Why entrepreneurs set up a business in the UAE
Favourable environment for business development. The UAE is number one on the Global Entrepreneurship Monitor Index. To create the ranking, 2,000 entrepreneurs from 50 countries have assessed:
- the level of business development and innovations in the country;
- the financial infrastructure condition;
- the efficiency of government supporting measures;
- the simplicity of opening a business in the UAE.
Most government services for entrepreneurs have been transferred online to the websites of government departments and apps such as Dubainow and UAE PASS.
UAE PASS is an analogue of an electronic signature that gives access to 6,000 services. Using the electronic signature, entrepreneurs can notarise documents and transactions and fill in applications for registering a company. Citizens and residents of UAE only can obtain UAE PASS.
Beneficial tax policy. The UAE companies are exempt from taxes on dividends, capital gains, qualifying intragroup transactions and reorganisations.
Companies registered in the Arab Emirates don’t pay taxes on profit till June 2023. After that, businesses with an annual profit of more than AED 375,000 ($102,000) will pay a 9% corporate tax.
The VAT rate in the UAE is 5%. For comparison, Germany has a VAT of 19%, and the UK 20%.
The Arab Emirates have dozens of free economic zones (FEZ) with special tax regimes. Owners of companies located in free economic zones are exempt from corporate tax, VAT, and import and export taxes.
Each free economic zone has its own specialisation, so to say, a list of allowed business activities. For example, Dubai Healthcare City is for registering companies that work in the healthcare services and the pharmaceutical industry, and Dubai Internet City is for IT and telecom companies.
What company to open to work on the UAE domestic market
Mainland companies allow one to run a business on the whole territory of the UAE: to sell goods, provide services, and open new branches.
Types of companies in the UAE
|Type||Business in the UAE||International business|
|Onshore||In the free economic zones only||Allowed|
Form of the company. A mainland company can have one of the following forms:
- general partnership;
- limited partnership;
- limited liability company, LLC;
- public joint stock company, PJSC;
- private joint stock company, PrJSC;
- local company branch;
- foreign company branch;
- free zone company branch;
- sole establishment;
- holding companies.
Types of business activity. The list of allowed activities for mainland companies includes 2,000 items. The owner must choose only one type of business activity to register their business.
Particularities. Names of mainland companies can’t start with Universal, Middle East, or International.
Registration of the company. A mainland company can be registered in any emirate of the UAE. To do so, one needs to receive permission for registration in the General Directorate of Residency and Foreigners’ Affairs.
For some types of business activities, entrepreneurs need to get additional permissions. For example, legal and tax advisers get permission from the Ministry of Justice, and insurance companies, from the Ministry of Economy.
Owners of mainland companies need to sign a contract with a service agent. The agent will act on behalf of the business in the tax office and other government institutions.
Buying or renting an office is also required to register a company.
After the registration is completed, one needs to get an Establishment Card. It proves that the company is registered in the Migration Department and that owners and employees can get residence visas.
Application for obtaining an Establishment Card is filed via the UAE PASS app. The service is paid: it costs AED 300.
Process of registration of a mainland company in the UAE
Documents for opening a mainland company in the UAE:
- a copy of a preliminary permit issued by the General Directorate of Residency and Foreigners’ Affairs;
- a copy of the loan agreement;
- a memorandum of association;
- a licence;
- a contract with a service agent notarised by a notary;
- a copy of the entrepreneur’s passport and a coloured 3x4 photo taken on a white background.
All the documents must be submitted to the Department of Economic Development of the emirate where the company will be registered. For example, in the Department of Economic Development of Abu-Dhabi.
How to register an offshore company in the UAE and run an international business
Offshore companies in the UAE are registered in the country but can only operate abroad. For example, such a company can provide services or sell goods on the European market but not in Dubai.
One shareholder can register a company, and the maximum number of owners is not limited.
Form of the company. Offshore companies in the Arab Emirates are registered as an International Business Company (IBC).
Types of business activity. Offshore companies can have any type of business activity except for insurance and banking.
Peculiarities of offshore companies in the UAE:
- It is forbidden to perform commercial activities in free economic zones and emirates territories.
- Attracting local suppliers, contractors, lawyers, accountants, and consultants is forbidden.
- Renting commercial property in the UAE outside free economic zones is forbidden.
- It is impossible to obtain residence visas for owners or employees of the company.
Registration. Offshore companies in the Arab Emirates can be registered only on the territory of free economic zones. To do so, one needs to apply to the website of the chosen zone, for example, Jebel Ali Free Zone, or JAFZA.
Documents. The standard list of documents to register an offshore company includes:
- a corporate charter and memorandum of association;
- a full name and address of each founder;
- information on the size of nominal capital, number of shares, and nominal cost of the company’s share.
How to register an onshore company in the UAE to work in the free economic zones and abroad
Onshore companies in the UAE are registered by foreigners for doing business in the free economic zones in the Arab Emirates and abroad.
Owners of the onshore companies can own 100% of the shares and obtain residence visas for themselves, their family members and employees.
Form of the company. To register a company, an entrepreneur can choose one of the legal organisational forms:
- free zone limited liability company (FZ LLC);
- free zone company (FZ Co.);
- free zone establishment (FZE).
Types of business activities. Each free economic zone has a list of allowed business activities. For example, to work in the automobile sector, one can choose Dubai Auto Zone, in the logistics, Dubai Logistics City, the industrial sector, Dubai Industrial City.
To register an onshore company in the UAE, one needs to have a licence. The minimum cost of it in the Sharjah Publishing City Free Zone is AED 5,750 ($1,570), and in the Fujairah Free Zone, AED 15,000 ($4,000). A licence is issued for one year; it must be extended.
Cost of a licence in the free economic zones in the UAE
|Name||Emirate||Minimum cost of the licence|
|Jebel Ali Zone||Dubai||AED 5,000|
|Sharjah Publishing City Free Zone||Sharjah||AED 5,750|
|Ajman Free Zone||Ajman||AED 11,000|
|Creative City Free Zone||Fujairah||AED 6,000|
|Meydan Free Zone||Dubai||AED 12,500|
Peculiarities. The administration of each free economic zone sets requirements for the size of nominal capital and the size of office and storage rooms. For example, in the Ras Al Khaimah Economic Zone, RAKEZ, the nominal capital can’t be less than AED 100,000 ($27,200).
Registration. Onshore companies are registered online on the websites of free economic zones. Administration considers the application and then elaborates details with the founders, for example, the required size of office or the number of residence visas for issuing.
The free economic zone administration helps entrepreneurs develop a corporate charter and memorandum of association and register a company in the Chamber of Commerce in the emirate.
An entrepreneur needs to open a bank account, contribute authorised capital and pay for the additional services. Expenses for opening a company in the Fujairah Free Zone include:
- a registration fee — AED 5,300 ($1,450);
- a one-time payment for utilities — AED 1,200 ($300);
- a returnable deposit — AED 5,000 ($1,370);
- a residence visa for one person — AED 3,460 ($9,500).
After the business is registered, its owner needs to obtain an Establishment Card in the UAE PASS app. The cost of processing the request and preparing the card is AED 300.
Documents. The list of documents depends on the type of business activity and requirements of the free zone. The minimum package of the documents includes:
- a decision of the board of directors on the appointment of a director;
- a letter of attorney on the director;
- a memorandum of association and corporate charter;
- an example of the director’s signature;
- a coloured 3x4 photo of the director on a white background;
- information on the nominal capital.
All the documents need to be notarised.
How to open a foreign business branch in the UAE
Foreign companies can register their branches in the UAE to enter the Arab Emirates market.
The form of the company is a Foreign Company Branch.
Types of business activities. A foreign company branch needs to have the same business activity as a parent company. For example, if the parent company specialises in selling office supplies, the branch needs to do the same.
Registration. A foreign company branch can be registered on the mainland or in a free economic zone.
Suppose the branch is opened in the mainland of the Arab Emirates. In that case, an application for registration is filed to an emirate’s Department of Economic Development. And if in a free economic zone, in the zone administration.
Documents for registering a foreign company branch in the UAE:
- a certificate of the registration, memorandum of association and charter of the parent company;
- a decision of the board of directors about creating a branch;
- a letter of attorney for a director with a right to open bank accounts;
- a contract with a service agent, notarised by a notary;
- a licence.
Documents for registration of the branch are notarised in the consulate of the Arab Emirates in the country where the parent company is registered. After that — in the Ministry of Foreign Affairs in the UAE.
Profitable types of businesses in the UAE for foreigners to invest in
The United Arab Emirates is one of the best countries in the world to run a business. It offers favourable conditions such as a beneficial tax policy, a high level of innovations in the country, and government efficiency measures.
Entrepreneurs open companies belonging to many sectors of the economy; however, some are more profitable than others.
- Travel and tourism. The UAE, especially Dubai, is popular among tourists. For example, in 2021, Dubai was visited by 7.28 million internationals.
- Entertainment. As the country is famous for wealthy tourists, it is also a good idea to invest in the entertainment sector and bring entertainers from across the globe to the country.
- Construction. The UAE is always under construction. New skyscrapers, industrial facilities and other buildings are erected there each year. The UAE construction market size was valued at $85.6 billion in 2021 and is said to grow in the following years.
- Real estate. Between the end of 2020 and the spring of 2022, around 100,000 people moved to Dubai. Some of them are in need of houses and apartments for rent.
- Beauty. Wealthy tourists visit the UAE, and many are interested in high-quality beauty services.
- E-Commerce. The use of E-Commerce technologies started to grow during the first year of the Covid-19 pandemic. Now E-Commerce is a profitable sector of the economy. Almost 100% of the UAE population has the Internet, and the Dubai Chamber of Commerce and Industry foresees that the E-Commerce sector will reach $8 billion in sales by 2025.
- Healthcare. Healthcare services are among the best in the world. Therefore, each year the country is visited by thousands of medical tourists. For example, Dubai welcomed 337,011 medical tourists in 2021.
How to open a bank account in the UAE
An application for opening a bank account in the UAE can be filed online on a bank’s website. The minimum package of documents for opening a corporate bank account includes:
- a copy of the company’s licence;
- a copy of a corporate charter and other founding documents;
- data on the legal address of the company and addresses of the founders;
- residence visas and Emirates IDs of the founder and employees of the company who have a signatory right;
- copies of founders’ passports;
- a bank account statement of the founder.
The Fintech magazine included three UAE banks on the list of the largest banks in the Middle East and Africa in terms of assets:
- First Abu Dhabi Bank in Abu-Dhabi;
- Emirates NBD Bank in Dubai;
- Abu Dhabi Commercial Bank in Abu-Dhabi.
Entrepreneurs can obtain an international debit card when opening an account in some UAE banks, for example, the Emirates NBD Bank.
How to obtain a residence visa for an entrepreneur in the UAE
Foreigners have an opportunity to obtain a residence visa in the UAE when founding a business. Visas can be obtained for 5 or 10 years.
A residence visa for 5 years can be obtained for creating an innovative company that costs AED 500,000+ ($136,000+).
To get a residence visa, one needs to provide a licence and a recommendation letter from the business incubator, notarised by the Department of Economic Development of the emirate where the business is registered.
A residence visa for 10 years can be obtained by:
- Owners of the company with revenue of AED 1,000,000+
or $272,280+ per year.
- Start-up founders in the government business incubator. For example, in the In5, DTEC and Dubai Future Accelerators.
- Founders of the companies sold for AED 7,000,000+ or $1,900,000+.
- Investors who founded a company or bought a share in the existing business for AED 2,000,000+ or $545,000.
Documents. The minimum documents packages for obtaining a residence visa for entrepreneurs include:
- a certificate of registration of a legal entity;
- a copy of a company’s trade licence;
- an establishment card of the company;
- a letter from the bank proving investments into the authorised capital;
- a copy of the international passport;
- a coloured 3×4 photo on a white background;
- health insurance;
- a certificate of passing the medical check.
a residence visa
Alongside the main applicant, a residence visa can be obtained by their spouse, non-married sons under 25 years old, and daughters with no age limit.
Frequently asked questions
Foreigners can open several types of the company in the UAE. They are:
- mainland companies — for entering an Arab Emirates market;
- onshore companies — for working in the free economic zones and abroad;
- offshore companies — for working around the world, except for the UAE;
- foreign company branches.
When doing business in Dubai or the Arab Emirates in general, one can obtain a residence visa for 5 or 10 years.
A residence visa for 5 years can be obtained when creating an innovative company with a cost of AED 500,000+ ($136,000+). Visa for 10 years, for investment into a business of AED 2,000,000+ ($544,500+) or creating a start-up in the government business incubator.
Residence visas for 10 years can be obtained by entrepreneurs who fulfil one of the following conditions:
- bought a share in the existing business or invested in a new company at least AED 2,000,000 ($545,500);
- founded a start-up in a business incubator, and the Ministry of Economy approved the idea of the start-up;
- own a company with annual revenue of AED 1,000,000+ ($272,280+);
- founded a company and then sold it for AED 7,000,000 ($1,900,000).
The profit tax rate in the UAE is one of the lowest in the world — 9%. It will be charged from June 1st, 2023. Businesses with a profit of less than AED 375,000 ($102,000) are exempt from paying profit tax.
Companies registered in free economic zones are exempt from paying corporate tax, VAT, and customs duties.
It is relatively easy to start a business in the UAE. It can even be done remotely as different apps and services are designed for it.
To start a business, one needs to obtain permission to register their company in Dubai or another emirate, gather all required documents, rent or buy commercial property and apply for registration. After that, an entrepreneur will get an Establishment Card proving that the company is successfully registered.
Depending on the form of the company, there can be additional requirements for starting a business.
There are many types of businesses that are in demand. The most profitable business sectors are tourism, entertainment, beauty, healthcare, construction and real estate, and e-commerce.
Yes, you can open a business in the UAE if you don’t have a residence visa.
If you decide to get it, you will need to provide several documents: a certificate of registration of a legal entity, a copy of a company’s trade licence, an establishment card of the company, a letter from the bank proving investments into the authorised capital, a copy of the international passport, health insurance, a certificate of passing the medical check.