Launching a company in the UAE? Don’t forget these important things, say experts
Find out about the changes in business ownership laws
The UAE has introduced several new legislation to attract foreign investment and fuel entrepreneurship and the most notable is 100 per cent ownership by foreign nationals of companies licensed and registered in the UAE. The government has created a “Positive List” of business activities where foreign investors can own up to 100 per cent of the shares in an onshore company. The “Positive List” focuses on three key areas - manufacturing, services and agriculture — where the government wants to see more businesses committing investments.
These include minimum capital, implementation of latest technology and contribution to research and development, as well as satisfying the requirement of the licensing authority at the emirate level.
Decide on the jurisdictions
In the UAE, an investor can set up a company in mainland, free zones or offshore jurisdictions. For a company planning to do business exclusively in the UAE or GCC with an office or a factory facility, it is always advisable to set up in mainland. If the company is intending to do import, re-export and B2B with mainland companies, it’s a good idea to get a free zone license, where 100 per cent expatriate shareholding is possible for all activities,
If the intention is to set up a company for international business, offshore International Business Company (IBC) is the best option. Offshore IBCs are considered to be a resident outside of the UAE and they can neither have offices in the UAE nor conduct business within the country.
Applicability of VAT
It’s critical to know about the Value Added Tax (VAT) law that stipulates all products and services are subject to 5 per cent VAT if the annual turnover of a company exceeds Dh375,000 and the company’s modus operandi comes under the purview of VAT law, unless it is under the exempted category or the zero-rated category.
Understand the laws and regulations of company formation
Federal law No. 2 of 2015 on commercial companies and the amended law No. 26 of 2020 apply to any entity involved in commercial, financial, industrial, agricultural, real estate or other kinds of economic activities in the mainland.
Find out about the UAE labour law which explains the rights, duties, contracts and remedies of employees and employers.
Learn about the common customs law of GCC as well as custom policies of the emirate in which the company is established.
You also need to find out about free zone regulations – each free zone has its own rules and regulations developed within the general framework of business and commercial laws of land.
Economic Substance Regulations (ESR) require the companies in the UAE carrying out “relevant activities” listed in regulation to maintain adequate “economic substance” in the UAE.
Law of bankruptcy provides a legal framework to address distressed companies in the UAE, while helping them avoid bankruptcy and liquidation through various mechanisms like financial restructuring.
Why you need to hire a business set-up consultant
Entrepreneurship presents many challenges but, with the right support, it is easier and faster to start a business than handling the entire process on your own.
A business set-up consultant will help you in various aspects of establishing a company in the UAE. They will first help you filter all the options available and select the most viable one based on your specific requirements. They also take care of the processing on your behalf. Business set-up is a process that requires accuracy as errors may cause lengthy delays and can be costly to rectify.