Business Setup Landscape in the UAE and Why is it the Best Option for Expats
A business hub for the region and beyond, the UAE continues to be increasingly popular and attractive to businesses worldwide. Although an oil–rich state, the UAE has diversified its economy into various sectors to become a global center for business, trade, and finance.
Business Setup Landscape in the UAE
Foreign investors have five options to do business in the UAE:
Acquiring/Investing in an Existing Local Entity: This option allows foreign investors to acquire or invest in an existing UAE company or business.
Operating Business Through an Agent/Distributor: This option allows foreign companies to involve an agent/distributor in the distribution and sale of their products, or providing services for a fee, leveraging the agent or distributor‘s local market connections. There is no need for a foreign company to establish a physical presence in the UAE.
Trading from Overseas: This option allows foreign investors to trade in the UAE from their home country without establishing a physical presence in the UAE.
Establishing a Joint Venture (JV): A JV allows the foreign investor to take an equity stake and a role in their UAE entity’s operation and management. The local partner may contribute by way of technical skills or local connections and reputation, or even financially.
Setting up a Local UAE Entity: This option allows foreign investors to set up a free zone or an onshore (mainland) company in the UAE. Whether to set up a business onshore or in a free zone depends on the nature of the business activity, the company plans to carry out in the UAE, and its customer locations.
Onshore/Mainland Business Setup: Foreign investors wishing to operate in the mainland UAE can either set up a limited liability company (LLC) or a branch/representative office. The main benefits of having an onshore entity are:
- Fewer restrictions on business activities to be carried out
- No restriction on the location of the business premises provided it is situated onshore.
Free Zone Business Setup: Foreign investors can choose to establish a 100% foreign–owned company or branch in one of the many free zones across the UAE. Free zone businesses can operate freely within their respective free zone and outside the UAE, but not in the local market. Each free zone is governed by its own regulatory authorities, and the licensing authority within each free zone issues free zone licenses.
Offshore Entity/International Business Companies: Companies that do not intend to engage in business activities within the UAE (either onshore or within a free zone) can set up an offshore entity under the offshore regulatory system. Offshore businesses are not permitted to trade with the UAE and cannot open a bank account or obtain a UAE tax residency certificate. However, the main benefits of an offshore entity include:
- Conduct business internationally
- No restrictions on foreign ownership
- No need for shareholders or directors to reside in the UAE
- No need to have a physical office space or premises in the UAE
- Offshore companies
Why is the UAE the Best Option for Expats?
- The UAE is one of the most business-friendly countries in the world. Over the years, it has become a financial powerhouse with diverse industries. UAE businesses are booming with a stable political system, business-friendly tax regime, liberal trade restrictions, and strong capital flow. As a result, it has become an increasingly popular investment choice and the best option for expats.
- With 80% of UAE residents being foreign-born, it becomes clear that there is plenty of scope for foreign investment. It is easy to set up a company in the Emirates as it involves less documentation, and most of it is in English. It is also comparatively easier for foreigners to do business in the UAE than in many other countries. The local UAE government encourages foreign investment and start–ups in many ways. It offers long-term visas for investment. Starting a business in the UAE also helps expats obtain a residence visa for themselves and their family members.
- The best part of starting a business in the UAE is Free Zones, which are very popular with foreign investors. This is because free zone companies enjoy special privileges, such as 100% foreign ownership, 100% repatriation of capital and profits, no need for local sponsorship, and exemptions on corporate tax, personal income tax, sales tax, and import–export tax. Furthermore, duties are low, and there are no trade barriers.
- Apart from the business-friendly environment, the UAE also offers year-round sunshine, world-class amenities, a vibrant and prospering community, and an upscale cosmopolitan living to its residents, drawing thousands of expatriates from every corner of the globe to live and do business in the UAE.
So, if you are an expat wanting to start a business in the UAE, then this is the best time to get on board. It is best to seek professional help from business setup consultants like Creative Zone. Call 800 LICENSE (5423673) to talk to one of our Business Setup Consultants today!
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