Establishing a Business
The World Bank’s Doing Business 2010 said that it takes just 15 days to set up a new business in the UAE. The benefits of establishing a business in the country include corporate tax holidays for most sectors, no personal taxes, no currency restrictions and freedom to repatriate capital and profits. These relationships are sometimes conducted through general trading activities and specific joint ventures.
A foreign company wanting to do business in the UAE can choose to set up operations as a branch, representative office or registered company within one or more of the emirates, or it can appoint a commercial agent to sell its products in the UAE market or export them. It has to interact with authorities at the federal and emirate level and observe federal and local laws and regulations. While federal laws gain precedence over local laws, emirates individually have discretionary policies and procedures that affect the way business is conducted.
New companies can also choose to conduct their activities from a Free Zone, which is a designated, self-regulated area set up to catalyse economic activity within an emirate and is governed by its own set of rules and regulations. See the Free Zone section on this website for more information
Ownership regulations: Under the law, all companies established in the UAE must have 51% ownership by UAE nationals or a company wholly owned by UAE nationals, except in the following cases:
- 100% foreign ownership permitted in Free Zones
- Activities allowing 100% Gulf Co-operation Council (GCC) ownership
- Wholly owned GCC companies entering into partnerships with UAE nationals
- 100% ownership for professional companies
- Instances where the law requires 100% local ownership.
However, even with 51 per cent UAE ownership, companies cannot pursue those activities which are allowed only for UAE nationals or companies wholly owned by UAE nationals.
Licensing Categories and Procedures
Companies have to notarize their Memorandum of Association, which should be written in Arabic, and the Commercial Companies Law (CCL) requires them to also enter their names into the Commercial Register maintained by the local licensing authorities. A company cannot commence business if its name is not registered and its Memorandum of Association is considered void.
All businesses, whether industrial, professional, trading or services, must also obtain a trade licence from the emirate concerned before it can begin business in the emirate. Licensing procedures may vary from emirate to emirate.
There are three categories of licences for all business activity in the UAE:
1. Commercial licences: covering trading activities.
2. Industrial licences: for establishing an industrial or manufacturing activity.
3. Professional licences: covering professional services, craftsmen and artisans.
Official approval is required from the appropriate Government ministry or department to set up a company to engage in certain activities, including:
- Financial institutions
- New industrial projects or expansion
- Medical institutions
- Air transport and services
- Publishing, printing, advertising, filming, photography
- Education and training
- Agriculture and animal welfare
- Customs clearance, freight forwarding, cargo services
- Telecommunications equipment
- Insurance companies and professional firms
- Legal consultancy
- Engineering and contracting