Setting Up a Business in the UAE Mainland: A Straightforward Guide

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What can you do in 15 minutes? You can get some coffee, boil and eat an egg, get through three-quarters of a high-intensity training routine, and meditate. You can also start a business in the United Arab Emirates.

Fifteen minutes is all it takes for anyone with a valid Emirates ID and a valid UAE PASS account to set up a business in the UAE through the Bashr platform. You have alternatives if you’re not a UAE resident, such as applying for a virtual business license. Talk to a management company that provides business consulting services to have a rundown of all your options.

UAE: Ease of Doing Business

Your UAE business setup should be fairly straightforward even if you don’t apply for a business through the Bashr platform. In fact, company formation through the concerned emirate’s economic development department takes an average of only four days in the UAE, much shorter than the typical 10-day timeframe in other countries.

In fact, the UAE is 16th globally when it comes to ease of doing business. This is according to the World Bank’s Doing Business 2020 report, which ranked 190 economies according to various business regulation criteria. The UAE particularly excelled in how easy it is for investors to get the following done:

  • Getting electricity (rank one)
  • Dealing with construction permits (rank three)
  • Enforcing contracts (rank nine)
  • Registering property (rank 10)
  • Protecting minority investors (rank 13)

Business Setup in 8 Steps

The following are the steps you must accomplish when applying for a business license in the UAE through the department of economic development of your preferred emirate.

1. Identify Your Business Activity

The first step is to identify your business activity. You have thousands of business activities to choose from.

For instance, if you plan to engage in social media marketing in Dubai, choose the business activity marketing services via social media (Activity code 6202101), which falls under the information technology activity group. If you’re an interior designer, select the interior design engineering services activity (Activity code 7110201) under the consultancy – B – engineering activity group.

Choose the business activity that aligns with your venture. You may choose more than one activity.

Declaring the correct business activity is crucial because your business activity influences the type of license you must obtain and the legal form your company will take. To use the earlier examples, you will need a professional license if you plan to offer social media marketing consulting or interior design services in Dubai.

2. Select Your Legal Form

You have many options. Your company’s legal form is dictated by the number of people starting the business and your business activity.

The following are the legal forms you may choose for your company:

  • Sole Establishment
  • Limited Liability Company (LLC)
  • Civil Company
  • Limited Partnership
  • Private Joint Stock Company (PrJSC)
  • General Partnership
  • Public Joint Stock Company (PJSC)
  • Local Company Branch
  • GCC Company Branch
  • Foreign Company Branch
  • Free Zone Company Branch
  • Holding Companies

3. Register Your Trade Name

You must decide what to name your business. It cannot be something that is already registered, and it must be relevant to your business activities.

Submit your chosen trade name to the economic department of your target emirate, online or through a mobile application. In Dubai, you can reserve your trade name on the department of economic development business services portal.

Upon application, you’ll get a payment voucher or transaction number. Use that as a reference when you pay the name registration fees.

General Rules on Selecting a Trade Name

Adhere to the following rules when naming your business. More details should be available in the name application or reservation portal.

  • Attach the legal form acronym: Add your business structure acronym (e.g., LLC, EST) to your trade name.
  • Do not violate mores and norms: Your trade name may not violate the UAE’s public morals or order.
  • Do not mislead: You shouldn’t include the name of Allah and synonyms, governing authorities, countries, regions, organizations, and established brands.
  • Be unique: You cannot use a name that has already been registered.

4. Apply for Initial Approval

After selecting your business activity, determining the license you need, picking your legal form and deciding on your trade name, it’s time to request initial approval.

Obtaining initial approval confirms that the UAE government, particularly the emirate government, does not object to you setting up your business.

Note, however, that the General Directorate of Residency and Foreigners’ Affairs must approve your application if you are not a UAE citizen. Additional approvals may also be needed depending on your business activity.

5. Prepare Your Memorandum of Association (MoA) and Local Service Agent Agreement (LSA)

You need to prepare a memorandum of association if you’re setting up any of the following types of companies:

  • Limited partnership
  • LLC
  • PJSC
  • PrJSC

Additionally, even if 100% foreign ownership is allowed in the UAE mainland, certain business activities and jurisdictions require a local service agent.

6. Choose Your Business Location

You must decide on your business address, and your office or business address must comply with government regulations. Execute an office or warehouse rental agreement with your landlord. In Dubai, you must register the contract with Ejari.

7. Obtain Government Approvals

Depending on your business activity, you may have to obtain additional government approvals. A car rental company may need a permit from the Ministry of Interior, an engineering contractor from the local municipal department, a travel agency from the Executive Council, and a law firm from the Ministry of Justice.

8. Apply for and Collect Your Business License

Gather all of your papers, including receipts of previously submitted documents and your initial approval, MoA, LSA, and other government approvals and submit them to the department of economic development.

Collect your trade license and payment voucher. You must pay the trade license fee within 30 days, or your license application will be deemed canceled.

Set Up Your Business in the UAE

Starting a business in the UAE is pretty straightforward. However, rules and processes change. If you want to avoid potential pitfalls and legal hassle, it’s best to get assistance from a company formation consultant.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.