Establishing a company in the UAE

As one of the most affluent nations in the region, the UAE maintains its lead over other Arab countries in global competitiveness rankings. State-of-the-art infrastructure, efficient transportation networks, and international standard facilities spur the country's economic expansion, rendering it a foremost destination not solely for first-time investors seeking to embark on foreign ventures, but also for multinational corporations. Today, the Emirates constitutes a worldwide hub for pioneering business and the economy of the future, drawing uniquely skilled talent to propel initiatives, explore prospective challenges, and transform them into prospects for sustainable growth. In the following sections, we analyse the advantages and requirements for establishing a company in the UAE.

Following economic diversification, the Emirates has transformed into a vital regional hub for trade and tourism, providing access to the Middle East's most significant markets. Some key advantages that have driven the swell in overseas investments into the UAE include:

• Strategic location between Asia, Europe, and Africa.
• Top FDI destination in MENA.
• Ease of doing business.
• Strong finances and banking.
• Key sector growth.
• Incentives in free zones.
• Skilled talent pool.

Foreign ownership restrictions: Recent legislative amendments

Positive List Activities: Permits 100% foreign control of companies engaged in approved business activities as published by the Department of Economic Development (DED). The DED with the Ministry of Economy serves as the principal regulatory overseer around incorporating and licensing onshore firms in the UAE.

Strategic Impact Activities: Cabinet Decision No. 55/2021 instituted the Strategic Impact List mandating elevated regulatory vigilance, for instance when registering a financial services entity in the UAE. Any investor, including foreign stakeholders, eyeing interests in a Strategic List company must notify the relevant authority to determine approval feasibility.

49%/51% Default Rule: For firms with operations outside the Positive and Strategic Lists, the preceding foreign ownership ceiling (49% foreign shares, 51% resident shares) is considered applicable.

Corporate structures for business

Investment activity in the UAE undergoes regulation at both federal and emirate tiers. As of 2021, authorities abolished the prerequisite for companies to retain a local sponsor, enabling overseas investors to establish and fully possess onshore entities across most sectors. This amended property legislation supports governmental efforts to ease conducting business and heighten the Emirates' allure to foreign investors, entrepreneurs and talent.

When registering a company in the UAE, the preliminary step is opting for the optimal corporate structure. Available avenues include:

• Mainland UAE Company
• Emirate's Free Zone Company
• UAE Offshore Company

Regarding mainland firms, the below corporate vehicles are accessible to foreigners:

• Limited Liability Company (LLC)
• Joint Stock Company
• Partnerships
• UAE Holding Company
• Branch
• Representative Office

Registering a limited liability company is one of the most prevalent selections. The prevailing reason driving the popularity of this legal form is that foreign shareholders' liability caps at their capital injection size. An LLC in the Emirates can be instituted by 2 to 50 members. A joint stock company necessitates at least 3 founders with a minimum capital of AED 5 million and can pursue any commercial, industrial or professional activities.

Partnerships in the UAE compartmentalise into:

• General Partnership
• Simple Limited Partnership
• Partnership Limited by Shares

Partnership creation is dictated by an agreement between two or more partners outlining each partner's obligations.

Other entities include branches and representative offices. Despite legal form and registration process similarities, certain differences exist; a UAE branch can replicate parent company operations whereas a representative office is restricted to the promotion and marketing of the parent firm's products or services without engaging in actual trade or service provision.

Steps to establish an onshore company

1. The UAE regulator requires determining business activity nature. The activity nature will correspondingly ascertain the licence type issued. Licences can encompass several economic activity categories.
2. Choose optimal legal structure. The legal structure primarily hinges on business needs.
3. Register company name
4. Seek initial approval. This initial endorsement permits proceeding to subsequent registration phases, but does not yet confer the right to commence operations.
5. Draft MOA or Ink Partnership Agreement. A Memorandum of Association is mandated for LLC or JSC forms.
6. Select business location. All UAE enterprises require a physical address aligning with zoning regulations and policies of pertinent municipal councils or authorities.
7. Open UAE bank account
8. Remit fees and apply for licence

Registering a company in a free zone

Emirates' commercial appeal involves the numerous free zones' conferring manifold upsides for foreign investors. Strategically embedded within peerless transport links, the such zones have morphed into the international trade epicentres, granting enterprises access to an expansive 2 billion+ customer base.

Choosing the appropriate free zone is pivotal to commercial success. Below are the key aspects to evaluate when opting to establish an entity within a UAE free zone:

• Business activities. Different zones cater to distinct activities. Thus, alignment with target operations is imperative.
• Costs. Each zone sets its fee structures, with expenses potentially fluctuating based on activity scope and number of founders.
• Location. Site selection directly impacts customer and supplier access.
• Infrastructure. Zones provide best-in-class amenities like modern offices, advanced telecom and transport links. Ensure the zone proffers facilities befitting business needs.

A free zone constitutes a designated geographical area whose discrete regulations do not apply to firms operating externally. Incorporating a business within a UAE free zone entails the below key steps:

1. Select free zone

The optimal zone selection hinges on the target market and activity scope intended to serve. There are over 50 free zones countrywide, each promulgating distinct rules and compliances.

2. Optimal legal structure

Available free zone legal structures include: Free Zone Company (FZCO), Free Zone Establishment (FZE), Branches of Foreign Firms, Branches of UAE-Based Companies. The ideal structure matches functional business needs and technical prerequisites.

3. Seek unique name approval

The proposed name must be non-replicable within existing UAE-based entities.

4. Obtain Initial approval

Preliminary endorsement must be secured from pertinent Free Zone authorities.

5. Lease zone premises

6. Apply for the requisite licence

Licence type issue depends on the nature of operations.

Documentation requirements

Incorporating within a UAE free zone necessitates furnishing specific documents to the pertinent zone authorities. Prerequisites may fluctuate based on the legal structure and selected area, however common submissions encompass:

• Copies of Founder and Director Passports
• Business Plan
• Registered Address Confirmation
• No Objection Certificate (NOC) from Existing Sponsor (mandated across certain zones)
• Initial Approval Confirmation from the Free Zone Governing Body

UAE top growth sectors

AI-powered marketing

2024 is slated to induce paradigm shifts across marketing ecosystems with consumer decision-making processes undergoing deep and automated analysis via artificial intelligence (AI), underpinned by systematic data aggregation. While data-driven strategies have historically shaped marketing ploys, recent technological leaps have streamlined and eased adoption for companies.

The UAE has cemented itself as an epicentre for AI research and development, prioritising information technology. Moreover, governmental organs actively back AI startups via varied incubators as advanced applications continue permeating the Emirates.

Information and communications technology

The ICT domain constitutes one of the fastest expanding industries locally. Incorporating an IT services firm specialising in software development, web design, data analytics, cybersecurity, and internet infrastructure presents a lucrative avenue given the sector's ascent.

Recently, hefty investments by both government agencies and private players have steered monumental ICT industry growth. Meanwhile, Dubai's thriving IT landscape serves as a key economic diversification driver, actively encouraged through leading events like GITEX, The AI Summit, Dubai Blockchain Summit and Dubai Innovation Summit.

E-commerce

Entrepreneurs can capitalise on the region's vast, multicultural population by assessing a broad range of prospects. Specifically, global remote work proliferation has established e-commerce as a market brimming with potential. Dubai's leadership in fostering e-commerce and digital transformation makes it a profitable environment to launch online commerce ventures.

Fintech

The fintech arena constitutes another swiftly blooming domain across the Emirates, with companies pioneering novel mechanisms to tender financial services like mobile payments, digital banking and cryptocurrency exchange. The government actively works to entice fintech startups via incentives around investment and regulatory support to stimulate industry expansion.

Healthcare

The UAE houses one of the most organised and high-growth regional healthcare markets. The government markedly enhances medical infrastructure to elevate standards in line with global benchmarks as part of its world-class healthcare delivery vision. With demand escalating, the healthcare sphere offers viable openings for business.

Real estate investment

Recently, UAE real estate has significantly buttressed economic advancement, primed for further growth in 2024. Buoyed by a surging population, thriving tourism and sustainable development priorities, the interest for premium properties endures. Backed by continuous governmental efforts, both commercial and residential asset demand persists, compelling investors and developers to craft innovative, sustainable ventures such as smart cities and mixed-use precincts.

Energy production

Over the next decade, the energy sector is primed for 5% yearly output spikes, encompassing both hydrocarbons and solar power generation.

Corporate taxation

The UAE enacted a federal corporate income tax from summer 2023 encompassing the below rates:

Mainland Taxable Entities

• Taxable Income ≤ AED 375,000 (Pending Cabinet Confirmation): 0%
• Taxable Income > AED 375,000: 9%

Free Zone Taxable Entities

• Qualifying Income: 0%
• Non-Qualifying Income: 9%

The UAE Visa programmes

Conclusion

Underpinned by enduring commitments to sustainable expansion, strategic commerce/trade crossroads status and surging consumer interest, the United Arab Emirates constitutes a prime destination for diverse business genres. As 2024 unfolds, owners seeking launches in the Emirates can capitalise on manifold openings across target verticals like technology, fintech, healthcare, and logistics.

Achieving entrepreneurial success within this dynamic, rapidly evolving climate mandates meticulous research, robust strategic planning and active monitoring of prevailing market trends.