Navigating Through The Maze of UAE Business Set-up

There are many misconceptions about the difficulties of establishing a business in the United Arab Emirates (UAE), but the most frequent that we encounter from prospective clients is that they will be required to hand 51% ownership of their business to a UAE citizen and that this local partner will effectively have control over their company and corporate bank account.

Sovereign will immediately correct this misunderstanding. Although all companies established in the UAE under the Commercial Companies Law (CCL) must have 51% ownership by UAE nationals, 100% foreign ownership is permitted in the UAE’s many Free Zones.

In addition to acquiring nationality in the UAE, companies based in a Free Zone can enjoy 100% import and export tax exemptions, 100% repatriation of capital and profits, corporate tax exemptions for up to 50 years, no personal income taxes and assistance with labour recruitment, as well as additional support services, such as sponsorship and housing.

The next step for Sovereign is to ascertain where the client needs to set up their business. The first question to ask is “where is the market for your product or service?” If you are not looking to trade onshore in the UAE, then a Free Zone Establishment (FZE) will almost certainly be the answer.

The UAE has almost 40 Free Zones across Dubai, Abu Dhabi, Sharjah, Fujairah, Ajman, Ras al Khaimah and Um Al Qwain, with several more currently under construction. Each Free Zone is designed around one or more business industry categories and only offers licences to companies within those categories. An FZE is a limited liability company (LLC) governed by the rules and regulations of the Free Zone in which it is established.

Sovereign is engaged with senior staff at most UAE Free Zones and is therefore able to advise on licence type, cost, office space, visas and the time scale. Often clients will have a preconceived notion that they wish to establish in a particular Free Zone, but after consulting with Sovereign they discover there is a more cost effective solution.

If however your business requires you to trade onshore in the UAE mainland with local companies then you will need a Department of Economic Development (DED)-licensed company and this will require a local partner. This is something that Sovereign can also assist with using a corporate shareholder model, which allows clients to effectively maintain 100% ownership control of their business.

The main benefit of using Sovereign’s corporate shareholder is that you won’t be dealing with an individual person as a shareholder but rather an international, fully licensed and regulated company without any emotional ties to your business or vested interests.

Sovereign works closely with the DED through an official strategic partnership with Dubai Foreign Direct Investment, whereby they endorse Sovereign as an ideal local partner and provide excellent ancillary services and advice for international clients of Sovereign entering the UAE market.

One final piece of advice – don’t make hasty decisions when setting up your business. A poor choice could severely hold back your business and lead to time-consuming and costly restructuring. Sovereign has been assisting companies with foreign market entry on a global basis for the last 29 years and in the UAE itself for the last 18 years. We offer unrivalled options and will recommend the most suitable structure, location and licence type, so feel free to contact us for a free consultation. Let us cut through the red tape and allow you to focus on your business.

For more information, please contact:

Paul Bryson
Onshore Formation Specialist & Business Development Manager - Sovereign Corporate Services (UAE)
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