ABU DHABI

ABOUT ABU DHABI AND MARKET ENTRY

As a dynamic hub for global commerce, investors view the United Arab Emirates (UAE) as a key component in their worldwide operations. The UAE is well established as the prime destination for multinationals to set up their regional base and serve the high growth markets in the Middle East, Africa and South Asia. It is also the perfect location for new business setups across diverse sectors.

The main driving force behind this economic and commercial expansion has been the UAE’s shift towards increasingly liberal economic policies, particularly the creation of economic and financial free zones, and diversification. Its success achieved international recognition with the decision to locate the World Expo in Dubai in 2020.

Historically Dubai has been the primary commercial hub of the UAE but over the last few years, Abu Dhabi, the federal capital and the largest of the seven emirates, has also been working hard to increase its global presence as a centre for all commercial activities, not just the oil and gas sector.

The Abu Dhabi Economic Vision 2030 outlines the government’s general policy framework for economic development and its plans for economic diversification over the next two decades, through greater investment in knowledge-based industries. Abu Dhabi’s non-oil industries – notably aviation, clean technology, financial services, legal services, travel, tourism and education – currently contribute over 60% of the Emirate’s GDP, with high levels of investment in infrastructure having a multiplier effect on the wider economy.

The Vision calls for greater collaboration between the public and private sectors in implementing the government’s policies and plans. It also identifies the following points as the priorities to achieve an ambitious economic transformation by 2030.

  • Creating an open, efficient and globally integrated business environment
  • Adopting a well disciplined fiscal policy that is responsive to various economic cycles
  • Establishing a resilient monetary and financial market environment with manageable levels of inflation
  • Improving the efficiency of the labour market
  • Developing a powerful and efficient infrastructure able to support the anticipated economic growth
  • Developing a highly skilled and productive human capital
  • Enabling financial markets to become the key financier of projects and economic sectors

If you want to establish a business in one of the safest, most affluent and fastest growing markets in the world, Abu Dhabi is the right place. Whether you are planning to set up a new business in the Emirate or open a branch of a company based outside the country, the procedures are transparent and flexible.

As with all the Emirates, there are no income or capital taxes in Abu Dhabi, except for oil and domestic banking, and no withholding taxes. Companies in Abu Dhabi can obtain further significant benefits from the absence of foreign exchange controls, trade barriers or quotas, making it an ideal location for business set-up and company formation.

It is important to have a full understanding of your options before deciding how to establish your company’s presence in the UAE. Overall growth for your company in the UAE can be hampered by making the wrong choice, so please consider the following points when deciding the best structure for your needs.

BUSINESS SETUP IN ABU DHABI

For companies looking to set up in Abu Dhabi, there are a number of options available. A foreign company that plans to open a business in the UAE as a whole can choose to set up as a branch, representative office or registered company, or it can appoint a commercial agent to sell its products in the UAE market or export them.

The UAE Companies Law contains one of the key restrictions on foreign investment. It requires that UAE corporate entities must be at least 51% owned by a UAE national or by an entity that is wholly owned by UAE nationals. Foreign investors that wish to register a ‘mainland’ company in Abu Dhabi must therefore pass 51% of their shares to a local Emirati ‘sponsor’.

For those foreign investors who are reluctant to give up control of their UAE business, Sovereign Corporate Services has a solution to mitigate this requirement in Abu Dhabi. Please click here for more details.

New companies can also choose to conduct their activities from a Free Zone, which is a designated, self-regulated area set up to catalyse economic activity within an emirate and which is governed by its own set of rules and regulations. A free zone entity permits a foreign investor to own 100% of the shares without the need to appoint a ‘local sponsor’.

There are three main free zones in Abu Dhabi – the Abu Dhabi Global Market (ADGM) financial free zone, the Masdar City clean technology and renewable energy economic zone, and the ‘twofour54’ media-based free zone. Sovereign Corporate Services can assist with company incorporations in each of them. If a company chooses to locate itself in one of these zones they will be required to have a registered office, which Sovereign can provide.

However, free zone companies are subject to a number of restrictions and are only permitted to conduct their activities within the vicinity of the respective free zone. Investors should carefully consider these restrictions when evaluating whether incorporating a company in a free zone is consistent with their objectives.

It is essential to have a full understanding of your options before deciding how to establish a business presence in Abu Dhabi. Sovereign’s team in Abu Dhabi is highly experienced and can provide expert advice and support on all aspects of company incorporation in Abu Dhabi and its free zones.

Setting up a business in Abu Dhabi generally involves six key steps:

  • Determining economic activity type – Before initiating the procedures for issuing the business licence, it is essential to determine the activity/activities of the intended business. The legal requirements and fees vary according to the nature of the activity. In addition, some activities require fulfilling requirements such as the location of the business and the total area of the facility.
  • Determining legal form of business – There are several legal forms and structures that are appropriate to the needs and nature of your business such as a Limited Liability Company or Limited Liability Partnership. Different rules and regulations apply to each legal form and ownership type.
  • Trade Name Registration – Having selected the activity and legal form of the business, a trade name that distinguishes the business from others and conforms to the nature of the activity and legal form must be selected.
  • Obtaining initial approval – Having obtaining the trade name certificate, an investor can request an initial approval certificate, which enables him/her to proceed with applying for a business licence and permission for the required business activity. For foreign investors, obtaining the approval of the General Directorate of Residency and Foreigners Affairs (GDRFA) is compulsory. At this stage, the investor can also seek approval from the Commercial Protection Division for its proposed business premises.
  • Obtaining approvals of relevant authorities – Following initial approval, an investor can approach the relevant authority to obtain approval according to its intended business activity or activities. Some activity types, however, only require the approval of Department of Economic Development (DED).
  • Issuing Business Licence – Having obtained the approval of the relevant authorities, if any, the investor can apply to the Department of Economic Development (DED) and fulfill all legal requirements and pay fees for issuing the business licence. The licences issued by various licensing authorities in Abu Dhabi include: Commercial, Agricultural, Vocational, Professional, Industrial and Tourism.
  • Issuing Business Licence – Having obtained the approval of the relevant authorities, if any, the investor can apply to the Department of Economic Development (DED) and fulfill all legal requirements and pay fees for issuing the business licence. The licences issued by various licensing authorities in Abu Dhabi include: Commercial, Agricultural, Vocational, Professional, Industrial and Tourism.

Interested in Abu Dhabi company formation?