Step by Step Guide 21 May 2020
How To Set Up A Business In The UAE – The Type Of Licenses?
UAE or the United Arab Emirates has undergone distinct changes over the last few years. It boasts of robust infrastructure and is now considered the next lifestyle destination. Apart from being the fast-growing economies, UAE is the new epicenter of trade and businesses. Things have changed so much that its infrastructure that was primarily funded by the oil and natural gas exports over 3 decades ago contributes no more than 5% to its overall GDP. Instead the largest contributor turns out to the real estate, financial services, trade, and tourism.
As such, the UAE does seem to be an ideal destination for many of the business owners and entrepreneurs. Since it offers the most ideal conditions like tax exemptions, asset protection, complete privacy, in addition to limited liability, things become a lot more convenient, while setting up a business.
Moreover, it is a tax heaven and as such, there are some more benefits, which include the likes of:
- Because of the business-centric policies, it does offer excellent growth trajectory.
- Access to a prosperous market in perhaps one of the most affluent regions that also offers ample opportunities.
- Devoid of any quotas, exchange controls or trade barriers.
- World-class infrastructure and great connectivity options through air and water.
What does it take to set up a business in the UAE?
While setting up a business in Dubai or anywhere around the UAE, it is necessary to have a local sponsor. The local sponsor should be a UAE national and it is he/she who is meant to work as the service agent. Most important of all, it is necessary to have a no-objection certificate, if you want to run the business, without facing any major obstacle.
- Be ready with a Memorandum of Association for your company and do cover all the basic elements on which the business is going to operate.
- Make sure to obtain the preliminary approval for the business by notarizing the MOA at the Department of Economic Development in Dubai.
- It is important to have a trading name and get the same registered with the DED.
- The next step would be to look and arrange an office space from where you can run the business. This is one of the key pre-requisites to obtain a business license. Keep in mind, the office tenancy or ownership contract is necessary as it serves as the address proof for the business address.
- Apply for a trade license that is primarily issued by Dubai Economic Development (DED). Based on the type of business activity, you can apply for one of the following license types:
- Industrial license for manufacturing activities.
- Professional service license for service-based companies like law firms and educational institutes.
- Commercial license for almost any kind of trading activity.
Other than these, depending on the type and location of your company, you have to submit the required documents to the DED and the Commercial Registration Department, and pay the required license fee.
Difference between Onshore and Offshore companies
The UAE has many offshore companies that are being operated by businessmen and entrepreneurs who are not operating within Dubai or anywhere in the UAE. A large chunk of these companies does operate in many countries.
As far as the onshore companies are concerned, they are allowed to conduct and carry out the business of all types in the UAE. In both instances, the rules and regulations governing the business are different.
The working of an offshore company within the UAE has is dictated by many elements. But without any doubt, it does provide some amount of leverage, which makes things more suitable for the business owner.
By and large, one major advantage of owning an offshore company in Dubai, and this include the likes of:
- The foreigners then get an opportunity to own a property in the UAE.
- Since Dubai is tax-free, the foreign national owning the property can easily avoid paying any form of tax in their home countries.
- Besides, they also get access to other facilities such as paying less amount of tax, apart from assured growth and higher returns on investment.
When it comes to onshore companies, these are primarily set up by those who prefer to operate a business from the UAE. Since the companies are registered in the same country, they do have to pay proper tax rates, as necessitated and regulated by the respective government. The companies operating out of the UAE do require 51% of its shares to be owned by a UAE national.
Some of the advantages of owning an onshore company are as follows:
- Access to a thriving market that is properly organized and also offers a lot of benefits.
- Cities such as Dubai and Abu Dhabi have high growth potential and is rapidly expanding.
- Onshore companies are less expensive to operate and there is no place for any visa or residency registration.
There are several aspects of setting up a business in the UAE. Because of its tremendous potential and great offering, it still continues to attract a lot of foreign expats, who are willing to invest. Judging by the current trend and on account of the robust and infrastructure, it provides businesses the desired leverage to grow and expand at exponential rate.