How to start off your business on the right foot?
Although UAE is famous for its unique and diverse tourist destinations, it offers much more to the global business community. The country is a nerve centre for direct foreign investments because of the open and dynamic economy, low tax rates, low import taxes and strategic location.
There have been relentless efforts on the part of the government to make it easy to do business in the UAE. A special focus has been on the capital. So, if you’re planning to open your own company or working on an expansion project for a big corporate, here is how to start a business in Abu Dhabi.
STEP-BY-STEP GUIDE ON HOW TO START A BUSINESS IN ABU DHABI
Being the largest emirate in terms of area and home to the second-largest population of the UAE, the capital offers countless benefits to global businesses. It also provides excellent opportunities for SMEs and startups to aspire towards exponential growth. On top of that, the recent amendment allowing 100% foreign ownership in the UAE has opened up endless possibilities. Hence, many local and foreign companies have been looking at starting a business in Abu Dhabi.
OPENING A BUSINESS IN ABU DHABI
The policies in the UAE are business-friendly. The government welcomes investment from local and global investors. Setting up a business in Abu Dhabi is straightforward and devoid of endless red tape.
Investors should follow the steps below to establish a business in Abu Dhabi.
BUSINESS ACTIVITY
The first step is the identification of the business/commercial activity. The legal requirements, as well as licencing fees, change depending upon the nature of your business. There are six types of business licencing in the UAE: industrial, tourism, professional, commercial, agricultural and occupational. Once you decide on your business type, you can move on to the legal work.
LEGAL FORM OF BUSINESS
Choosing the ownership structure of the business is imperative when setting up a business in Abu Dhabi. There are different options to choose from. Due diligence is required when choosing a structure, as different rules and regulations apply to each legal form. The options include:
- General partnership
- Limited partnership
- Limited liability company (LLC)
- Public joint-stock company (PJSC)
- Private joint-stock company (PrJSC)
- Civil company
- Local company branch
- GCC company branch
- Foreign company branch
- Free zone company branch
- Sole Establishment
- Holding companies
Please note that the legal form of your business must match the business activity.
TRADE NAME REGISTRATION
One of the critical steps when considering opening a business in Abu Dhabi is selecting your trade name. Once you have chosen a name, it has to be registered at the emirate’s Department of Economic Development (DED). However, a business name may be rejected if it doesn’t meet the following criteria:
- The proposed name cannot violate public order or public morals.
- The name cannot contain any governing authority names, religion or external body names or logos.
- Any unique name has to be followed by the acronym (legal form of the company), i.e. EST, PrJSC etc.
- The name must be compatible with the proposed business activity.
- The name must be unique and should not be registered in the past with another business.
A payment voucher (or a transaction number) will be issued during the registration process. The cost can vary depending on the business type, while the payment has to be made within 30 days. The DED only register trade names. Trade name certificates are renewable. For trademark registration UAE, the legal body is the Ministry of Economy.
OBTAINING INITIAL APPROVAL
After obtaining a trade name certificate, the DED issues initial approval to set up a business in Abu Dhabi. This initial approval allows an investor to apply for a business licence.
The relevant authority for approvals varies according to the type of business. Foreign investors must also seek approval from the General Directorate of Residency and Foreigners Affairs (GDRFA).
MEMORANDUM OF ASSOCIATION (MOA) OR A LOCAL SERVICE AGENT AGREEMENT (LSA)
The following legal forms of businesses require a Memorandum of Association:
- Limited partnership
- Limited liability company (LLC)
- Public joint-stock company (PJSC)
- Private joint-stock company (PrJSC)
The MoAs and all such agreements are prepared and attested by a notary public, courts and UAE-based law firms.
Any business owned by non-GCC residents has to have a local service agent on board. The court or a notary public attests to the agreement between the two parties.
ADDITIONAL GOVERNMENT APPROVALS
In some cases, additional approvals from certain government entities are required. These entities include:
- Ministry of Interior
- Ministry of Justice
- Local Municipal Department
- Telecommunications and Digital Government Regulatory Authority (TDRA)
- Executive Council
- Ministry of Economy
- Local Health Departments
- Supreme Petroleum Council
ISSUING OF THE BUSINESS LICENCE
Once you’ve completed all the above-listed steps on how to start a business in Abu Dhabi, you can collect the business licence from the service centres of the Economic Departments. The licence can also be obtained through their websites. The following documents are required to get a licence for all the legal forms:
- Initial approval receipt
- All previously submitted documents
- Copy of lease contract duly attested by the Real Estate Regulatory Agency (RERA)
- Duly attested memorandum of association (for all company types)
- Approvals from other government entities
- Duly attested service agent contract (for civil establishments that are 100% owned by non-GCC nationals. This also involves local service agents.
HOW TO START AN ONLINE BUSINESS IN ABU DHABI?
The government of UAE has started a unified online platform, Bashr. You can start an online business in Abu Dhabi in 15 minutes through this portal. Bashr is connected with local and federal government entities that provide commercial licence services.
If you reside in Abu Dhabi, you don’t even have to visit the service centres. Instead, investors can apply for a commercial licence online. You can visit the official website of UAE Emirates’ Government Portal to apply for the licence.
FREQUENTLY ASKED QUESTIONS
IS IT BETTER TO SET UP A BUSINESS IN AN ABU DHABI FREE ZONE?
When planning to set up a business in Abu Dhabi, there is an option to choose a free zone. There are certain advantages of opening a business in an Abu Dhabi free zone.
- Full ownership of the business
- Permission to transfer revenue and profits from and to the free zone
- Tax exemptions
- Accommodation for labour
- Facilitation in acquiring permits and licences
The final decision depends on what type of business you are planning to open and the possible ownership structure.
HOW MANY FREE ZONES ARE IN ABU DHABI?
Currently, there are five free zones in Abu Dhabi:
- Abu Dhabi Global Market
- Khalifa Industrial Zone Abu Dhabi
- Masdar City Free Zone
- Abu Dhabi Airport
- Twofour54 (the Media Zone Authority)
WHO CAN APPLY FOR A BUSINESS GOLDEN VISA IN THE UAE?
Entrepreneurs from all over the world can apply for the Golden Visa. You can refer to our guide to Business Gold Visa in the UAE for more information on the eligibility criteria and other requisites.
This brings us to the end of our guide on how to start a business in Abu Dhabi. In recent years, the UAE government has taken significant steps to simplify opening a business in Abu Dhabi.
It is all about facilitating the investors. If you are still in the early stages of your planning, considering free zones in Abu Dhabi might be a good idea. Depending on your business activity, you can also apply for a freelancer’s permit in Abu Dhabi.
If your field of business is energy, reading about UAE oil and gas companies can be useful.
UAE is one of the most attractive places to open a business in the region and its stature is only likely to grow in the near future.
