activities you are permitted to practise. You must also have either:
Sponsorship from a UAE national, who will have a 51% stake on your business (if setting up a limited liability company (LLC) or public/ private shareholding company) OR
Sponsorship from a local service agent (if seeing up a branch company, sole proprietorship or civil business)
Free Trade Zones
Free zones have their own set of rules and procedures for establishing a company, and are designed to encourage foreign investment.The rules and procedures differ from the mainland, particularly with regards to foreign ownership.
For example, a branch or a representative office can be established in a free zone with the support of the free zone authority. Non-nationals and foreign companies may also choose to set up a free zone branch as their head office. Full private foreign ownership is permitted, albeit with significant annual fees.
The bureaucracy of getting a business off the ground can put people off from carrying out their great ideas. Fortunately, the government appears to realise this and, as private enterprise is a key way for the UAE’s economy to become more diverse, there are measures being put in place that should help make entrepreneurs feel more empowered to take the plunge.
The country has seen a major SME push of late, as banks work to offer better deals for smaller firms and local governments stage SME networking, recognition, and education events. In the run up to Dubai Expo 2020, there is a palpable grassroots entrepreneurial push. Popular SME support hubs continue to thrive, such as Impact Hub, based in Downtown Dubai or Jumeirah Beach Residence’s MAKE Business Hub. In Abu Dhabi, the Abu Dhabi Business Centre (adbc.abudhabi.ae) is currently being created. This will be a ‘on-stop shop’ for budding business owners, where 15 of the different government agencies that a new start-up might need will be housed under one rook. By the end of 2014 the doors to the Business Centre should be open and at least provide a focal point for any new business in the emirate.
In Dubai, the Department of Economy has launched a system that allows entrepreneurs to be in business within hours of completing and online form. By using MY ID – an online government portal – they can complete a memorandum of association from and the start trading, with a 120-day grace period in which to complete all of the other necessary paperwork. It means not only a quick start-up, but also added convenience in that partners in a business can complete this initial procedure remotely, rather than having to go somewhere together. once completed, a copy of their trade licence will be sent to their smartphone and from that point they’re ready to go. However, some business such as restaurants or those in the medical profession are excluded from this new system, as public health risks deem extended checks necessary.
The UAE government is also drafting new laws that will help to not only make business set-up a little more tempting, but also address some of the concerns raised in the past. For example, the issue of bankruptcy and the fact there is no government – structured method to resolving the issue when companies fail, os being revised. The new laws should mean entrepreneurs have a more certain prospects of resolution should the company they start fail, and their creditors will also benefit too. Clearly these moves are all positive steps for the UAE’s economy, and good news for anybody looking to start a business in the country.