The United Arab Emirates has consistently ranked among the Middle East region’s top destination for doing business.

Successful case studies such as Souq.com’s USD 580 million sale in 2017 to Amazon, and InstaShop’s USD 360 million acquisition by Delivery Hero in 2020, have all added to the appeal and allure of the UAE as the place to setup your business and grow your business to greater heights.

However, outsiders and entrepreneurs unfamiliar with the UAE may find it confusing with the varying entity types and jurisdictions within Dubai and UAE itself.

To help, we have created the below list of important points to note before you embark on your business setup journey in the UAE.

1. Business Activity

1. Most companies in the UAE are issued a Trade Licence upon the successful incorporation. This means they are licensed to engage in certain activities, whether it is a form of commercial trading, or the provision of consultancy services or even an industrial-scale manufacturing license.

Because entities are limited to only conducting the activities they are licensed to operate, it is crucial for investors-to-be to choose the relevant and correct business activity from the beginning when setting up their companies in the UAE.

For example:

• A licensed Para Pharmaceutical Products Trading company cannot suddenly sell any Jewelry or Precious Stones.

• An Occupational Safety Consultancy cannot engage in the trading of Frozen Fish and Seafood items.

• A company licensed to conduct Baby Food Trading is not allowed to manufacture powdered food products.

This doesn’t mean investors cannot diversify their business activities but should instead make arrangements to obtain the applicable licenses for the various intended activities.

2. Company Type

Clients will have to decide whether they require a mainland company, or a free zone company, or an offshore company.

As a licensed corporate service provider, we at INCORPORTAS can assist you with finding the best entity for your proposed business.

You may be interested in this article about the different company options available in the UAE.

3. Jurisdiction

Upon choosing the right type of company, clients will now have to decide on the jurisdictions on offer.

For mainland companies, there are 7 emirates to choose from.

For free zone companies, there are more than 45 free zone jurisdictions to incorporate your proposed free zone company.

For offshore companies, there are 3 main offshore regimes in the UAE.

4. Location

In this post-Covid era, does your proposed business require a physical presence, or is it a completely remote working setup?

Do you require a prime office strategically located for receiving clients?

Or a simple facility for the occasional usage would more than suffice for your needs?

The aforementioned jurisdictions all have varying degrees of facilities, as well as being situated across a wide range of locations, each with their own advantages relative to the individual needs of the clients.

5. Banking Solution/ Partner

Banking in the UAE is not without its imperfections, but it is also one of the Middle East’s most developed financial centre.

With greater consolidation across the region’s banking sector, clients can expect an improvement in the breadth of services and quality of said services in the times to come.

Check out this article regarding our perspectives on banking in the UAE .

6. VAT in the UAE

Will my proposed setup have VAT implications? What are my VAT obligations and responsibilities?

Find out more about VAT in the UAE.

We hope the points above can assist you in deciding on the most suitable entity type for you to register your company in the UAE.

If you have any more queries and clarifications, do not hesitate to reach out to us by email.