UAE – the hub of the business world continues to provide massive opportunities for investors, thus attracting businesses from all around the world. With the introduction of free zones and the Foreign Direct Investment Law in 2018, the country provides a favorable environment for business owners and foreign investors.
The UAE has seven Emirates comprising of Dubai, Abu Dhabi, Ajman, Ras Al Khaima, Fujairah, Sharjah, and Umm Al Quwain. All these emirates have high economic growth offering several business opportunities, thus becoming the global center for trade, business, and finance.
All You Need to Know About Establishing a Business in the UAE
As a business investor looking for establishing a business in the UAE, you have five major options of setting up a business:
1. Overseas Trade
2. Establishing a business through an agent
3. Set up a local entity
4. A joint venture
5. Acquisition of local business
The detail of each business option is given below:
Overseas trade allows foreign companies to trade in the UAE without establishing a physical presence in the UAE. This is a great way to enter the UAE market without spending millions of dollars on setting a store. However, if you are trying to enter the public sector, you may have to establish a physical presence in the UAE if your UAE based clients request it.
The same goes in case of onsite business and activities requiring special licenses. For overseas trade, you need to take extra caution when it comes to looking over accounts and keeping books because one wrong account can lead you to severe administrative penalties and shutdown. Do consider consulting the best accounting firms in Dubai to help you with your accounts for the year-end taxes.
Establish Business Through an Agent
If you want to establish a business in the UAE but don’t want to invest a lot of money in building a physical presence, then you can enter the market through a local agent in the UAE. This is an excellent option for foreign companies to leverage the local agent/ distributor’s connections in the home market.
If you set up a business through an agent, then you don’t need to spend extra money on setting up a store. This is the most common type of business set up in the UAE taken up by foreigners. However, make sure you are familiar with the UAE Commercial Agencies Law that grants the agent certain rights and protection. So, make sure to consult a local financial firm in UAE before entering into such agreements.
Set Up Local Entity
Setting up a local entity can open up your business to receive a number of benefits from the government. If you wish to know about how setting up a local entity can help your business read more on insurance authority in Dubai. Let us now look in some details about what it means to set up a local entity in the UAE.
The next option for establishing a business in the UAE is to set up a local entity. Now, when it comes to setting up a local entity, investors have two options:
1. Establish an “onshore” business in the mainland UAE.
2. Establishing a business in one of the free zones.
You can either set up a business in the mainland or in one of the free zones in the UAE, depending upon your targeted customer’s location and the nature of your business. There are more than 37 free zones in the United Arab Emirates, as shown in the table below:
Operating Free Zones in the UAE
|1. Abu Dhabi Airport Free Zone (ADAFZ)
2. Abu Dhabi Global Markets (ADGM) 3. ADPC – Khalifa Port and Industrial Zone (KPIZ) 4. Industrial City of Abu Dhabi 5. Higher Corporation for Specialized Economic Zones 6. Masdar City Free Zone
|1. Dubai Academic City2. Dubai Science Park3. Dubai Technology and Media Free Zone4. Dubai Airport Free Zone5. Dubai South or DWC6. Dubai Biotechnology & Research Park (DuBiotech)7. Dubai Car and Automotive City Free Zone (DUCAMZ)8. Dubai Design District9. Economic Zones World10. Dubai Gold and Diamond Park11. Dubai Healthcare City12. Dubai Multi Commodities Centre or Jumeirah Lakes Towers Free Zone||13. Dubai Industrial City (DIC)14. International Media Production Zone15. Dubai International Academic City16. Dubai International Financial Centre17. Dubai Internet City (DIC)18. Dubai Techno Park19. Dubai Knowledge Village20. Dubai Studio City21. Dubai Logistics City22. Dubai Media City23. Dubai Outsource Zone24. Dubai Silicon Oasis25. Jebel Ali Free Zone|
|Sharjah||Ras Al Khaimah||Fujairah|
|1. Hamriyah Free Zone 2. Sharjah Airport International Free Zone 3. U.S.A. Regional Trade Center (USARTC) Free Zone 4. Sharjah Publishing City Free Zone 5. Sharjah Media City Free Zone (Shams)||1. Ras Al Khaimah Economic Zone (RAKEZ) 2. RAK Maritime City Free Zone Authority (RMCFZA) 3. Ras Al Khaimah Investment Authority 4. Ras Al Khaimah Free Trade Zone 5. Ras Al Khaimah Media Free Zone||1. Fujairah Free Zone 2. Fujairah Creative City 1. International Free Zone Authority (IFZA)|
|1. Ajman Free Zone 2. Ajman Media City Free Zone|
|1. Umm Al Quwain Free Trade Zone (UAQFTZ)|
A Joint Venture
Another option for foreign investors looking for an opportunity to establish a business in the UAE is a joint venture. International companies who wish to enter the UAE market or expand their operations in UAE can benefit from a Joint Venture. A joint venture enables investors to take a share in the equity of a local firm and play an active role in management and operations, while the local partner also participates.
In this case, the local partner may contribute through his skills, connections, and even financially. Most investors form a joint venture either using onshore companies or companies in one of the free zones of the UAE.
Acquisition of Existing Local Business
The last option for foreign investors to establish a business in the UAE is to acquire or invest in an already existing and running company in UAE. Before you enter into such agreements, do consult one of the local best accounting firms in Dubai to make sure the business you are acquiring is profitable and successful. Make sure to keep the following things in mind before acquisition:
1. Take due diligence before selecting a company for acquisition in case there is limited information about it.
2. Consider the impacts of foreign ownership restriction in the UAE
3. You may require approvals like consent from the UAE Central Bank before buying up a company.
4. Transfer of employment contracts as part of the purchase
Ready to Set Up Your Business in the UAE
When it comes to establishing a business in the UAE, there are endless options and opportunities for business owners. UAE is an oil-rich state with a highly diversified economy, presenting various investment and business opportunities. All the seven Emirates in the UAE have a growing economy with unlimited business opportunities. So, if you are thinking about entering the UAE market, do consult a professional before investing your money in a business venture.