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    Company Formation in the UAE: Costs and Benefits

    Posted by admin Posted in Blog

    May 30 2020 at 11:01pm
    Company Formation in the UAE
    Dubai downtown night scene, UAE, beautiful modern buildings, bright glowing lights, luxurious travel and tourism

    The UAE is one of the world’s most famous business hubs for good reason. The country sits at the crossroads of East and West, primed to trade with every corner of the globe.

    On top of a perfect strategic location, the UAE also offers a welcoming and encouraging business environment, a low tax regime and a straightforward company incorporation process.

    Starting a business in the UAE is also incredibly affordable in comparison to other famed business locations such as London, Hong Kong, and New York.

    Below is a detailed breakdown of the UAE company formation process, along with the benefits and costs involved.

    Benefits of forming a UAE company

    One of the main benefits of doing business in the UAE is the level of support on offer. Before starting your business, it is always advisable to work with a company formation expert. As well as managing the application process, a trusted formation expert can offer advice and support to help grow and nurture your business.

    With your business up and running, you can benefit from:

    A diverse economy
    The UAE is no longer reliant on its oil and gas sector. The country is now home to a wide array of industries in the ascendance, from healthcare and hospitality to technology, travel, and trade.

    A supportive environment
    UAE rulers are committed to helping the country’s businesses thrive. As well as low barriers to entry and a transparent incorporation process, the UAE is also home to entrepreneur hubs, incubators and startup support schemes.

    Low tax rates
    While it’s not true to say the UAE is a tax-free environment, it is certainly a low tax environment. The UAE levies 0% tax on both personal and corporate income. Elsewhere, the most common tax is VAT at a flat 5%.

    A strategic geographic location
    The UAE is strategically located between Asia, Europe and Africa. It lies within a few hours flight time of a third of the world’s population and its time zone overlaps with many other major cities.

    Free zones
    The UAE’s free zones are another major advantage of doing business in this part of the world. These designated zones allow international entrepreneurs to automatically own 100% of their business as well as qualifying for customs tax exemption, repatriation of capital and profits, and zero currency restrictions.

    Company formation UAE

    There are several steps to take before applying for your business license in the UAE. While no step is particularly complex on its own, each requires a knowledge of the business incorporation process and it is therefore best undertaken with the assistance of a company formation expert.

    Step 1: Choose your business activity
    Every business in the UAE must list a business activity, or activities, on its business license. It’s important that you list every activity that applies to your business when making your application as failure to do so can lead to fines or even license revocation.

    There are over 2,000 to choose from so no matter your industry or the type of business you undertake, you are sure to find an activity that fits the bill.

    Step 2: Choosing your company name
    A step of the business incorporation process that takes on more importance here in the UAE is the choosing of your company name. That’s because as well as the need for a name that’s catchy and captures the essence of your business, you’ll also need to stick to the UAE’s clearly defined naming conventions.

    In short, UAE company names must not contain any blasphemous or offensive language, any references to well-known institutions or any abbreviations of your name – though your full name is acceptable.

    Your name should also have a legal entity attached to it such as FZE or LLC. It must also relate to your business activity, not resemble the name of any other company and be available to register.

    Step 3: Applying for your license
    Now we come to the most important step – applying for your business license.

    If you’re setting up in the mainland, you can make your license application directly to the Department of Economic Development or equivalent. If you’ve chosen a mainland setup, you should apply directly to the managing authority of your chosen free zone.

    In both cases, you are usually required to submit several documents along with your application form, including:

    • A copy of your passport – and that of any other shareholders
    • Your business plan
    • A copy of your signature
    • A No Objection Certificate from your current employer (if applicable)

    Step 4: Applying for your visa
    Finally, you’ll need a residency visa to work in the UAE.

    This process involves four stages including a medical fitness test and biometric capturing. In all, it usually takes less than a week.

    As the holder of a UAE business license, you can also sponsor others such as children, a spouse or domestic staff for their visas too, providing you meet the eligibility criteria.

    Understanding UAE free zone costs

    The cost of setting up in the UAE will depend on location, business type, business size and much more. In most cases, setting up in a free zone is the most cost-effective approach.
    Below are some examples of UAE free zones, to give an idea of the costs involved in forming your business.

    FCC: Fujairah Creative City free zone is located in the emirate of Fujairah, just one and a half hours outside of Dubai. License packages start from AED 11,000.

    RAKEZ: Setting it apart from many of its peers, RAKEZ offers an exclusive package aimed at women entrepreneurs. Prices start from AED 6,200 inclusive of workspace and support services.

    Ajman Free Zone: Located in the emirate of Ajman, AFZ caters to a wide range of industries including health, retail, food and beverage, technology and education. Licenses start from AED 13,535.

    UAQ FTZ: As well as providing trade licenses and support services, UAQ FTZ offers warehouses, office space and land for development in the emirate of Umm al Quwain. Prices start from AED 13,500.

    SAIF ZONE: SAIF ZONE benefits from excellent sea, land and air access and is directly linked to Sharjah International Airport. Licenses start from AED 10,800.

    KIKLABB: KIKLABB benefits from a unique location, just 15 minutes from downtown Dubai, aboard the QE2. Prices start from AED 17,750.

    KIZAD: KIZAD offers business solutions for all types of business activities such as manufacturing, logistics, trade and distribution. License packages start from just AED 9,450.

    Start your business in the UAE

    By following the steps above, it is possible to obtain your trade license in the UAE with minimal fuss.  

    However, it is always advisable to undertake the steps with the assistance of a registered company formations agent to eliminate any potential hassles that might arise.

    With more than 15 years of experience in company incorporation, Worldwide Formations can help you get your business up and running within a week or two. We’ll manage your license and visa application and correspond with all relevant authorities for you. All you need to do is wait for the green light to start trading.

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