How to Open a Local Company in the UAE

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Active regional development, a business-friendly community, and easy access to international markets make the UAE an attractive country for business development. Local firms can benefit the most from the advantages of this jurisdiction. Moreover, opening a local company in the UAE is much easier now than it was just a few years ago. For instance, there is no longer a requirement to involve a local partner who must own 51% of the business.

Options for Opening a Company in the UAE

Russian businessmen have several options for starting a business in the UAE. They can open a mainland company or a business in a free zone. In free zones, there are both onshore and offshore companies.

Offshore companies must operate outside the territory of the United Arab Emirates. Such businesses also cannot lease office space.

On the other hand, an onshore company can operate both within the free zone in the United Arab Emirates and abroad. Registration features in the free zone include:

  • Choosing an activity from the list offered by the free zone administration—each free zone serves a closed list of directions;
  • The possibility to work within the free zone of registration. To sell goods and provide services in the UAE without registering on the mainland, it is necessary to involve a local distributor;
  • Obtaining visas with the possibility of extension. The number of visas depends on the rules of the free zone, the direction of activity, and the size of the office;
  • Several office options—workspace in a coworking space, physical office for rent or ownership, virtual flexi desk space;
  • Simplified financial audit.

The advantages of free zones include simple and fast registration, full ownership of the company, and developed infrastructure. Each free zone offers opportunities that correspond to its specialization. Renting a full-fledged office in a free zone is not necessary—it is possible to limit yourself to a legal address without tying it to any workplace.

Features of a Local Company

A mainland company is a special tool for doing business both within the UAE and beyond its borders—on international markets. For organizations in free zones, opportunities are limited—it is only possible to work within the free zone itself or outside the country, whereas there is no such restriction for local companies.

Local firms can choose the direction of work they are interested in, except for those prohibited by UAE law. For example, gambling is illegal. Mainland companies have access to government contracts in various industries and can collaborate with government agencies.

Renting offices, manufacturing, and warehouse facilities is allowed anywhere in the emirate, not just within the free zone. Local businesses can choose the most advantageous territory for themselves.

Other advantages of local companies include:

  • Simpler hiring procedures;
  • Unrestricted repatriation of funds;
  • The right to collaborate with any counterparties;
  • Minimal restrictions on obtaining work visas.

Do you need a local partner?

A few years ago, when registering on the mainland, it was necessary to have a local member on the board of directors who would own 51% of the company. Now, the requirement for UAE citizen involvement in the business has been retained only for mainland companies operating in strategic sectors of the economy. It's more of an exception than a rule.

At the owner's discretion, a local partner can certainly be involved and participate in crucial strategic decisions, especially in cases where no one else can help. Local residents with UAE passports often own shares in companies and participate in developing business strategies. However, keep in mind that everyone has their capabilities and levels of access—there's no one-size-fits-all solution. In any case, choose your partners carefully.

Legal Forms and Licenses

Foreign investors have several legal forms available. On the mainland, you can open the following types of companies:

  • Limited Liability Company (LLC): The maximum number of shareholders is 50. The allocation of responsibilities among shareholders depends on the amount of investment. The company's obligations are separated from the personal assets of the shareholders. The minimum capital for an LLC is AED 300,000 in Dubai and AED 150,000 in other emirates.
  • Sole Proprietorship (SP): The sole owner is personally liable for all company obligations.
  • Branch of a Foreign Company: When registered on the mainland, it has the same rights and responsibilities as an LLC.
  • Branch of a Free Zone Company: One of the forms of mainland company, which is registered with the Ministry of Finance and the Department of Economic Development of the UAE.

In free zones, onshore businesses can be registered with one or multiple owners. Offshore companies open as IBCs.

Every local company, like onshore businesses in free zones, must obtain a license. Licenses are divided into industrial, professional (service), and commercial categories.

How to Open a Mainland Company

Step-by-step guide to opening a local company in the UAE:

  1. Familiarize yourself with the local market. Business missions—business trips for a small group of investors interested in opening a business in the UAE, finding partners, and concluding initial contracts—are the most suitable format for this.
  2. Choose a business direction. Test any business hypotheses on the local market. Market analysis, competitors, and target audience are mandatory steps.
  3. Decide on the type of company and license. A local company is one of the most convenient legal forms. Local companies have fewer restrictions compared to other types of businesses.
  4. Choose and reserve a name in English and Arabic. It's important for the name to comply with the naming norms of enterprises in Arab countries. For example, the name should not contradict moral norms. You can check the availability of the chosen name on the website of the UAE Ministry of Economic Development.
  5. Submit an application for preliminary approval. For this, you need an identity document, a valid visa if you reside in the UAE, a No Objection Certificate (NOC) from your employer, the company's articles of association, and a techno-economic justification of the activity. In some cases, a diploma and additional permits from government authorities (Dubai Municipality, Dubai Health Authority, Ministry of Education, etc.) may be required.
  6. Find and rent an office. To register the company, you need to provide a lease agreement or ownership certificate.
  7. Open a business account. Registering a corporate account is very difficult. Entrepreneurs need to justify their reliability, provide extracts from other bank accounts, a rental agreement for housing in the UAE, utility bills, a resume, a business plan, and more.
  8. Obtain a license. Any activity in the UAE requires a license. Not all types of activities can be combined in one license—it's worth consulting with experts on this issue, for example, by contacting The Level Consulting.
  9. Submit an application for final approval. To do this, you need to confirm the company's address, legal information, and an extended package of documents.

The professional support of a business is of paramount importance, especially for a recently launched enterprise. In the UAE, where most local and international companies rely on consulting to address current issues, identify growth opportunities, and ensure development, this is particularly crucial. To successfully conduct business in the UAE, it's essential to seek support from a reliable consulting company that can help you:

  • Understand the registration rules and peculiarities of local legislation.
  • Develop and implement strategies for launching a business, supporting the company at the initial stage of existence, and expanding its activities.
  • Provide convenient outsourcing solutions: legal consultations, IT, accounting, recruiting.

The Level Consulting can be such an assistant for you. Reach out to us—our specialists will answer your questions and find the optimal solution for doing business in the UAE.

Frequently Asked Questions

Despite the abundance of information about registering a local company in the UAE available in the public domain, entrepreneurs still have quite a few questions. Let's briefly answer several of the most common ones.

What taxation do local companies face?

The UAE is not a tax-free territory. Since June 1, 2023, all companies are required to register for corporate tax and also register with the Federal Tax Authority (FTA) and obtain a Tax Registration Number for VAT if they have turnovers of AED 375,000 or more. Additionally, companies must maintain accounting records themselves or through outsourcing, submit VAT reports according to the schedule received during VAT registration and in line with the financial year, and file a corporate tax return at the end of the financial year within 9 months—these are general requirements for all companies.

The main taxes paid by mainland companies include:

  • Corporate tax (9%). Levied once a year if the profit for the reporting period exceeds AED 375,000.
  • VAT (5%). Must be paid quarterly for the sale of goods and property rights in the UAE, rental of premises, and imports if the turnover exceeds AED 375,000 per year. There are exceptions, for which the VAT rate is 0.
  • Excise tax. Depends on the type of product, for example, on tobacco products, energy drinks—100%, sweetened carbonated drinks—50%. Companies that import, store in warehouses, transport, and sell goods that are harmful to health are subject to this tax.

Companies registered in free zones also pay taxes if they conduct activities within the country and, in some cases, corporate tax if the profit exceeds AED 375,000.

Do I need a license?

Obtaining a license is a crucial stage in organizing business on the mainland of the UAE. Licenses are divided into several groups: service (professional), commercial, industrial. There are also tourist licenses—these are obtained by companies operating in the hotel business and tourism, as well as some event agencies.

A brief guide to types of licenses:

LicenseSuitable forRenewal Conditions
CommercialOrganizations involved in trading or commercial activities. These can include importers and exporters, e-commerce businesses, publishers and media, retail shops, and food service establishments.Timely payment of fees (depending on the type of activity), compliance with labor and safety regulations.
Service (Professional)Companies providing legal, educational, and other services, engaged in marketing, consulting, medical practice, etc.Typically requires maintaining membership in professional associations, staff training, timely submission of documents.
IndustrialEnterprises involved in production, processing, and sale of goods. This category includes food processing, chemical production, textile manufacturing, etc.Compliance with labor safety standards, environmental regulations, and timely submission of reports.

The cost of opening a company in the UAE depends on several factors, including the type of business and licenses, the type and size of the rented premises, and the need to obtain permits from government authorities. At the initial stage, a minimum of 20,000 dirhams + 5% of the annual rent for the office, warehouse, or shop is required. This amount includes government fees, license, company name reservation, labor and immigration card processing, as well as some other expenses. The cost of an investor visa is around 5,000 dirhams; if employees are planned, a minimum of 7,500 dirhams will be required, as well as medical insurance.

In the future, annual payments for government fees, licenses, office rent, and additional organizational and business expenses, such as outsourcing accounting services, IT support, etc., will be required. Visas are issued for two years.

As for the time frame, opening a business usually takes from 4 to 8 months, including two to three months required for account registration verification. The duration depends on the type of business, the need to obtain additional permits, and other factors. For more accurate information, contact The Level Consulting for consultation.

A significant portion of the work on registering the company and other related tasks can be delegated to a consulting company. The Level Consulting specialists have been helping Russian investors open businesses in the UAE for over 12 years. Contact us for professional assistance to obtain accurate and reliable information, expedite the registration process, and avoid most of the problems that entrepreneurs in the UAE face at the initial stage.

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