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
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
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
Abu Dhabi |
Dubai |
|
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 City 2.
Dubai Science Park 3.
Dubai Technology and Media Free Zone 4.
Dubai Airport Free Zone 5.
Dubai South or DWC 6.
Dubai Biotechnology & Research
Park (DuBiotech) 7.
Dubai Car and Automotive City Free
Zone (DUCAMZ) 8.
Dubai Design District 9.
Economic Zones World 10.
Dubai Gold and Diamond Park 11.
Dubai Healthcare City 12.
Dubai Multi Commodities Centre or
Jumeirah Lakes Towers Free Zone |
13.
Dubai Industrial City (DIC) 14.
International Media Production Zone 15.
Dubai International Academic City 16.
Dubai International Financial Centre 17.
Dubai Internet City (DIC) 18.
Dubai Techno Park 19.
Dubai Knowledge Village 20.
Dubai Studio City 21.
Dubai Logistics City 22.
Dubai Media City 23.
Dubai Outsource Zone 24.
Dubai Silicon Oasis 25.
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) |
Ajman |
||
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.
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