The United Arab Emirates is a great choice to start a company and establish presence if the investor has a viable business setup plan and is looking to tap into one of the safest and most affluent markets in the world. To operate a business in the country you must be licensed by the government. A business license is a certificate that permits a natural person or legal entity to practice a particular type of activity in line with the legal requirements and conditions relating to that particular activity in each of the Emirates. The Department of Economic Development(DED) is the key government body issuing licenses for resident companies in each Emirate of United Arab Emirates. The seven emirates each have their own Department of Economic Development as their license issuing authority. A business setup licensed by the DED is governed by the laws of the country. This is different to a business setup under the Free Zone and Offshore licenses which is subject to specially enacted rules and regulations insulated from the main laws of the country. Investors choose to get their companies registered by DED if they expect substantial volume of economic activity inside the UAE.

Setting Up Business in UAE Free Zones

The major attraction of setting up business in Free Zones is the 100% ownership allowed to foreign investors. The incentives for a Free Zone entity are

  • 100% foreign ownership
  • Exemption from tax on corporate gains or personal incomes
  • No currency restrictions

A business may be set up either as

  • Free Zone Company (allows 2 to 5 shareholders)
  • Free Zone Establishment (with just one shareholder / owner)
  • Branch / Representative Office of Foreign Company or UAE company

Setting Up Business in UAE Main Land

The term ‘Main Land’ is used to represent the geographical area in the land of UAE that are subject to the laws and regulations of UAE. The businesses set up in UAE main land are subject to the laws of land of UAE for all purposes unlike Free Zone companies which are governed by separately constituted rules and regulations.

The registration of business in main land is opted for when a substantial volume of business is expected inside UAE or when the intention is to explore the UAE business market.
The incentives are

  • License to have business dealings all over UAE
  • Exemption from tax on corporate gains or personal incomes

The business may be set up in main land either as

  • Individual Establishment (with just one shareholder / owner)
  • Branch / Representative Office of Foreign Company or UAE company

Setting Up Business in Offshore Jurisdictions

An Offshore Company is one that does not conduct substantial business in its country of incorporation and is formulated in a law of no tax jurisdiction for the purpose of legally minimizing any type of tax payment. An offshore company can eliminate or minimize many type of tax payments such as capital gains, VAT, profits on business earning and property sales. An offshore company has non-resident status and cannot occupy an office space in its name in the UAE. Both individuals and corporate bodies can hold the ownership in an offshore company. The most common reasons for opening offshore companies are

  • Tax minimization
  • Ease of international operations
  • Asset protection
  • Investment diversification
  • Placement of funds in accounts out of the home country

Doing Business in UAE

The UAE has a vibrant ‘free economy’, a significant portion of its revenues arising from the exports of oil and gas. Successful efforts have been made to diversify away from dependence on hydrocarbons, and a solid industrial base has been created, together with a strong services sector. The incentives of doing business in the UAE include its tax efficient policies providing tax exemption on corporate gains and personal incomes. The UAE’s strategic location between Asia, Europe and Africa is a major advantage to investors, particular the country’s proximity to some of the world’s fastest growing economies in Asia.

Back to Top