Steps to start a business on the mainland

The ability to operate without territorial restrictions is an important feature of registering a company on the mainland, but it's not the only one. For example, the broad opportunities for doing business are also noteworthy. By establishing a company in the mainland part of the country, entrepreneurs gain the ability to participate in government tenders.

The favorable tax system also deserves special mention. In particular, the VAT rate is 5%, and corporate tax applies only to income exceeding 375,000 dirhams, at a rate of 9%. Additionally, there has been a gradual easing of requirements related to having a local sponsor. For many types of activities, this condition is no longer relevant. Considering all of the above, it's clear why many investors choose this jurisdiction.

Starting a business in ordinary ways involves a series of steps, including:

1. Identifying a business activity

2. Selecting an appropriate legal form

3. Registering the trade name

4. Applying for an initial approval

5. Drafting a Memorandum of Association and local service agent agreement

6. Select a business location

7. Get additional government approvals

8. Submit documents and pay fees

Identifying Business Activities

Choosing the appropriate business activity is essential when determining the legal structure and type of license needed, which could be commercial, industrial, professional, or others. In the UAE, there are six primary types of licences: industrial, commercial, professional, tourism, agricultural, and occupational.

Notes:

- A business can engage in multiple activities.

- There are over 2,000 business activities available in the UAE.

Selecting the Legal Form

The legal form of a business should align with its specific needs and serves as the foundation for applicable laws and regulations. In the UAE, an investor can choose from various legal forms, including:

- General partnership

- Limited partnership

- Limited liability company (LLC)

- Public joint stock company (PJSC)

- Private joint stock company (PrJSC)

- Civil company

- Local company branch

- GCC company branch

- Foreign company branch

- Free zone company branch

- Sole establishment

- Holding company

Note: The legal form must be consistent with the chosen business activity.

Registering the Trade Name

A trade name serves to distinguish one business from another and reflects the nature and structure of the business. It can be registered through the economic department of each emirate, either online or via their mobile applications.

Requirements for Selecting a Trade Name:

- Must include the business structure acronym (e.g., LLC, EST, PJSC, PrJSC).

- Should not violate public morals or order.

- Must be suitable for the type of activity and legal status of the business.

- Cannot include names of religions, government authorities, or external organizations’ names or logos.

- Must not be previously registered.

During the application process, a payment voucher or transaction number will be issued for reference during payment.

Notes:

- Trade names are registered by the local department of economic development, while trademarks are registered by the Ministry of Economy.

- Trade name certificates are renewable.

Obtaining Initial Approval

Initial approval indicates that the UAE government does not object to the establishment of the business, allowing the investor to proceed with the next steps. However, it does not permit the operation or conduct of business activities. Foreign investors must seek approval from the General Directorate of Residency and Foreigners’ Affairs before obtaining initial approval. Some business activities may also require additional approvals from relevant government entities before applying for initial approval, especially in areas such as legal, security, and financial sectors.

MOA and LSA

Depending on the legal form of the business, a Memorandum of Association (MOA) or a Local Service Agent (LSA) agreement is required. The MOA is necessary for limited partnerships, LLCs, PJSCs, and PrJSCs.

Notes:

- UAE-based law firms, courts, and notaries prepare and attest to MOAs and agreements.

- Businesses fully owned by non-GCC residents must appoint a local service agent from the UAE through a notary-attested agreement.

Choosing a Business Location

All businesses in the UAE must have a physical address that complies with the respective emirate’s Department of Economic Development requirements and local municipal land planning regulations. A rental agreement for office or warehouse space is required and, in some cases, must be attested. In Dubai, for instance, the agreement must be registered with Ejari.

Obtaining Additional Government Approvals

Certain business activities require additional approvals from relevant government entities, such as:

- Ministry of Interior: For transport-related businesses like driving schools and car rentals.

- Ministry of Justice: For legal activities and consultancies.

- Local municipalities: For architectural and engineering activities.

- Telecommunications and Digital Government Regulatory Authority (TDRA): For telecommunication activities.

- Executive Council: For travel and tourism, shipping, and other services.

- Ministry of Economy: For insurance and related consultancies.

- Local health departments: For health-related businesses.

- Supreme Petroleum Council: For oil and gas field services and drilling operations.

Collecting the Business License

After completing the necessary steps, investors can collect their business licence from the economic department service centres or through their websites.

Documents Required for All Legal Forms:

- Initial approval receipt and previously submitted documents.

- Attested copy of the lease agreement (RERA attestation required in Dubai).

- Attested Memorandum of Association for all types of companies.

- Additional approvals from other relevant government entities, as applicable.

- Attested service agent contract (for civil establishments and businesses fully owned by non-GCC nationals).

Notes:

- The trade licence fee must be paid within 30 days of receiving the payment voucher.

- Failure to pay within the specified timeframe may result in the application being cancelled.