How to Start a Business in the UAE: Full Guide
Dreaming of establishing your own venture in the UAE’s dynamic marketplace?
The path to entrepreneurship might seem daunting, but worry not.
We’ve distilled the process of starting a business in the UAE into clear, manageable steps that’ll help you navigate the journey from idea to open doors.
So, let’s dive in!
Can you do business in UAE as a foreigner?
It is straightforward for you to do business as a foreigner or ex-pat in the UAE.
Also, the UAE government offers a 0% tax rate on your business and personal income, so you are looking at a lot of net income in which the state has no share.
Several business corporations offer you several plans to grow and start your business and help you navigate the business laws as well.
Non-Residents can also start a business; however, a resident should have a 51 % or majority share of your company.
However, they will only stay behind the scenes, and you will have the controlling share.
These business corporations also help you to find out such local sponsors who will lend you money and have a majority share in your company so you can have your legitimate business under the UAE laws.
Difference between Freelancing and Self-Employed in the UAE
When you are working as a freelancer, you work separately for another organization or corporation.
You provide your services for another brand and help solve their problems. It is straightforward to confuse this term with Self Employment.
Self-Employment is when you are working for yourself under your brand name. If you work for your organization, you will be called self-employed and not a freelancer.
There are some rules and regulations for you to stick to if you want to do business in either of the categories.
Freelancing in the UAE can be quite technical if you are not a resident or are not married to a resident.
However, the state has given some relief to freelancers by announcing temporary work visas and tax-free zones within the UAE, where they will provide tax exemption for some defined business sectors to attract investors and skilled labor.
Some of the designated areas in Dubai and Abu Dhabi include Dubai Media City, Dubai Studio City, Dubai Design District, and Abu Dhabi TwoFour 54.
Types of Business in the UAE
There are many different types of businesses and corporations one can branch out into when doing a business.
Trade can be made in various capacities by a business owner, and here we will break down the different types of businesses you could classify yourself into in the UAE.
Different Types of Business Entities in the UAE
Your business can take on many forms, and below, we will talk about the different types of business forms you can have while starting your business in the UAE.
Sole Proprietorship
This type of business structure is the best one to go for if you have a residence permit in the UAE, even if you are a foreign national.
The best thing about this type is that all the profits are yours, and you do not have to share the profits at all. However, you might also have to bear all the losses, so there are many pros and cons to this type.
Moreover, there are some apparent restrictions, such as the name of the brand must be related to the services offered, as well as the brand must have only one manager.
There is also no requirement for a minimum capital so you can start with as many funds as you have.
Limited Liability Company
In this type of business activity, you can have multiple partners who will bear the losses and get the profits depending on their investment size in the company.
This is one of the UAE’s most popular types of business arrangements.
This type of company can conduct any business, be it commercial or industrial.
However, there are some rules in this type of business.
51% of the company stake must be owned by a UAE national. You can own the rest of the 49%.
However, you will still be in charge of the majority of the controlling aspects of the business.
A recognized firm in the UAE must audit your business.
Also, you can have a maximum of 50 shareholders as well.
As opposed to having only one manager in the case of a sole proprietorship, you need to have five managers in this case.
Private Shareholding Company
This type of company is on a larger scale than the limited liability company. The company should have a combined starting capital of AED 5,000,000. Moreover, as opposed to a limited liability company, there must also be three investors.
The economics ministry must approve this type of company; after that, they are free to practice any industrial, professional, or commercial business.
There must be one manager and multiple branches as well.
Apart from this, like most other types of businesses, there must be a 51% or majority stake in the company held by a UAE national.
Public Shareholding Company
Also called a Joint Public Stock Company, the shares are given according to the values of the investment by each shareholder. There must be a combined capital of AED 30,000,000 as well.
The company is free to practice any commercial or industrial business as well as the professional business per the economics ministry’s laws.
Around five partners are UAE nationals, and their ownership percentage should range from 30% to 70%.
Moreover, this type of business is allowed aggressive expansion and can have multiple branches, employing at least more than five managers.
Civil Company
A civil company must be owned and operated by people with skilled professional degrees like Doctors, Engineers, etc.
Moreover, the partners can own 100% percent of the company’s shares, and there is no need to involve a UAE national.
However, another restriction says that this type of business can only indulge in professional business activities.
Another plus point of a civil company is that the owners can be of any nationality.
The only exception is if the company decides to invest in an engineering business, then one of the owners must be a UAE national with majority shares.
Partnership Company
In this type of business arrangement, multiple owners can share the profits and losses in any way they please. General Partnership and Limited Partnership Company are two further sub-types in this category.
How to register your business in The UAE
There are a series of steps that you have to take in order to get your business regulated and registered with the relevant authorities so that you can start legally trading.
Select Business Type
There are several business types you can select from when choosing your next business.
You can go for industrial, commercial, or professional businesses.
Make sure to evaluate the market before selecting your business type, as this is the most crucial part of the process.
Different business types can have different pathways to getting a license in the UAE.
Sponsor
Sponsors are significant when it comes to some businesses.
Some of the businesses in the UAE will require you to have a sponsor who has to be a UAE National and will have a 51% or the majority stake in your company.
Sponsors are needed for some business structures like Limited Liability Company and Public Shareholding Company.
Business structures like Sole Proprietorship and Civil Company do not require a sponsor.
Company name
Another vital aspect of the company is the name you will trade under. If you are setting up your business in the Tax-Free zones in the UAE, your company name must be related to your services.
When you have decided on your company name, it is vital for you to get it registered with the ministry of economics and tourism.
Look for space
Finding out the perfect space for your office can take a lot of time.
There are a lot of factors to look for in this phase, such as the community, location, and rental prices, among other things.
The place where you will start your company can make a lasting impact on the revenue.
It would be best if you took your time and wisely look for office space soon after deciding on a name and business type.
Company Structure
The company structure is the most essential part of this whole process.
You will decide on the type of company structure, such as Sole Proprietorship, Civil Company, and Public Shareholder Company.
Different company structures have different rules, regulations, and paperwork, and hence it is vital to be sure which business structure will suit your brand the best.
Fees associated with registration
The fees, which you will need for your company registration, will be discussed later.
Get all the legal paperwork
It would be best if you also have an excellent legal team who will develop the legal contracts for your sponsors, office spaces, and company structure frameworks.
Having a solid legal team will help you stay out of trouble with the authorities. Make sure you collect all your legal paperwork before you submit an application.
Submit the application
After all, the dues are cleared, and all your documents are in order, make sure that you submit your application on time to the department of economics and tourism.
The process of reviewing your documents might take up to a week or more, and after that, you will get your license to trade!
Is it challenging to start a Business in the UAE?
It is not that hard to start a business in the UAE, especially if you are doing it as a Sole Propertiership in one of the Tax-Free zones in the UAE.
There is no corporate tax in the UAE on earnings, be it personal or business here in the UAE, making it one of the best options for investing your money and growing your brand.
There are, however, some things to look at carefully before you can set up your company.
Things like company structures and sponsors are vital and must be emphasized before starting your company.
However, there might be a lot of red tape, bureaucratic hurdles, and laws that you might not be aware of as a foreigner or expat.
Hence, in that case, it is always advisable to engage business consultants and other agents to help you with the nitty-gritty of the corporate laws in the UAE.
Cost of Registration of your business in the UAE
The cost of registration would vary depending on the business type and structure.
Different contracts have different registration fees.
The registration cost will vary depending on many factors; however, the cost will generally vary between AED 17,000 and AED 41,000.
| Description | Services License Fee | Services License Fee | Trading license Fee | General Trading Fee |
| Sole Establishment | Civil Company | Limited Liability Company | Limited Liability Company | |
| Trade Name | AED 776.50 | AED 776.50 | AED 776.50 | AED 776.50 |
| Initial Submission | AED 256.50 | AED 256.50 | AED 256.50 | AED 256.50 |
| Office and Tenancy Annually | AED 10,000 | AED 7,000 | AED 10,000 | AED 10,000 |
| License Fee | AED 8,000 | AED 9,000 | AED 13,000 | AED 30,000 |
| Total Setup Cost | AED 19,033 | AED 17,033 | AED 24,033 | AED 41,033 |
Taxes in the UAE
The UAE is known as being one the best countries to do business in due to its lenient tax systems.
Individuals do not have to pay any tax on their income, personal income or business.
The only known taxes are up to 55% but are only applied to Oil Companies or Banks.
Hence, you can conduct your business without worrying about unnecessary taxes.
However, you are still required to pay VAT of 5% on your business.
In the UAE, there are several free zones – in the thousands – where you can conduct your business and are given even more tax-free incentives.
It does not matter if you are a UAE citizen or an Expat citizen; you are not required to pay tax on your income!
Hence, people flock to Dubai and the rest of the UAE to start their businesses!
Accounting for Businesses in the UAE
It is vital to keep your books clean for a better idea of your company’s expenditures.
Transparency is crucial, and it’s also advised. Several reputable firms in the UAE help you get a detailed audit of your firm.
These firms help you calculate your business’s outcome and recognize weak areas.
Moreover, you can also understand where you are bleeding financially so that it can be repaired and profit margins increase.
These firms keep track of all the receipts, payments, and expenditures to make detailed reports and analyses to benefit the firm in the long and short run.
Detailed audits and accounting also maintain transparency and shareholder confidence, which is imperative for the smooth flow of a corporation.
Some of the best auditing firms for your business in the UAE are Emirates Chartered Accountants Group, KGRN Chartered Accountants, and TRC Pamco, among others.
Insurances for Business Owners
Insurance is also essential for businesses so that you have plans to deal with any kind of situation regarding your business operations.
Insurance always keeps the shareholders happy and allows a company to fully open its wings and fly with whatever goals they have set.
There are many types of insurance. If you are a business owner, make sure you engage a good law firm to help you navigate the world of insurance contracts—moreover, typical insurance for small business range from AED 600 to AED 1,500.
Some of the best insurance firms in the UAE are Oriental Insurance, Abu Dhabi National Insurance, and Oman Insurance Co, among others.
There are 62 firms in the UAE; you can choose one of them for your insurance.
Conclusion
Entrepreneurship in the UAE is more than just a lucrative opportunity—it’s an adventure filled with possibilities.
With a business-friendly environment, tax-friendly policies, and a thriving community of business owners, the UAE is a gold mine for savvy investors and entrepreneurs.
It’s time to seize the opportunity and make your mark in this thriving business landscape.
Happy entrepreneurship!