This article is first of the series of the article that we will be publishing on the Subject “DOING BUSINESS IN UAE”
This Article will include an introduction, followed by the details of business options available in UAE along with the type of registration process.
INTRODUCTION
UAE is an important business center that has become an attractive hub for overseas investors. UAE is made of 7 emirates, however those who want to open Company in Dubai or in any other emirates are required to comply with UAE commercial Law.
In 2017, there were 131,000 registered businesses in the UAE. When you combine this with the fact that 80% of residents are foreign-born, it becomes clear that there is plenty of scope for foreign investment in the UAE.
Further, the UAE announced in 2019 that it is allowing 100% foreign ownership in 122 economic activities across 13 sectors. Most notably, these include growth sectors such as renewable energy, logistics, hospitality, food services, and manufacturing. Despite this, it is important to note that each Emirate can impose its own restrictions.
HOW TO START BUSINESS IN UAE
Starting a business in emirates is quite easy, and anyone could do it, after the amendment in 2020 made in the Commercial Company Law. It has removed the requirement of having an Emiratis as 51% owner for registration of an Onshore Company in the UAE. Foreign investments up to 100% are now allowed in all sectors except in ‘Activities of Strategic Effect’. Foreign Companies are no longer required to have UAE nationals as directors in a joint stock company. The Departments of Economic Development in each of the Emirates are given the responsibility to come forward with list of such business activities where 100% foreign ownership is to be allowed.
WHERE TO REGISTER YOUR COMPANY in UAE?
In UAE one can register its Company as a free Zone Establishment, Offshore Company or a Mainland Company.
Free Zone Establishment: A free zone company is a company formed within a special jurisdiction that comes under a particular Emirate. As of now, over 40 Free Zones operating in the UAE as a whole they are also known as free trade zones or a free zone authority, free zones are economic areas where goods and services can be traded. Free trade zones attract 0% tax rates, preferential customs duty rates and 100% import and export tax exemption.
Offshore Company: An offshore Company is a Company which are operating its business in UAE without any address or office requirement. An offshore entity is a wholly foreign-owned limited liability company. These are preferred by those enterprises and investors who need business confidentiality and asset protection.
Mainland Company: A Mainland company is licensed by the Department of Economic Development (DED) of the particular Emirate in which your company is established. The license from the DED allows you to do business in the local market as well as outside the UAE without any restriction.
WHAT ARE THE TYPES OF BUSINESS REGISTRATION AVAILABLE IN UAE?
> Sole Proprietorship
This type of company is 100% owned by one individual. Because of this, that person has full control over operations and profits. Although all nationalities can create a sole proprietorship company, only UAE and GCC nationals can have a commercial or industrial company.
> Civil Company
Professionals such as doctors, accountants, and lawyers can open a civil company business in the UAE. An Emirati national must own 51% of the business in addition to this, the partner should hold in addition, this partner should hold the relevant qualifications and proven experience linked to this activity. It is always recommended to check with the Department of Economic Development on the required compliance, education qualification, and work experience required for the intended activities of the license.
> Limited Liability Company (LLC)
In an LLC, there must be between two and 50 shareholders. As such, each one is liable only for their percentage of shares. Additionally, profits and losses are divided between shareholders according to their holdings. Again, 51% of shares must be owned by a UAE national. Furthermore, an LCC with more than seven partners must appoint a board with at least three shareholders.
> Foreign Company Branch
A foreign company may establish a branch in the UAE. In this case, the company is 100% owned by the parent company. However, any goods must be imported through a local trading firm.
> Free Zone Company
Businesses operating in a Free Zone need two to five stakeholders. While there are many benefits and incentives for setting up in the UAE Free Zones, you should know that these companies cannot trade directly with the UAE market.
> Freelancers
It is surprisingly easy to set up a freelance business in the UAE. You will need to register in a Free Zone with an application form, CV, bank reference, and notarized Registry Identification Code Form. You will also be able to apply for a visa
Foreign Investors will now be allowed to register limited liability companies & joint stock companies as holding companies in Dubai.
The only places foreign investors may fully hold a Company Registration in Dubai is Dubai Free Zones.
This article is written by Team Anupama Tripathi & Associates is purely for the purpose of knowledge and comment. For more information you can reach us #8800839633 or # csanupamatripathi121@gmail.com
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