What is Business Setup?

1.What is the Business setup?

1.1 What is the meaning of business setup?

Business setup is the process of obtaining an official license under which business activities can be legally carried out. Three types of licenses are commonly offered within the United Arab Emirates namely, commercial, professional, and industrial. While commercial licenses cover all types of trading activities, professional licenses include those for consulting and services businesses, whereas industrial licenses typically are those involving the manufacturing of goods from raw materials.

1.2 What is the process followed for business setup?  

No step is particularly complex, but the entire process does require some knowledge of UAE business. The first stage in a business setup is to choose a business activity and then select a company name. After that, it is crucial to decide whether the business is to be set up in the UAE free zones or mainland. It is only then that the process of license application can be commenced; for this, the passport copy of all the shareholders will be required along with a business plan, a copy of the owner’s signature, and (if applicable) a No Objection Certificate from the current employer. The final step in the business setup process is applying for a UAE residence visa under the established business. By following the steps above, it is possible to set up your business in the UAE without any hassle.  

2.Why set up in the UAE?

2.1 TAX in Dubai and how does the introduction of VAT affect TAX benefits?

Dubai and the rest of the UAE are a zero-tax jurisdiction, where no taxes are levied on personal income. Also there is also no federal corporate tax regime implemented (except for corporate tax on oil companies and foreign banks). Value Added Tax (VAT) was introduced in the UAE only in 2018, and, at a rate of 5% applicable to most transactions for taxable goods and services, it serves as a general consumption tax applicable to tax registered businesses at each step of the supply chain. It is aimed at providing the UAE with a new source of income that will be further utilized to enhance the nation’s public services. 

2.2 Why is Dubai a good place to set up a media company? 

Over the recent years, Dubai has been growing as an international hub, not just for businesses but also for individuals from various professional backgrounds and different walks of life. Therefore, regardless of the scale of operations being commenced, Dubai offers an ideal landscape to set up a media company as it offers immense potential and opportunity when it comes to gaining visibility, networking and building relationships, and therefore growing exponentially.

2.3 Why do clients want to open a company in the UAE?

Apart from the various tax benefits, the increase of profitability and its central geographic location are factors which tend to attract multiple clients to open their own company within the UAE. Many entrepreneurs and business owners choose to set up their operations in Dubai because of its advanced commercial ecosystem and growing landscape. Most importantly, the UAE serves as a gateway to the greater Middle Eastern and Asian markets politically, socially, and economically. Thus enabling to facilitate smooth and hassle-free transactions both internationally and domestically. An additional benefits of setting up a businesin the UAE is the ability to open a corporate bank account, thus benefiting from the nation’s stable and secure financial system.

2.4 Can non-residents open bank accounts in Dubai?   

Non-residents can set up personal bank accounts in Dubai, and with a residence visa obtained from UAE business licenses (under the applicable quota), clients can easily set up corporate bank accounts as well.

3.Types of Business setup in UAE.

3.1 What are mainland, free zone, freelance business setup? 

a. Mainland Companies are available as a means for clients to directly engage with the UAE market. These companies are registered with the Department of Economic Development and can carry out the licensed activities directly, without the requirement of working through third-party distributors, retailers, or other stakeholders, thus optimizing profits retained.

b. Free Zones are economic areas in which goods and services can be traded at attractive tax and customs rates. One of the most popular benefits of Free Zones is 100% foreign ownership of companies without the requirement of a local sponsor or partner.

c. Freelancing has seen a significant rise in the last couple of years, with individuals choosing to work independently, taking on contracts as individual professionals as opposed to a company.

4. How to set up a business?

4.1 An outline of the process in the UAE. Is it easy to start a business in the UAE? 

1. Choose Business Activity

Every business in the UAE must list a business activity[s] on its license. The type of activity you intend to undertake will decide the type of license and setup you require. 

2. Choose Company Name

3. Free Zone or Mainland? There are two overarching business types in the UAE.

Mainland companies can be registered anywhere in the country and are permitted to trade freely throughout the UAE.

Free zone companies can only operate within their free zone. They can always be owned 100% by foreign entrepreneurs. They are eligible for 100% customs tax exemption, operate without currency restrictions, and are permitted to repatriate 100% of profits and capital.

4. Applying for License

If you’re setting up in the mainland, you can make your license application directly to the DED or equivalent. For a free zone setup, you will apply with the managing authority of your chosen free zone.

In both cases, it is much quicker and easier to assign a company setup agent to handle this process for you.

5. What are popular business categories people go for?

5.1 How popular is Ecommerce, Media, Logistics, Production, Manufacturing etc? 

The UAE is a booming international business hub with growing potential for most, if not all, economic sectors. Some of the most sought-after local business setups involve trading activities, whereby specialized goods and products are brought into and sold in the UAE market as well as abroad. Delving into more specialized activities, technical service licenses are also another popular option in the UAE, whereby companies and individuals can be licensed to offer certain particular services (typically requiring a degree of expertise) including electrical fittings, carpentry, concrete works, etc. Other popular activities include consulting, import-export, manufacturing, logistics and many others.

E-commerce, the marketing and sale of goods and services through online platforms, is another trending form of business in the UAE. This activity is available in both mainland and free zone jurisdictions, and, accordingly, the scope of services that can be offered also varies.

5.2 What are the Permitted activities and the range of setting them? Are E-commerce and trading activities allowed in all areas of UAE?

With the exception of certain activities prohibited by law and the specific regulations of each relevant authority, the UAE is an ideal jurisdiction for almost any line of legitimate business. This includes numerous activities in sectors such as media, manufacturing, agriculture, trading, e-commerce, and many more. E-commerce and trading activities are offered in most, if not all areas in the UAE, and more specific information can be obtained from the relevant authorities of each jurisdiction.

6. What are the types of licenses available?

6.1 What are Commercial, Professional, Industrial licenses?

There are typically three common license types that are available in the UAE, namely: commercial, professional, and industrial.

a. Commercial licenses include all types of trading activities.

b. Professional licenses tend to be for consulting and service-based businesses.

c. Industrial licenses are for businesses that focus on the manufacturing of goods from raw materials.

There are a variety of other license types available within these categories, such as the e-commerce license and the general trading license. E-commerce licenses are for businesses that wish to operate solely online while general trading licenses are for those wishing to trade in multiple unconnected goods. Introduction of E-commerce licenses has boosted the economy in profitability and instigates a more advanced and digitalized aspect within the UAE.

7. Can you summarise the process of a company set up in the UAE.

Company setup in the UAE, with the right agent, can be a simple, smooth and a hassle-free process. By choosing the right activity and license, a local business presence can not only help individuals and entities penetrate their businesses within UAE and the Middle East but also tap into the surrounding Asian and African markets. There are various categories, options and packages available for company setups, with specific provisions catering to each potential requirement and niche. Business licenses can be obtained at rates starting from AED 5,000, and some can also be issued within a day.

This information has been provided by Worldwide Formations.

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