Business Setup in the UAE 101

The United Arab Emirates (UAE) is a country with an incredibly advantageous geographic location. Thanks to this, companies operating in the UAE can easily access markets in Europe, Asia, Africa, and the Middle East. When you also consider the favorable investment climate and the dynamic development of the country, it becomes clear why many entrepreneurs are considering opening a company in Dubai or other emirates. In this article, we discuss the advantages of registering a company in the UAE and how to do it.

Benefits of Starting a Business in the UAE

One of the key arguments in favor of registering a company in the UAE is the state's favorable tax policy. There are no quotas, trade barriers, or currency controls in the country. This not only makes the Emirates attractive to foreign investors but also allows them to freely repatriate profits.

Other advantages of the UAE include:

- A strategic location that positions the country as a link between Europe, Asia, and Africa;

- The ability to open a company in the Emirates without the involvement of a local sponsor, allowing 100% ownership;

- Favorable conditions for companies importing goods into the country—only a 5% customs duty is required;

- A stable economic situation, coupled with significant growth in most financial indicators;

- Numerous promising sectors that are of interest to entrepreneurs from other countries;

- A well-developed business support system that enables attracting investment to your project.

The advantages of opening a company in Dubai or another city in the UAE are numerous, but it’s already evident that registering a business in the UAE is a promising idea that offers many benefits to entrepreneurs looking to operate in the international market. So, it’s time to move on to the practical part of our article and discuss the specifics of setting up a company in the UAE.

The Initial Stage of Starting a Business in the United Arab Emirates

Before opening a company in Dubai, it is essential to carefully plan each step. The first decision to make is choosing the jurisdiction for your future firm. There are three options: offshore, free zone, and mainland. The first option offers advantages such as tax benefits and the opportunity to become a UAE resident. However, there is a downside. An offshore company is not allowed to conduct business in the country where it is registered. Therefore, if you plan to live and work in the UAE, choosing an offshore company might not be the best option.

Let's take a closer look at the other jurisdictions to objectively assess their features:

- Mainland: The mainland refers to all the territory of the UAE except for the free zones. When setting up a business on the mainland, entrepreneurs have the opportunity to operate without any territorial restrictions. This lack of boundaries within the country applies to both trading enterprises and companies providing various services.

The ability to operate across the entire country is typically cited as the main difference between the mainland and the free zones. But there are other distinctions as well. For instance, there is a corporate tax of 9% on income exceeding 375,000 dirhams, as well as a 5% VAT.

When discussing the disadvantages of the mainland, most entrepreneurs point out the requirement of having a local sponsor who owns 51% of the company’s shares. However, for many industries, this requirement has become non-mandatory in recent years. Nevertheless, there are market niches where it remains relevant. Therefore, when choosing a jurisdiction, it is important to study the requirements for your specific field of activity.

- Free Zones: Free zones are designated areas within the UAE created to support entrepreneurs working in specific sectors. To achieve this goal, free zones offer various benefits to businesses. Some of these benefits are common across all free zones, while others vary from one zone to another.

The advantages of free zones include numerous tax incentives, particularly exemptions from VAT and corporate tax. Another benefit is the absence of local sponsorship requirements. Foreign entrepreneurs can own 100% of their company’s shares, which simplifies financial decision-making and overall business operations.

A notable feature of many free zones is their specialization. For example, there are zones dedicated to IT, education, healthcare, media, and more. This specialization means that free zones provide services and infrastructure tailored to the needs of entrepreneurs in these specific fields.

As for the drawbacks of free zones, the most significant one is geographic limitations. When planning to open a company in a free zone, it is important to 

remember that you can only operate within the chosen free zone and outside the UAE.

As you can see, both the mainland and free zones have their pros and cons. Therefore, before starting a business in the UAE, you should carefully consider not only the field of activity for your future company but also the jurisdiction in which it will operate.

Well known free zones 

Currently, there are 47 free zones operating in the UAE. More than half of them are located in Dubai, but there are also free zones in Abu Dhabi, Sharjah, Ajman, and other emirates. Each zone offers businesses various benefits, preferences, and support. The conditions vary, which results in some free zones being more in demand than others. Below, you can find information on some of the most popular free zones.

DMCC Free Zone, Dubai.

The primary specialization of this free zone is trade, including the sale of tea, coffee, precious metals, and general goods. Logistics is an associated area of activity. Companies operating in these fields are provided with extensive opportunities for business development and growth.

One of the unique features of this free zone is its location in the high-rise district, near Dubai Marina. This area is known for its excellent transport accessibility, well-developed infrastructure, and abundance of commercial real estate.

ADGM Free Zone, Abu Dhabi.

 Located in the capital of the United Arab Emirates, this free zone has become an international financial hub. Its primary focus is on professional services in finance, asset management, banking, and fintech.

A distinguishing feature of this free zone is the ability to operate outside its borders, specifically on the mainland of the emirate. To do so, an entrepreneur must obtain a special license from the Department of Economic Development. However, if you choose to open a company in this zone, keep in mind that the firm will require a physical office, which must be located on Al Maryah Island.

JAFZA Free Zone, Dubai.

This is one of the largest free zones not only in Dubai but in the entire UAE. The free zone is located in the Jebel Ali Port, which is considered the main hub for imports into the UAE and for re-exports to Asia, Africa, and beyond.

The location of the free zone defines its primary specialization. It is mainly oriented toward international trade. Residents of the free zone have the ability to import and store products duty-free. However, that's not all. By choosing this free zone to register a company in Dubai, entrepreneurs can expect extensive opportunities in manufacturing and logistics, excellent infrastructure, various types of support, and assistance from the free zone administration.

IFZA Free Zone, Dubai.

Operating since 2016, this free zone has become one of the fastest-growing. Its rapid growth has been driven by several advantages, such as 100% foreign ownership, no corporate tax, unlimited repatriation of assets, and the provision of visas for both company founders and employees.

  As residents of the IFZA free zone, entrepreneurs can conduct business in trade, industry, and more. The free zone provides business-friendly regulations and world-class infrastructure. It also offers favorable conditions, including low company registration costs in the UAE. Another advantage of this free zone is its convenient location, just 20 minutes from both the city center and Dubai International Airport.

RAKEZ Free Zone, Ras Al Khaimah.

This free zone does not have a narrow specialization, but it focuses primarily on companies involved in trade, logistics, and manufacturing. They are offered the most favorable conditions for development, along with various types of support and assistance.

In addition to the above-mentioned activities, this free zone offers other licenses for e-commerce, media, education, freelancing, and more. The minimum share capital required depends on the company’s field of activity and ranges from 10,000 to 1 million dirhams. It is important to note that all entrepreneurs, except freelancers, must have a physical office.

SHAMS Free Zone, Sharjah.

This free zone has several priority specializations, including marketing, media, information technology, online services, and e-commerce. One of the key advantages of this free zone is its relatively low costs, making it particularly attractive for startups and small companies that are just beginning their journey in the UAE market.

However, the optimal cost is not the only benefit of SHAMS. For example, it offers simple and quick solutions for starting a business. Additionally, personal presence during the company registration phase is not required. Other advantages include a convenient location just 10 minutes from Sharjah Airport, 100% foreign ownership, and a wide range of business services.

D3 Free Zone, Dubai.

The main specialization of this free zone is in various creative fields, including architecture, fashion, design, art, media, and more. By bringing together the creative potential of its residents, the free zone has become a creative space with a unique atmosphere for idea exchange and collaboration.

At the same time, it is worth noting that the administration of D3 Free Zone places significant emphasis on innovation. In particular, it offers comfortable conditions for companies engaged in design research and the development of new concepts in creative fields.

The examples provided above illustrate the diverse nature of free zones. This means that entrepreneurs from any field of activity can start a business in the UAE.

Three Stages of Business Registration in the UAE

Opening a company in Dubai or another city in the Emirates is not so much a complicated process as one that requires adherence to formalities. To ensure everything goes smoothly, it's necessary to divide the registration into separate stages and go through each step-by-step.

Registration of the Company Name

Choosing a name for the company might seem like a simple and straightforward task that won't take much time. However, that's not the case. A company's name is the first thing potential clients and partners encounter, and it largely determines the initial impression. A good name indicates the organization's field of activity, does not contradict the cultural traditions and legal norms of the UAE, is easy to remember and reproduce, and carries no ambiguity or negative connotations. Moreover, it should be unique or, at the very least, not too common. Coming up with such a name is not an easy task, but it must be done well, as rebranding after several years of operation can be costly.

Suppose an appropriate name is already chosen. Now, it needs to be registered. Depending on the chosen jurisdiction, this requires contacting the administration of the free zone where the company will operate or the Department of Economic Development of the relevant emirate.

To register the name, you'll need the company’s charter, the founder’s identification, and documents confirming the legal address. After preparing the documentation package, the entrepreneur must pay the fees and submit an application to the relevant authority.

Gathering Documents for Company Formation in the UAE

This step might seem a bit confusing because the set of documents required depends on the type of company and its field of activity. Generally, the package includes the organization’s charter, confirmation of the legal address, and identification documents of the founders and directors. An extended set of documents may include various memoranda, shareholder agreements, and other documents regulating the company's management.

Regarding the legal address, it’s necessary to rent office space. The minimum lease term is one year. The office can be physical, virtual, nominal, or flexible. For some companies, the choice depends solely on the founder's preferences, while for others, it’s dictated by law. It all depends on the nature of the business, jurisdiction, legal form, scale of the organization, and other factors.

Important! Documents written in a foreign language must be translated into Arabic. Additionally, some papers may require notarization.

If you have the desire and time, you can complete this stage independently. However, if you’re unsure of your abilities or are in a hurry, it’s better to seek professional assistance. For example, you can use a one-time consultation service for company registration in Dubai or another city. Entrepreneurs also have access to comprehensive business support services in the UAE.

Business Registration in the UAE

Now that all the documents are in place, they need to be submitted to the relevant authority. As with company name registration, everything depends on the chosen jurisdiction. If the company is being opened on the mainland, the documents should be submitted to the Department of Economic Development of the emirate where it will operate. If registering in a free zone, the application should be submitted to the administration of that free zone.

It’s important to note that in different emirates and free zones, the requirements for the person submitting the registration documents may vary. In some cases, a representative of the business owner can handle this; in others, the founder's personal involvement may be required. To save time, it’s best to clarify who can submit the documents in advance.

Processing times also vary, but overall, the process doesn’t take long. The submitted documents will be reviewed by an official. If the documents meet the requirements and the information is accurate, the entrepreneur will receive a notification of the company’s registration in the UAE. After that, they can obtain a certificate allowing them to legally conduct business in the country.

Company Registration in the UAE Completed. What’s Next?

After completing the business registration process in Dubai or another city in the UAE, the entrepreneur needs to take four more steps. Let’s look at each of them in more detail.

Obtaining a Resident Visa

The first step to obtaining a resident visa is to apply for an entry permit. If the entrepreneur is abroad at the time of the company’s formation in Dubai, they should enter the country with this document. If they registered the company while in the UAE, they need to change their status from tourist to resident. Additionally, biometric data must be submitted to issue a resident card.

Important! The UAE authorities ensure compliance with health standards in the country. Therefore, an essential step towards residency is passing a medical examination, which includes a physical examination and testing for several diseases.

After the resident visa application is approved, the applicant receives an Emirates ID. This is a plastic card that serves as a passport equivalent and is used as an identification document. For example, this document is necessary when opening bank accounts, obtaining a driver’s license, buying a car, and handling other professional and personal tasks.

Obtaining a License

Simply registering a company in the UAE may not be enough to legally conduct business in some sectors. This primarily applies to highly regulated industries such as healthcare, banking, insurance, and several others. In such cases, the entrepreneur must confirm that the company complies with the country's standards. This can be done by obtaining a license for a specific type of activity.

Licenses vary depending on the business sector and type. Therefore, the first step is to choose the appropriate option and then apply to the regulatory authority. The application should include the company’s charter, business plan, a copy of the founder’s ID, and documents confirming the required level of professional qualification.

Choosing a Bank

There are 13 national and 28 foreign banks operating in the UAE. Financial institutions differ in the range of services offered, account maintenance fees, and other parameters. The six most popular banks among foreign investors are:

- Emirates NBD: Currently the largest bank in the UAE by assets and number of branches. The credit and financial institution offers a wide range of investment tools and provides access to global markets. Key advantages include an extensive branch network, advanced online banking, a good reputation, and reliability.

- Mashreq Bank: This bank specializes in brokerage and investment services. According to Global Finance (2021 ranking), it ranks first in the number of clients and fifth in the number of branches and assets. The bank positions itself as an innovative bank focused on digital technology and offers advanced digital tools for investment.

- Abu Dhabi Commercial Bank (ADCB): A leading player in commercial banking, offering numerous tools for corporate clients. According to Forbes (2021 ranking), the bank ranks third in the country in terms of assets and the number of branches. ADCB clients, including Russians, appreciate the convenience of international transactions, service quality, and customer care.

- First Abu Dhabi Bank (FAB): A leading provider of financial services in the UAE, specializing in both private and corporate clients. The bank emphasizes private banking and asset management, with notable advantages such as international presence, a wide range of investment products, and extensive corporate services.

- HSBC: A global bank and one of the world’s leading financial conglomerates. In 2023, it ranked 23rd globally in terms of assets under management. With vast resources and international expertise, the bank offers a wide range of investment services and products, along with reliability, strong financial performance, and convenience for investors.

- Standard Chartered: A large international bank with an extensive network of branches in the UAE and abroad, giving corporate clients access to global markets. The bank offers many services, including asset management. Standard Chartered has been present in the UAE since 1958 and has earned a good reputation among private and corporate clients.

As noted above, banks differ in many parameters, including the tools offered, business opportunities, and account maintenance costs. Therefore, before making a final decision in favor of a particular institution, a thorough analysis is necessary. This can be done independently by carefully studying the offerings of various institutions, or with the help of a financial advisor. After evaluating the client company's features, the expert will recommend a suitable solution. Professional services are also available as part of comprehensive business support and assistance in opening a business in Dubai or another UAE city.

Opening a Corporate Account in the Chosen Bank

Conducting business effectively is impossible without a bank account. It is essential not only for processing payments for goods or services but also for various other purposes. For instance, without a bank account, you cannot pay employee salaries, handle taxes, or maintain accurate financial records.

In the United Arab Emirates, there are three main types of bank accounts for organizations, each offering specific tools and features tailored to business needs. Let's take a closer look at the available options to help you decide which account is right for you:

- Savings Account: The primary purpose of these accounts is long-term savings. Banks typically offer more favorable interest rates on these accounts compared to traditional checking accounts. This allows entrepreneurs to build up a reserve of funds for emergencies or significant purchases.

- Investment Account: These accounts are designed for the buying and selling of bonds, stocks, and other securities. They provide entrepreneurs with convenient and useful tools for managing an investment portfolio, conducting trading operations, and tracking current market trends. These accounts are particularly appealing to investors.

- Commercial Account: This is the most popular type of account, intended for conducting various commercial activities. These accounts enable firms to manage cash flow, conduct transactions, maintain accounting records, pay for goods and services, and address other business tasks. Typically, commercial accounts come with additional tools that make them more user-friendly, such as mobile banking, internet banking, and more.

To open a corporate account, you will need to prepare the necessary documents and submit an application to the bank. Generally, the document package includes:

- Founding documents;

- Business plan;

- License;

- Passport, visa, and ID of the founder;

- Proof of legal address;

- Personal bank account statement;

- Contact details: email, phone number, etc.

Additionally, the bank may request further information, such as proof of residency in the UAE or a link to a LinkedIn profile.

How Much Does It Cost to Set Up a Company in Dubai: Prices for All Procedures

When planning to establish a company in Dubai, most entrepreneurs try to assess the economic feasibility of this decision, including the initial costs. To help you navigate the costs of key procedures, here are the average amounts you might expect to pay during the registration stage:

- Approval and registration of the company name — from $300.

- Notarization of the company's articles of association — from $300.

- Office rental — from $2,800 (depending on the size and location).

- Government permits (for certain activities) — from $1,000.

- Business license — from $3,000.

- Issuance and obtaining a resident visa — from $1,500.

- Opening a bank account — from $3,500.

- Total: from $12,400.*

*Note: The above prices are approximate for processing various documents. The exact cost depends on the choice of jurisdiction, the type of business activity, the emirate chosen, and other specific company characteristics.

Separate mention should be made of the costs of professional support, which can help you open a company in the UAE with minimal time, effort, and stress. The exact cost depends on the service provider and varies widely, but on average, it will cost around $4,000 or more.

Three Examples of World-Renowned Companies Registered in the UAE

The favorable economic environment, high growth rates, well-thought-out infrastructure, and tax incentives make the United Arab Emirates one of the most attractive countries for doing business. This applies to both small businesses and large corporations. For example, the UAE is home to such giants as:

- LinkedIn: In the UAE, LinkedIn is registered as a branch, allowing it to expand its presence in the region and work closely with local businesses.

- Microsoft Gulf: This is a division of Microsoft that focuses on the Gulf countries. The branch offers a wide range of services and software products and is registered as a limited liability company.

- Lukoil Overseas Offshore Projects: A subsidiary of the Russian oil and gas company Lukoil. The subsidiary focuses on offshore oil and gas extraction projects. It is registered in the UAE as a branch of a foreign company, giving it access to local markets.

Conclusion

Establishing a company in the UAE for Russians, as well as for citizens of other countries, is a promising decision that can elevate a business to a new level of development. The UAE's stable economy, access to global markets, favorable tax rates, and almost unlimited business opportunities have long made the Emirates one of the best launching pads for business.

If you're also considering this path but are unsure how to start a business in Dubai, Abu Dhabi, or another city in the UAE, it might be wise to seek professional assistance. For example, you could use the services of the UPPERSETUP platform, whose experts have been helping entrepreneurs enter the international arena for over fifteen years.