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How to set up your business in UAE?

November 19, 2020

The UAE’s population starts expatriates making up the majority, it has emerged as one of the topmost destinations for corporates, businessmen and investors in the Middle East region. The government of the United Arab Emirates extends progressive, forward-thinking policies and numerous incentives to encourage foreign investors to invest in the oil-rich country. The procedures for setting up a new business in the UAE have been further simplified by the governing authorities. These relaxed policies and advanced infrastructures support the growth of startups as well as large corporates. Another reason why the Emirates, particularly the city of Dubai is a fertile ground for businesses is that taxation is at minimal in all but three sectors – oil, banking and tobacco processing. So, after living in UAE for many years, if you are now looking to invest here, then you will face no problems in terms of setting up your Company even if you are relatively new to the country.

  • Type of business:

    This measure will determine the kind of trade license you require in UAE. Depending on the basis of your operations, you may require commercial, professional or industrial licenses. The Department of Economic Development (DED) in Dubai offers over a range of 2100 activities you can choose from. However, keep in kind while selecting those certain activities (like food trading, jewelry trade, veterinary activities and more) require further approvals from different Government departments.

  • Legal Structure:

    There are rules regarding the legal structure of your Company according to your type of business and location. For example, if you are planning to start a legal consultancy firm, then this can be done only as a branch of company or as a stand-alone. It is not permissible for a sole proprietor to take up this activity in the UAE. Moreover, each free zone has its own restrictions regarding company structure.

  • Business jurisdiction:

    • Free Zone:

      If you are a foreign national and want to have full ownership of your company, then opt for a free zone license in the UAE. A free zone business allows you 100% ownership of your operation, with no need to be sponsored or partner with a UAE national. Such companies can only conduct business and trade with companies outside the UAE. However, if you want to operate locally, then having a local sponsor who will have 51% of the shares in the business is mandatory.

    • Mainland:

      Foreign nationals can set up a business in the mainland. For this, you are required by law to appoint a UAE national to act as a local sponsor , owning a 51% share of the business for commercial type of license and business. If the company’s activity is to provide consultancy or Services then Professional license is required where a foreign expat will be 100% owner of the company and UAE national will become just a Service agent (Sponsor) of the company.

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Steps to set up business in the Mainland

  1. Trade Name:

    Once you have decided to set up your business in the mainland, then the first crucial step is to select your trade name. The company name should indicate the nature of your business or trade unless it is a branch of another. All the rules regarding trade names are available on the official website of DED.

  2. Initial approval:

    Next, you need to apply for the pre-approval which is a kind of NOC (No Objection Certificate) from the DED. A trading company dealing with commodities, securities, or legal services will require additional approvals. Initial approvals clarify the partner/owner's details, nature of the business and appointment of manager of the company.

  3. Documents & Agreements:

    Based on the legal form of your business, you need to draft a Memorandum of Association (MOA) / Local Service Agreement (LSA) / Corporate Agent Agreement of your proposed company. In some instances, minimum share capital maybe required.

  4. Work Premises:

    Once all legal documents and forms are ready, you need to select your work premises according to jurisdiction. An attested Ejari contract is required to obtain your actual business license. However, if investor goes with the instant license then no need of the office lease agreement for the first year of the company registration.

  5. Submission of Documents and get the license:

    After the successful completion of the aforementioned steps, you just have to submit all the documents and process the payment. It is required to make payment for the trade license within 30 days of receiving a payment voucher.

A variety of documents and legal actions are required in compliance with the local government, while setting up your business in UAE. If you require further support in setting up a business in the United Arab Emirates, then this where Avyanco Business Consultancy comes into the picture. We provide fully customized business set up and registration solutions exclusive to each business or office set-up. Our team of experts consists of business set up consultants, seasoned lawyers, PRO executives, offshore personnel and operations staff to ease your business set up needs. Our foundation is based on relationships and sustained through continuous innovation and productivity and trust. Rest assured, Team Avyanco will handle all formalities and legalities while you sit back and wait for the business set up to be done.

Contact us: +971 4 240 5000 mobile: +971 50 398 9000. info@avyanco.com

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