What you need to know before setting up a business in UAE?
Are you planning on setting up a business in the United Arab Emirates (UAE)? If so, there are a few things that you need to be aware of before you get started. In this article, we’ll take a closer look at what you need to know about operating in the UAE and the different types of businesses you can set up.
First, you need to decide if you’d like to operate in a Free Zone or Offshore. Each option has its own benefits and specifications depending on your requirements. A Free Zone is a special economic area where business owners can enjoy full ownership of their company, 9% corporate taxation (to be applied to UAE businesses on profits above AED 375,000), and 0% personal income tax. However, one of the key limitations of operating a company in a Free Zone is that you are not allowed to make direct trade with the UAE local market. Currently, there are over 30 Free Zones operating in Dubai, each designed around an industry category.
On the other hand, an Offshore company can also be registered in a Free Zone and enjoy many of the same benefits, but it’s not a substitute for a Free Zone company. Offshore companies are allowed to have business activities outside the UAE and not inside, and they also have no requirements for minimum capital deposited before incorporation. However, unlike operating as a Free Zone business, a sponsor is required, which will restrict your foreign ownership to only 49%.
When setting up a business in the UAE, you’ll also need to identify the type of license needed. There are three main types of licenses that can be obtained from the Department of Economic Development (DED): Commercial license for trading activities or the buying and selling of goods, Industrial license for manufacturing activities, and Professional license for service providers, artisans or craftsmen.
One of the main benefits of incorporating in a Free Zone like DMCC is that you don’t need a local sponsor. This means that you can set up an entity with 100% foreign ownership without the need of a UAE national as a partner or sponsor.
In conclusion, setting up a business in the UAE can be a lucrative opportunity, but it’s important to do your research beforehand. By understanding the different options available and the requirements for each, you can make an informed decision about the best way to set up your business.