| Jun-21-2021

START A BUSINESS IN UAE

A STEP BY STEP GUIDE

Table of content

• Introduction
• How To Start A Company
• Selecting A Free Zone
• Documents Required
• Company Incorporation
• Visa Processing
• Setting Up Your Office
• About the Author

INTRODUCTION

The UAE comprises of 7 Emirates - Abu Dhabi (which is the capital), Dubai, Ras Al Khaimah, Sharjah, Ajman, Fujairah & Umm Al Quwain. Each of these Emirates is ruled by its Sheikh & the Sheikhs together form the Federal Supreme Council. The official language of the country is Arabic, however, English, Hindi & Urdu are also widely spoken throughout the country. Foreign expatriates form the majority of the population of the country.

UAE is home to expatriates from more than 190 countries.

The UAE has developed from a juxtaposition of Bedouin tribes to one of the world's most wealthy states in only about 50 years. It is the second largest economy in the GCC (after Saudi Arabia, with a nominal gross domestic product (GDP) of US$ 414.2 billion. Thanks to considerate investments combined with decided economic liberalism and firm Government control, the UAE has seen their real GDP more than triple in the last four decades. Nowadays the UAE is one of the world's richest countries, with GDP per capita almost 80% higher than OECD average.

The UAE offers businesses a strong enabling environment: stable political and macro economic conditions, a future-oriented Government & good infrastructure. Moreover, the country has made continuous and convincing improvements to its regulatory environment over the last few years. The UAE's monetary policy stresses stability and predictability, as the Central Bank of the UAE (CBUAE) keeps a peg to the US Dollar (USD) and moves interest rates close to the Federal Funds Rate. This policy makes sense in the current situation of global and regional economic and geopolitical uncertainty. Also considering the fact that exports have become the main driver of the UAE's economic growth.

Business is booming in UAE. The government is paving the way by opening opportunities for foreign investment. This includes lifting restrictions on foreign ownership and offering long-term visas for investors.

Did You Know?

UAE is a Melting Pot of Cultures from Across the World.

HOW TO START A COMPANY

This e-book is mainly aimed to guide and advise international businessmen who plan to start a company in UAE for strategic planning purposes. Irrespective of which country you belong to, this e-book shall guide you with the in-depth process of starting & operating a business in UAE. It aims to ensure that as a foreigner or as an expatriate business, you truly understand the processes & procedures of incorporating a business in UAE. Reading this e-book will in enrich your knowledge about business in UAE.

First & foremost, one needs to understand the reason for incorporating a business in UAE. There could be various reasons for incorporating a business in UAE, such as:

1. Ease of Operations
2. Favourable Business Environment
3. Quick Approvals & Transparent Process
4. No Corporate Tax
5. No Personal Income Tax
6. Access to Global Markets
7. Strategic Location to Serve Europe, Asia & Africa
8. Convenience in Structuring International Transactions

Did You Know?

A Business can be incorporated in UAE in less than 7 days.

Selecting the free zone

Once you have a decided to start a business in UAE, it is extremely important to ensure that you select the correct type of entity / company for your business. Incorporation of a Company depends on the Emirate in which you wish to incorporate your Company. That is to say, each Emirate has its separate procedure to incorporate a Company. Hence, the procedure to incorporate a company in Dubai will be different from a company in Ajman. Similarly, documents required also depend on the Emirate.

UAE free zones are a major attraction to foreign investors and businesses wishing to conduct business in the UAE. Each Emirate may have, one or more, of its own Free Zones in which you can incorporate your company. Free zones are geographically demarcated areas within the UAE, which permit 100% foreign ownership and are in most cases, dedicated to a specific industry. They were designed to support strategic transformation in key industries and many are built with public finance and boast state-of-the art facilities. Accordingly, each free zone has its own specific requirements regarding minimum capital requirements, once or warehouse space and permitted activities; with each possessing the relevant licences and adequate legislation to enable their dedicated industry to flourish.

In the last 1 decade, free zones in UAE have attracted massive foreign investments from global players since the requirement to have 51% shareholding of a local citizen was not required.

Did You Know?

UAE has more than 51 free zones spread across 7 emirates.

Selecting the free zone

There are some free zones which have a specific object or which serve specific type of businesses. For instance, the Dubai Media City - a free zone in Dubai – has infrastructure & licences adapted to the needs of the media industry. Similarly, the

Dubai International Financial Centre, attracts companies in the financial services sector, drawing in insurance, financial services and investment firms and banks wanting to grow their international client-base. There may be some which may allow multiple type of businesses under its jurisdiction for eg. Ras Al Khaimah

Economic Zone supports numerous activities spread across various industries.

The next factor to be considered at the time of selecting a Free Zone, is the cost involved in incorporating your company. Each Free Zone has its own pricing, offers and costs depending on a number of factors such as:

1. Type of Licence: Service Licence, Commercial Trading Licence, Industrial Licence, E-Commerce Licence.
2. Number of Visas: Higher number of visa required would lead to additional charges. Also, visa eligibility is decided on basis of once type. For eg. a Co- Working space is eligible only for 1 visa in most Free Zones.
3. Type of Business Place: Whether you need a small once, co-working space, warehouse or industrial unit (where available).

Did You Know?

Ajman is the smallest Emirate in UAE, covering only 260 square kms

Documents required

1. Name Approval:

   Once the Emirate & the Free Zone are decided, you need to check if the proposed name of your business in UAE is available or not. You have to ideally give 2-3 proposed names at this stage. There are certain restrictions on using certain words in the proposed name, such as using the name of any Emirate, the Sheikhs or the Rulers or Government Body or using a name or an acronym which resembles any of the above. Time taken: up to 1 day.

2. KYC Documents:

   a) Passport Copy (preferably visa copy or Entry Stamp of having visited UAE
   b) Proof of Identity such as Driving License / Voter ID / Unique Identification card / Citizenship Card
   c) Latest Utility Bills such as Electricity / Telephone / Gas / Water

3. Immigration File Approval:

   On finalizing the shareholders and directors of the company, the Free Zone has to send these details to the UAE Immigration Department for a security clearance. There is a possibility for some additional documents being requested at this stage. In case if any of the shareholders or directors had committed a crime (civil or criminal), such names can get rejected by the Immigration Department. Generally, this process takes 3-4 days. However, there is no time limit specified for this process.

Did You Know?

'Gold Souk' is the largest market for gold & jewellery in the world

Company incorporation

1. Drafting of Memorandum:

   Each company must have its own memorandum of association (MOA). It governs the functioning of the company after incorporation. Rights, duties & roles of the shareholders & directors are mentioned in the MOA.

2. Signing of Lease Agreement:

   Depending on the type of once space taken in the incorporation package, a lease agreement will have to be executed. However, it is observed that some free zones do not execute a lease agreement. This could lead to operational issues in future. It is also advised to check with the free zone whether the once lease agreement would be executed in favour of the company, before you decide to incorporate your company.

3. Incorporation Certificate:

   On completion of the above mentioned steps, your licences will be released & your new company will be incorporated. Time taken to complete this process is 1 day.

Did You Know?

Incorporation process can be completed without visiting UAE.

VISA processing

1. Application for a Tourist Visa to enter UAE:

   After incorporating your company, you need to apply for a tourist visa to enter UAE. As things stand today, an application for UAE residence visa can only be applied for after entering UAE.

2. Application for Status Change:

   One needs to make an application to the immigration department requesting for changing the status of the visa from a 'tourist visa' to a 'residency visa'.

3. Medical Tests:

   Each person requiring a residency visa has to mandatorily get a medical test done at a Government accredited Medical Fitness Centre. These centres are well-organized and hygienically maintained at par with international standards. All of the required check-ups can be done here along with blood tests and chest x-ray.
   After Incorporating your company, you need to apply for your visa. The visa is linked with the company and is sponsored by the Emirate with which your company is registered. The process explained below is for those who are were not in UAE at the time of incorporating the company or those who are not already employed in the country. The process is slightly different for the above mentioned 2 scenarios.

Did You Know?

Dubai is the busiest airport in the world, followed by London & Amsterdam.

List of medical and Emirates id centres

A Medical Fitness Certificate is mandatory to apply for a new Emirates ID. One has to take the Medical Fitness Certificate and submit a copy of it to the Emirates ID Centre. Not all Medical Centres are near Emirates ID application centres. I would like to recommend 2 such centres in Dubai, where both these centres in near each other. These centres are conveniently located and are accessible via public transport as well.

All Karama Dubai	All Quoz Dubai
Other Medical Centres	Other Emirates ID Centres
1) Al Nahda Centre (Dubai)	1) Al Barsha Centre (Dubai)
2) Ibn Battuta Mall (Dubai)	2) Al Rashidiya (Dubai)
3) Spring Souk Mall (Dubai)	3) Favor Centre Al Ra􀃠a(Dubai)
4) Al Baraha Smart Centre (Dubai)	4) Al Qusais (Dubai)
5) Sahara Centre (Sharjah)	5) Al Dhaid Road (Sharjah)
6) Musheirif Health Centre (Ajman)	6) Al Jarf Centre (Ajman)
7) Mina Tower (Fujairah)	7) Sakamkam Centre (Fujairah)
8) Al Dahan Centre (RAK)	8) Al Dahit Centre (RAK)

*List of Medical Centres & Emirates ID Centres are only indicative. The entire list of all approved / authorised centres can be obtained from the official Government Website Click here

Setting up your office

1. Bank Account Opening:

   First & foremost, after obtaining the visa & Emirates ID, you must open a bank account. Each bank has its own set of requirements for opening a bank account. Most banks require the company's incorporation certificate, trade license, Memorandum of Association, KYC documents of Director/(s), Tenancy Contract of the office space & a business plan. All of these would ideally be available with you at this stage.

2. Hiring Staff:

   In UAE, there are quite a few registered recruitment agencies who could help you find the correct candidate for your company. They generally charge 1 month's salary as their commission on successful recruitment. However, if you wish to recruit from a job portal, www.dubizzel.com & www.monstergulf.com are priced reasonably and can help searching for the right candidate. For those looking to hire without spending, may try www.linkedin.com. In many cases, it was observed that LinkedIn connected the employers with employees.

Did You Know?

Incorporation process can be completed without visiting UAE.

Setting up your office

3. Accounting System:

   In UAE, there is neither corporate income tax, not personal income tax. In such cases, you are required to maintain your books of accounts purely for record keeping purposes. In case if you wish to borrow money from any bank in UAE in future, you will be mandatorily required to submit your books of accounts, on basis of which profitability and borrowing power of your company is determined.

   Borrowing funds in UAE is relatively cheaper as compared to emerging Asian and African economies. Some of the widely used accounting software in UAE are Tally, Quickbooks & Zoho - all 3 of them are accredited by the Federal Tax Authority of UAE. Tally is a pure accounting software, whereas Zoho has multiple modules which can be integrated such as CRM, Sales Management, Helpdesk etc. Tally comes with a lifetime license with an AMC, accounting for multiple companies can be done with 1 license. Whereas, Quickbooks and Zoho charge per user, per company on an annual basis. In UAE, many companies also opt for remote cloud-based accounting to bring down the costs. For remote accounting, a business neither spend money on purchasing a software, nor on the accountant.

4. VAT Registration:

   If your business crosses AED 350,000 in annual local sales, then a business must apply for VAT registration and subsequently, collect VAT and pay it to the Government treasury. VAT returns have to be filed quarterly along with details of Emirate-wise sales.

About the author

Vivek Shah is a Chartered Accountant from India who has specialised in Information Systems Audit & Forensic Audit (ICAI). Prior to starting his own Firm, he had worked at Deloitte, which is one of the Big4 firms globally.

Currently his clients range from Start-ups to companies listed on stock exchanges. His clients are spread across multiple countries.

As a speaker, he has addressed businessmen, bankers, professionals, law enforcement agencies & government bureaucrats. He has also been selected as an International Speaker on UAE VAT by the ICAI, India.

Disclaimer: This E-Book is for informational purpose only published in May 2021. The author does not guarantee the accuracy of information contained herein.

Trademarks & Logos belong to their respective owners. Products & Services advertised in this E-book shall solely be the responsibility of the product / service provider. To form a professional opinion, please appoint an independent expert. The Author neither accepts nor assumes responsibility for any loss arising to any person acting or refraining from acting as a result of material contained herein. This e-book in no way solicits work of/for any professional including but not limited to the author. When addressed to any client, any opinion or information is subject to the terms and conditions expressed in the governing client engagement letter.