BUSINESS SETUP IN UAE
Setting up your own business can be one of the most challenging times of your life. In the UAE, would-be entrepreneurs often face a number of obstacles once they have decided to take the leap. So whether it’s deciding between free zone or onshore licensing, or navigating all the legal loopholes, here is a guide to setting up a UAE business.
• Licensing
While time is dedicated to researching the business model, investment requirements, consumer demand and all the other factors necessary, business licensing often drop to the bottom of list. Licensing should be prioritized and you must ensure it is done legally. Choosing the correct option at the start will save you time and money later on. There is nothing to be gained from setting up in one licensing authority or free zone, only to discover further down the line it doesn’t serve your company’s needs and won’t allow you to carry out specific activities.
• Location
Location isn’t simply about where you would like to set up an office, shop, or factory but more about licensing jurisdiction. There are number of options available, from onshore, licensed by the Department of Economic Development (DED) in each emirate, to a growing number of free zones, often themed around particular industries or segments. Some licensing authorities allow you to set up as a freelancer or professional services provider. Others will limit your scope of activities so if you plan to expand your services in the future, make sure you are licensed in a zone or authority that allows you to do so.
• Onshore Licensing
Onshore licensing means you are licensed in DED (Department of Economic Development) and is best suited to all types of commercial enterprises that would benefit from being set up as a limited liability company (LLC). Examples of this might be a trading company, a logistics company, or a manufacturing company. Local laws require that a minimum of 51 per cent of the shares in such companies must be held by a UAE national. The company must also take up physical office space, and may be subject to further requirements or approvals from government departments that regulate specific industries. Offshore means you are licensed in a free zone.
• Free Zones
Free zones can offer a suitable alternative to start-ups within specific sectors. A start-up looking to set up a manufacturing facility and export their products may consider Jebel Ali Free Zone. Other options include Hamriyah and Ras Al Khaimah free zones. Themed free zones such as Dubai internet City, Dubai Media City, or Dubai Design District can help start-ups within those sectors become part of the business community.
• Local partner vs local service agent
If you decide to license onshore, everyone will tell you to find a local partner. This is not necessarily the case. Onshore professional licenses are available for activities such as consulting and other services, and may be owned 100 per cent by a suitably qualified foreign national, although he or she must appoint a Local Service Agent (LSA). The LSA provides government registration services for a fixed annual fee and has no shareholding or involvement in the business. Such licensing also requires a physical office location.
Written by
Imran Siddiqi
Business setup expert
+971563849356