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What are the Types of Business in the UAE?
The UAE Commercial Companies Law regulates UAE businesses as per the Federal Decree-Law No. 32 of 2021. This law creates a legal framework, maintains a check on establishment and governance, and ensures transparency in the company’s operations. Some main types of businesses in the UAE are the following:
- Mainland Business
- Free Zone Business
- Offshore Business
- Hybrid Business
Mainland Business
The Mainland offers tax-free businesses and doesn’t have restrictions regarding trade with local markets. The most common businesses in the Mainland are the following:
- Commercial businesses like general trading, retail stores, import-export, and logistics.
- Professional services like legal, IT, Healthcare, and Education.
- Industrial businesses like manufacturing and production.
In the past, 51% of the UAE national sponsorship was compulsory for every business. However, the UAE Commercial Companies Law (2021) allows foreigners to start businesses with 100% ownership in specific sectors, as reported by the UAE Ministry of Economy.
Free Zone Business
The Free Zones promotes investment and entrepreneurship by providing the ideal environment. The key businesses in the Free Zones are given below:
- Companies of logistics, trade, import, and exports.
- Media or creative businesses like advertising, broadcasting, or publishing.
- IT businesses for software development and services.
- Financial industries for banking, insurance, and investment services.
Foreign business owners can get 100% ownership according to the Federal Decree-Law No. 26 of 2020. Moreover, businesses meeting the conditions of Qualifying Free Zone Persons (QFZPs) and with qualifying income don’t need to pay Corporate Tax (CT).
Offshore Business
Offshores also have several businesses, such as asset management, intellectual properties, and international trading. Some businesses offshore don’t need to have a physical office in the UAE, which will minimize their taxes, as mentioned on JAFZA’s official offshore website.
Hybrid Business
Hybrid businesses combine the features of the Mainland and Free Zone businesses. The main businesses that are offered hybrid models are logistics, financial firms, and tech startups.
What are the Advantages of a Business in UAE?
The UAE provides several advantages to the businesses, such as the following:
- Tax Benefits
The Tax structure make the UAE one of the best place for businesses in the world. The businesses below AED 375,000 don’t need to pay taxes. At the same time, Value Added Tax (VAT), is too low as compared to other countries, which is 5% as per reports of Federal Tax Authority.
- Business Ownerships
Previously, it was compulsory for every business to have a 51% partnership or sponsorship of the UAE native. However, according to the recent law changes, expatriates can have 100% of their business ownership. For instance, JAFZA offers foreigners to have 100% ownership and tax exemptions.
- Strategic Location
The UAE provides trading opportunities in Asia, Africa, and Europe through its crossroads. At the same time, the Jebel Ali port in the UAE is one of the world’s busiest ports. Moreover, the Dubai International Airport is also ranked as the world’s busiest airport, according to reports from Dubai Airports.
- Business-friendly Environment
The UAE provides streamlined business registration processes. At the same time, there is minimal paperwork and few bureaucratic barriers. That’s why the UAE is ranked high in the “Ease of Doing Business” reports of the World Bank.
- Skilled Workforce
The UAE has skilled workers from about 200 different nationalities. It ranks 10th in the Global Talent Competitiveness Index 2023, as per reports of INSEAD, 2023.
- Economic Growth
The UAE is experiencing diversified economic growth as it is signing economic partnership agreements with different countries, such as the elimination of Tariffs on 99% of Australian exports to the UAE.
- Advanced Infrastructure
Several advanced infrastructures are offering businesses in the UAE, such as the Dubai International Airport, Etihad Rails, and digital infrastructure.
What are the Requirements for Business in UAE?
The federal government designs the legal structure for the businesses in the UAE as reported by the Ministry of Finance. Moreover, the Department of Economic Development is responsible for implementing the federal laws in each jurisdiction. In this way, the federal government, along with the respective business authorities in both Free zones and Mainland.
Business Activity
Selecting a business activity is the first step and requirement for starting a business in the UAE. There are three main business activities in the UAE.
- Commercial
- Professional
- Industrial
Business Structure
The next requirement to establish a business in the UAE is the business structure. There are different types of business structures, such as the following:
- Limited Liability Company (LLC)
- Sole Proprietorship
- Branch Office
- Civil Company
- Public Joint Stock Company (PJSC)
- Free Zone Company and Free Zone Establishment
Trade Name
Every business needs to have a trade name for registration. This name should be unique and adhere to the naming rules.
Business License
The business license is different for every type of business, such as commercial, professional, and industrial. At the same time, it will be different in every business jurisdiction in the UAE.
Tax Registration
Every business needs to register with the Value Added Tax (VAT), especially when the annual imports and exports exceed AED 375,000.
Do I need a physical presence to start a business in the UAE?
No, you don’t need a physical presence in the UAE to start a business. In the Free zones, you can start and register a business remotely as mentioned on the Ministry of Education website. However, in the mainland, you will require a physical presence to start a business.
What are the Conditions for Business in UAE?
In the UAE, the businesses need to fulfill the conditions, such as the following:
- Have a legal structure.
- Have a license related to the business.
- Adhere to all the UAE’s corporate laws for formation, taxation, and reporting.
How does the UAE’s Strong Economy Create a Favorable Environment for Businesses?
The UAE’s strong economy creates a favorable environment for businesses through different initiatives, such as diversification and international trade agreements. The UAE government has made the Ministry of Investment specifically to attract Foreign Direct Investments (FDI) and economic diversification.
How to Set Up Business in UAE?
Steps to Set Up a Business in UAE?
- Select Business Activity
You need to select any of the business activities, such as commercial, professional, or industrial.
- Choose a Jurisdiction
Then, select the jurisdiction to establish a business from the Free zones, Mainland, and Offshores.
- Decide on Legal Structure
Analyze the business model and goals to decide on a legal structure, such as a Liability Limited Company, Sole Proprietorship, or Branch of a Foreign Company.
- Register Trade Name
Name your business according to the business naming rules of the UAE.
- Obtain Initial Approval
Then, you need to get the initial approval from the relevant authorities in the respective authorities.
- Lease Office Space
The next step includes leasing a space for an office. It is optional in the Free zones but mandatory in the Mainland.
- Prepare Legal Documents
Prepare all the legal documents, such as the Memorandum of Association (MOA), passport copies of all the people in business, and agreements of all the shareholders.
- Apply for License
Submit all the legal documents to the respective authorities to get the business license.
- Pay License Fees
License fees are compulsory but they vary according to the type of business and jurisdiction.
- Open a Corporate Bank Account
You need to open a corporate bank account for your business transactions. This will ensure compliance with international rules and regulations and maintain transparency.
What are the Types of Business Licenses in the UAE?
The Department of Economic Development (DED) of each jurisdiction decides the fees and requirements for every type of business license.
- Commercial License
It takes one to two weeks and costs between AED 15,000 to AED 50,000.
- Professional License
It also takes one to two weeks and costs between AED 15,000 to AED 25,000.
- Industrial License
Industrial license takes 2 to 4 weeks due to environmental and safety regulations. It costs between AED 15,000 to AED 25,000.
- Tourism License
Businesses dealing with tourism need to pay above AED 15,000 for the license. Due to regulatory requirements, this license takes 2 to 4 weeks.
- E-commerce license
These licenses require 1 to 2 weeks and businesses need to pay between AED 5,750 and AED 30,000.
Visa Process and Immigration
After establishing a business, the owner or shareholders can get a residency visa. At the same time, the shareholders can sponsor their family members as per the reports of UAE.
Cost and Time
The UAE is an advantageous place for businesses due to its location, tax-free policies, business-friendly infrastructure, and economic stability. The Department of Economic Development (DED) in the respective zones designs the rules and regulations for businesses in the UAE. For instance, this authority has designed rules for forming, operating, and dissolving businesses, under the Federal Law No. 2 of 2015 on Commercial Companies.
How much Time is Required to Set up a Business in the UAE?
In the Mainland, the estimated cost to set a business ranges from AED 25,000 to AED 70,000. However, in the Free zones, it ranges from AED 20,000 to AED 50,000 for business setup. In the case of the Offshores, only AED 10,000 to AED 15,000 are required. In the Mainland, it takes up to 8 weeks. However, in the Free zones, it takes only 1 to 2 weeks.
Tips for Scaling a Business in the UAE
Scaling a business in the UAE requires a detailed market analysis. At the same time, you need to leverage your business through technology implementation. Moreover, establishing strategic partnerships can result in exponential growth as mentioned by Richard Branson in his book, “The Virgin Way”.
What is the Best Location for Business Setup in the UAE?
The best location for business in the UAE depends upon the needs and types of business.
- The mainland is ideal for the UAE market and accessing government contracts.
- Free zones are the best option for 100% ownership and tax benefits.
- Offshores are good for international businesses.
What are the Consulting Agencies for Investment in the UAE?
According to the UAE Securities and Commodities Authority (SCA) and Dubai Financial Services Authority (DFSA), the following are the best consulting agencies for investment in the UAE:
- FTI Consulting
- Mercer UAE
- MBS Consultancy
- Redcliffe Partners
- AIX Investment Group
How can I Get a Mainland Visa Consultant in the UAE?
You can find a list of several firms from online platforms. Then, check their reputation through the reviews and comments. Moreover, you can visit the physical offices of different Mainland visa consultants. Along with this to help you in a much better way we have a team of professionals who consult the way investors need
