New regulations in the UAE for setting up an AI company

Why AI?

The worldwide interest in Artificial Intelligence (AI) and the resulting innovation has been experiencing increasing advancements in recent years, with a significant rise in businesses looking to explore the opportunities associated with this technology.

With increasing demand and efficiency for AI solutions, by starting an AI business there is an opportunity for entrepreneurs to engage with the development of AI-influenced products and services in this growing industry.

His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum as Chairman of the Board of Trustees of the Dubai Future Foundation announced the “AI Retreat” in June 2024 at Museum of the Future. The AI Retreat will be the first event of its kind under the Dubai Universal Blueprint for Artificial Intelligence (DUB.AI). It is set to host AI experts from the government, private sector and global industry leaders on the local and global adoption of AI in the UAE.

While AI Regulations are still in the development phase, it is said that the 'AI Retreat' will incorporate feedback from AI experts and leaders to assist in building UAE AI regulations based on international best practices and real use of AI across the globe.

The UAE and AI

In the United Arab Emirates (UAE), AI has recently been announced as a regulated activity. This means that businesses engaging with AI will be required to obtain approvals from the relevant regulatory authority to be licenced for AI activities in the UAE.

The city of Dubai has had a Minister of AI in place since 2017, and with the announcement that AI will be a regulated activity, the UAE is leading the development of AI innovations in business by putting in place the appropriate measures to ensure proper governing and monitoring of the activity. The city is establishing itself as a global frontrunner as it develops itself as a hub for AI.

The Dubai International Financial Hub (DIFC), is setting out to make the city an AI and Web 3.0 zone by aiming to attract 500 technological companies by 2028.

The UAE is embracing the global AI phenomenon and evolution, which is quickly becoming an integral aspect of business, and by positioning itself at the forefront of such innovations is set to benefit from the advancements of AI. Through setting up an AI company, companies can tap into the dynamic and rapidly growing technological market in Dubai. The robust infrastructure, regulatory environment, and access to resources and accelerators encourages the entrepreneurial innovation and development of businesses engaging in related activities

Where should I set up my AI company?

Within the UAE there are various jurisdictions and free trade zones which are specifically tailored through regulation and governing authorities to meet the needs and requirements of different industries and sectors.

Those considering establishing an AI business in Dubai can opt for either a Mainland or free zone company setup.

The DIFC, the financial hub in Dubai, is perfect for companies focusing on financial services; Dubai Multi Commodities Centre (DMCC), a diverse business ecosystem; or Dubai Internet City for internet and technology businesses, all provide access to global markets and networking opportunities.

The new regulations will mandate that each government authority will be required to have a Chief AI Officer. Therefore, it is likely that each jurisdiction will have the capacity to oversee the regulated activities and companies within their respective zones.

Generally, for AI companies, the setup process in the UAE remains the same as for any other regulated business.

To set up an AI company in the UAE, it may require specific permits and licenses in addition to the typical company registration with the Department of Economic Development (DED). For example, approvals from the Telecommunications Regulatory Authority (TRA) or the Dubai Data Establishment (DDE) may be required for businesses involved in AI research and data processing.

For those businesses that use AI, but whose core product or service isn’t centered around AI, it is unlikely that they will be required to obtain specific regulatory AI approvals. However, if unsure, it is advised to check whether the requirement extends to the particular company, as the extent of AI involvement may be a qualifying factor.

New AI regulations in the UAE

In the UAE, AI will now have a number of associated regulatory requirements, under the Dubai Universal Blueprint for Artificial Intelligence, similar to the recent updates to the virtual assets industry with the Virtual Assets Regulatory Authority (VARA). 

The UAE has effectively identified the need to appropriately monitor the AI industry, assigning a regulatory authority to govern the activity. Each government entity will appoint a Chief Artificial Intelligence Officer, who will oversee the respective regulatory body to ensure businesses engaging with AI meet certain mandates.

This initiative reflects the UAE’s economic development and aspiration to be a frontrunner in global technological and innovative advancements. These new regulations in the UAE will require that businesses operating or engaging with AI will be required to obtain relevant licencing and approvals, creating a proactive environment for businesses to operate under a governed framework.

Investments into AI in the UAE – Example: Abu Dhabi’s G42

Abu Dhabi’s artificial intelligence and cloud company, G42, has aspired to lead the charge in developing AI, since its inception in 2018. The company has gone on to prove its capabilities in AI contributions, as is evidenced by past endeavours with companies such as Nvidia and IBM, and a recent injection of investment of $1.5 billion, by the US-based tech giant – Microsoft, to support its AI developments. The AI applications and developments of G42 have provided new innovative tools and technology into various industries such as education, healthcare, and energy.

The education sector saw the addition of new AI tools such as Core42’s, a company under G42’s umbrella, - Jais, which allows for better communications with regards to the intricacies of the Arabic language, assisting with things such as answering questions or writing emails, for both computers or Arabic-speakers, and has possible applications in other areas like content creation and customer service-based industries.

In healthcare, M42, another of G42’s companies, developed an AI tool for the healthcare industry which can be used to support medical staff, analyse test results, provide patients with information, decipher reports, and generally improve the experience and communications of healthcare.

In terms of the energy sector G42 has a partnership with ADNOC, AIQ, which was created with inputs from scientists, industry experts, and AI software developers to assist companies in the oil and gas industry to better analyse digital data and make use of machine learning, to improve their informed decision-making, and boost efficiency.

Based on the previous years of AI development in Abu Dhabi, it is expected that the new investment from Microsoft will have a positive impact on further progressing the development of AI innovations, seeing new tools and support software being produced, with applications across various different fields.

AI business support incubators, accelerators and events

In alignment with the announcement and implementation of new regulations, the UAE is further encouraging entrepreneurial and innovative businesses involved in AI to grow their business in the country by offering specific incubators, business support and events for knowledge sharing in the industry. These programmes are crucial for startups who might need funding and support for their business growth.

Since the announcement of the initiatives, there were over 600 entrepreneurial startup businesses and SMEs from 55 different countries who submitted applications to benefit from the Dubai Centre for Artificial Intelligence (DCAI) Accelerator Programmes, by the Dubai Future Foundation (DFF). Of these applications, 30 were confirmed in that same week for the programme and will be given the opportunity to develop their innovative tech solutions, with a focus on government services and media and communications, for an 8-week period at the AREA2071 offices.

In the UAE, there jurisdictions that are specifically aimed at providing support and a collaborative business environment for virtual asset and AI companies. In Dubai there is the Dubai Technology Entrepreneur Campus (DTEC), located within Dubai Silicon Oasis, which is a technology-focused business that is providing well-established infrastructure and support services, specifically designed for technology startups and entrepreneurs. The country also has Ras Al Khaimah Digital Assets Oasis (RAK DAO), a free zone jurisdiction aimed at supporting and encouraging digital asset companies.

In addition to the supportive incubator projects, an AI week is to be introduced where institutions and businesses involved in AI will have the opportunity to showcase their innovative advancements and exchange knowledge. The government is actively encouraging and supporting entrepreneurial businesses, from startups and SMEs to large multi-national companies looking to explore innovation in AI technology, as is evidenced and reinforced in the recent developments.

How Can Sovereign PPG Help?

Establishing an AI company in the UAE is a relatively new process and therefore can be quite complex and subject to change with regards to regulatory requirements and governance. This is where the expertise of a professional corporate services provider becomes invaluable. Sovereign PPG has decades of experience in assisting to setup these kinds of technological and regulated companies, which require specific regulatory approval in order to obtain a licence in the UAE.

Sovereign PPG offers unrivalled expertise in the technology company legal and regulatory landscape and direct access to government bodies and regulatory authorities. We can guide you through every step of setting up your business in the UAE, from initial registration with the relevant authority to obtaining your trade licence and ensuring compliance with all local and international regulations.

If you need assistance with this or with any other related company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Saudi Arabia, Bahrain, Oman or Qatar, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at SovPPG@SovereignGroup.com or complete the contact form below and we will be delighted to assist you.