If you’re looking to start a business, there can be few better locations than the UAE. The country is now firmly established as a global hub for trade, with thriving industries as diverse as retail, technology, healthcare, hospitality and foodstuffs.
There’s a long list of reasons why the Emirates is so popular with entrepreneurs and business owners the world over.
The country still boasts a 0% tax rate on both corporate and personal income and levies an attractive VAT rate of 5%.
Its company registration and visa processes are affordable, fast and – with the right support – straightforward.
Add to this the benefits offered by the nation’s free zones, its world-class infrastructure and a strategic location between the markets of Asia, Africa, Europe and beyond, and it’s easy to see why it’s such a popular business destination.
If you’re sold on the idea of setting up in the UAE and looking to get started, here’s everything you need to know.
Business setup in a UAE free zone: Rules and processes
The UAE company setup process can seem complex to the untrained eye. Truth be told, it is a little complicated. That’s why it pays to work with a company setup expert. For those with a knowledge of the procedure, it can be completed in a matter of days.
There are several key steps along the way.
1. You must first choose your business activities. Your activities must be chosen from the official government list.
This list contains 2,000 activities from a wide range of sectors, as detailed below. However, while there are many to choose from, they can be quite specific.
The activity you choose will depend on the nature of your business. If you are a manufacturing business, you must detail exactly what it is that you manufacture, for example.
As there are penalties for carrying out unlicensed activities, it’s always best to work with a company formation specialist who can align your business with a permitted activity.
2. You’ll also need to choose and register your company name. This needs extra care here in the UAE due to the country’s company naming conventions.
You cannot include any offensive or blasphemous language and if you wish to include your name in your company name, you must use it in full rather than just your surname or initials. You must also check that your chosen name is available to register.
3. The next important decision is to choose whether to set up in a free zone or the mainland. Free zones offer a range of benefits, including full customs tax exemption, no currency restrictions, and the ability to repatriate 100% of your capital and profit.
Mainland companies cannot take advantage of these benefits, but they are permitted to trade directly with the local UAE market without the need for a service agent, and can take on government contracts – both things that free zone businesses cannot do.
4. Finally, you’ll need to apply for a residency visa if you don’t already have one. Not only will you need one to work in the UAE, but it will also be your responsibility to apply for those of your employees.
Depending on your income, it may also be possible to sponsor others for their UAE visas too, such as your children, partner or parents.
Business setup cost in the UAE
The total cost of starting a business in the UAE will depend on multiple factors. There is a difference in cost between mainland and free zone setups, as well as between the UAE’s individual emirates.
License and rent prices tend to be higher in Dubai and Abu Dhabi, for example, than in Ras Al Khaimah or Fujairah.
Then there is the matter of premises. If you are happy to work in a co-working space or use a flexi-desk then your overheads will be much lower than if you require a large premises such as an office, warehouse or showroom.
The number of employees you have will also have a significant impact. Not only must you account for their wage and health insurance, but as an employer, you must also cover the cost of their visas.
License prices also differ depending on your activity, with trading activity licenses usually higher than those for consultancy or service activities.
What is the cheapest business setup in the UAE?
If you’re looking for the cheapest business setup in the UAE, a free zone is likely to be your best option.
Free zones offer affordable license packages inclusive of the cost of visa applications. Most also provide co-working spaces and the use of business facilities on an ad-hoc basis, helping you to keep overheads down.
For consultancy and service activities, free zone licenses range from AED 9,600 with no visa application, up to AED 19,700 inclusive of the cost of three visas, AED 24,700 inclusive of six visas, and so on.
For trading activities, licenses packages start from AED 11,500 without a visa application, and again up to AED 19,700 inclusive of the cost of three visas, and AED 24,700 inclusive of six visas.
As there are so many variables involved in determining the cost of starting a UAE business, the best approach is always to work with a company formation expert. After taking the time to understand your requirements, we can give you a fully transparent, tailored quote.
Starting your UAE business
Company formation in the UAE has been designed with simplicity in mind. That said, it does take some in-depth knowledge of the country’s many customs and regulations.
That’s why it’s always advisable to acquire the services of a business setup company who can not only advise on the process but also seek out the most suitable license and setup type for your business, based on your needs and your budget.
By making use of a business setup service, you also gain peace of mind that your license and visa applications are free from errors and omissions – both of which can lead to delays and rejection.
When you work with a company formation specialist, all you need to provide is some basic documentation and a little information about the nature of your business.
Then, sit back and let the experts take care of the rest – managing your license and visa applications, communicating with all relevant departments and authorities, and reporting back when you’re ready to start trading. It really is that simple.