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UAE
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ABU DHABI COMPANY FORMATION
Abu Dhabi company formation offers numerous advantages to international firms as it is the capital of UAE and one of the largest emirates in size. Abu Dhabi is home to the second-largest population in the UAE.
The emirate offers fantastic chances for startups and SMEs aiming for rapid expansion. Moreover, the city has a diverse and thriving economy, with sectors ranging from energy and petrochemicals to tourism and real estate.
The UAE’s law now allows 100% foreign ownership of over 1,000 business activities, making it easier for international firms to set up and operate in the emirate.
KEY REQUIREMENTS FOR COMPANY REGISTRATION ABU DHABI
TIMELINE FOR SETTING UP A BUSINESS IN ABU DHABI
Shareholders and Shares
Abu Dhabi Mainland Company: 100% foreign ownership is allowed for more than 1,000 commercial and industrial activities.
Abu Dhabi Free Zone Company: 100% foreign ownership is allowed in most Free Zone regardless of business activity.
Share Capital
Mainland Company: Share capital for mainland (onshore) companies in UAE varies from US$10,000 to US$250,000, depending on the industry sector and the business activity is chosen by the investor.
Free Zone Abu Dhabi Company: Share capital varies depending on the location and the industry the company is operating. The share capital can range from US$1 to US$30,000. Although The UAE government introduced a new regulation in 2021 abolishing the minimum share capital requirement. Note that a minimum share capital is still applicable for selected business activities.
Director
It is a mandatory requirement for both mainland companies and free zone companies to appoint at least one director. The director can be a resident of any country. Investors wishing to open a UAE corporate bank account must appoint at least one director who is an ordinary resident of the UAE or has a UAE resident visa.
Registered office address
It is a mandatory requirement for both mainland companies and free zone companies to have a local office address. The office address can be a flexi desk office.
TYPES OF COMPANIES IN ABU DHABI
Freezone Company
In Abu Dhabi, there are more than eight free zones. When it comes to foreign ownership of the corporation, a free zone company is independent. There are no restrictions in hiring employees. Each free zone formed in Abu Dhabi has its own set of rules and laws. A business that is registered in one of these free zones must comply with the requirements of local law.
Limited Liability Corporation (LLC)
Limited Liability Corporation, or LLC, is one of the most popular types of corporate entities for Abu Dhabi mainland company registration. This is because they offer a number of benefits, including quick incorporation, and a flexible structure. The articles of association are the primary legal documents for subsidiaries. They contain details about the owners, their nationality, the business’s operations, voting rights, general guidelines, and much more.
The liability of the shareholders of a company is limited to the number of shares. The maximum number of shareholders allowed is 50. Effective 2021, a UAE LLC does not have to appoint a local sponsor. An LLC undertaking permitted business activity can be 100% foreign-owned.
Representative Office
A foreign firm may establish a representative office to perform different types of tasks, such as market research, rather than conducting actual operations. A foreign firm is permitted to establish a representative office under Article (313) of the UAE Companies Law.
Branch office
A foreign business may open a branch office. A local agent is mandatory for opening a branch office in the United Arab Emirates. A branch is only allowed to undertake business activities that are identical as the parent. A branch office can handle routine tasks associated with promoting the business in the region.
International companies have the chance to grow their business by opening a branch in Abu Dhabi, the nation’s capital. If a branch is incorporated in one of Abu Dhabi’s free trade zones, foreign investors may own 100% of the business, with the condition that it must conduct business in accordance with its company of origin.
The parent company must be informed of every branch operation. The Ministry of Economy issues the approvals for opening a branch in Abu Dhabi. The Articles of Association must be written and submitted to the regional Trade Register. The Department of Economic Development in Abu Dhabi will issue the Certificate of Incorporation if all the documents are approved.
Sole proprietorship
A Sole Proprietorship is a type of business structure in which a single individual owns and operates the business. In Abu Dhabi, a Sole Proprietorship is considered as a “commercial licence” type of business and it is registered under the Department of Economic Development (DED).
This type of business structure is relatively straightforward to set up, with a relatively simple process for obtaining a commercial licence. However, it is important to note that the owner of a Sole Proprietorship is personally liable for the business’s debts and obligations, which means that their personal assets may be at risk if the business is unable to pay its debts.
MAINLAND COMPANY IN ABU DHABI
A Mainland company is a company that is registered with one of the UAE DED (Department of Economic Development). You must register a Mainland limited liability company if your business wishes to conduct business within the UAE. The DED will approve the business registration and provide you with a business license that allows you to operate within the UAE.
Mainland companies are allowed to undertake any industrial, commercial, trading, professional, or tourism-related business activity. Selected professional activities are not permitted as per DED’s business regulations, while some others require approvals of authorities that regulate these activities.
The cost and process of setting up a Mainland company in Abu Dhabi are typically the same as in the rest of the UAE. The minor differences are the timeframe, initial start-up costs, and the provisions for the licence duration or the office space obligation.
The Abu Dhabi authorities issued a business license that is valid for two years, and the cost of this license has been reduced considerably in recent years. Investors can use a private residential address to apply for a trade licence in Abu Dhabi.
The UAE authorities abolished the share capital requirement for establishing a Limited Liability Company. Effective 2021, foreign investors don’t need to hire a local sponsor, and the business can be 100% foreign-owned if the business activity falls under permitted business activities.
FREE ZONES IN ABU DHABI
The Abu Dhabi free zones have been designed with particular business industry categories in mind, such as technology, finance, and creative industries. This means that the free zones are specifically targeted toward businesses that operate within these categories, offering them the support and resources they need to succeed.
Each free zone is governed by a separate independent Free Zone Authority, which is also responsible for issuing employee visas, regulating business standards, and issuing business licenses and permits.
Each of Abu Dhabi’s free zones has its own set of rules and regulations, and these free zones are exempt from the terms of the commercial companies’ law. There are several benefits to starting a business in the free zone in Abu Dhabi, and the procedure is relatively easy and affordable.
Major Free Zones In Abu Dhabi Are:
- Abu Dhabi Airport Free Zone (ADAFZ)
- Home – Masdar Free Zone
- Khalifa Industrial Zone Abu Dhabi (KIZAD) | Ministry of Economy – UAE
- Media Zone Authority-Abu Dhabi
- Abu Dhabi Global Market– ADGM
- Abu Dhabi ports company free zone (ADPC)
- Industrial City of Abu Dhabi (ICAD) – UAE Free Zones
- Higher Corporation for Specialized Economic Zones(ZonesCorp)
MAINLAND COMPANY VS FREEZONE ZONE COMPANY IN ABU DHABI
A mainland company operates within the jurisdiction of the UAE government, while a free zone company operates within a designated free zone area, which is governed by separate regulations.
Some key differences as listed below.
Foreign Ownership and Permitted Business Activities
Certain business activities operating in the mainland must be 51% owned by UAE nationals, while all types of business activities operating in a freezone can be 100% foreign-owned. Mainland companies have more restrictions on the type of business activities they can undertake, while freezone companies have greater flexibility in this regard.
Taxation
Mainland companies are subject to corporate tax in the UAE, while freezone companies are exempt from corporate tax and personal tax.
Relevant Law
The Department of Economic Development (DED) or its equivalent in each of the UAE’s seven Emirates is responsible for issuing licences and serving as the corporate regulator of businesses on the mainland. Whereas each free zone is created by a decree and has its own licensing body and business regulator. Additionally, each free zone has its own set of business and licensing rules.
Visas and Residence
For mainland companies, visa sponsorship is typically provided by the local sponsor or the government, while for freezone companies, visa sponsorship is provided by the freezone itself. In addition, freezone companies are able to provide residency visas to their employees, while mainland companies typically do not have this option.
Costs
Starting a business in a freezone can be more expensive than starting a business on the mainland, as freezone companies often face higher costs for office space and other business-related expenses. However, the tax benefits and greater flexibility in terms of foreign ownership and business activities can make it a more attractive option for some companies.
Location and Access
Freezone companies are located in specific areas within the UAE, while mainland companies can be located anywhere within the country. Freezone companies also have the advantage of being located in areas with a higher concentration of similar businesses and a more conducive business environment, while mainland companies are located within the broader
STEPS TO REGISTER COMPANY IN ABU DHABI
Determine Business Structure and Location
Choose the best legal structure for the business, such as a Limited Liability Company (LLC).
Consult with a professional firm to determine if a Mainland company or a Freezone company would be more suitable based on the business activity.
Select a Trade Name
Choose an appropriate trade name for the business and submit a minimum of three names to the Department of Economic Development (DED) or the relevant Free Zone Authority.
The DED or Free Zone Authority will approve the trade name and provide the business with a name to conduct activities.
Submit Relevant Documents
After the company name is approved, submit all necessary application forms and corporate documents to the DED or relevant Free Zone Authority.
Obtain a Commercial Licence
Register for a Commercial Licence from the DED or relevant Free Zone Authority.
The application must include the trade name, business activity, and location.
Register for Company’s Visa
The owner of the company must apply for a work visa, also known as the Investor or Entrepreneur visa, to reside and work in the UAE.
Open a Corporate Bank Account
Open a corporate bank account in Abu Dhabi to conduct financial transactions.
Register with the Abu Dhabi Chamber of Commerce
Upon receipt of the license, the business will be registered with the Abu Dhabi Chamber of Commerce. It is important to note that while the overall steps are similar, there are some differences in the registration process between Mainland and Freezone companies in Abu Dhabi.
Mainland companies are subject to corporate tax and have restrictions on business activities, while Freezone companies are exempt from corporate tax and personal tax, and have greater flexibility in terms of business activities.
DOCUMENTS REQUIRED FOR COMPANY FORMATION IN ABU DHABI
The following are some of the key documents typically required for company formation in Abu Dhabi:
- Memorandum of Association: This document outlines the purpose and objectives of the company, as well as the powers and responsibilities of the shareholders.
- Articles of Association: This document outlines the rules and regulations governing the internal management of the company, including the appointment of directors and the distribution of profits.
- Shareholders Agreement: This agreement sets out the terms and conditions under which the shareholders will conduct their business, including the rights and obligations of each shareholder.
- Manager’s Appointment: This document formally appoints the manager of the company and outlines their responsibilities and duties.
- Board Resolution Copy: This document records the decisions and resolutions of the company’s board of directors.
- Notarized Documents: Certain documents, such as the Memorandum of Association and Articles of Association, may need to be notarized by a public notary in Abu Dhabi.
- Certificate of Paid up Share Capital: This document provides proof that the required amount of share capital has been deposited in an Abu Dhabi bank account.
- Deposit Slip: A copy of the deposit slip showing the capital deposited in an Abu Dhabi bank account.
- Name Approval Certificate: This certificate confirms that the proposed name of the company has been approved by the relevant authorities.
- Lease Agreement of the Premises: This document outlines the terms and conditions of the lease agreement for the company’s premises.
Please note that the specific requirements for company formation in Abu Dhabi may vary depending on the type of company and the business activities being undertaken, so it is advisable to seek professional advice to ensure that all necessary documentation is in order.
PROS AND CONS OF REGISTERING A COMPANY IN ABU DHABI
PROS
Free Zones
In Abu Dhabi, there are more than 8 free zones for conducting business. Hence, an investor has the option to conduct business in one of these free zones in Abu Dhabi. In Abu Dhabi, a different free zone company can also be incorporated.
Tourism Development
Abu Dhabi is a popular tourist destination, generating high revenue and attracting a diverse range of businesses to the city.
Tax Benefits
As the UAE does not impose tax, Abu Dhabi is a great place for businesses to lower their worldwide taxation. Oil and gas companies are the only businesses in Abu Dhabi that must pay taxes. Several double taxation agreements exist between Abu Dhabi and other nations.
Variety of Business Structures
To register a company in Abu Dhabi, a variety of business structures can be utilised. Therefore, there are various possibilities available to a foreigner for company registration in Abu Dhabi.
Strong infrastructure
The emirate has modern infrastructure, including a well-developed transportation network, high-quality telecommunications, and state-of-the-art port facilities.
CONS
Prohibited Business Activities
The United Arab Emirates forbids foreign ownership of some business activity. To find out whether a particular economic activity is permitted or not in a given location, it is necessary to conduct research. The business owner must discuss with the business consultants in Abu Dhabi first about the business activities.
Strict regulations
Companies operating in Abu Dhabi are subject to strict regulations and must comply with various laws and regulations, which can be burdensome.
WHY CHOOSE RELIN CONSULTANTS TO FORM A COMPANY IN ABU DHABI?
At Relin Consultants, we understand the complexities of setting up a business in Abu Dhabi, which is why we offer comprehensive business formation services to simplify the process for our clients. Our team of experienced consultants will guide you every step of the way, ensuring that all the technical and administrative requirements are met efficiently and effectively.
We take pride in our expertise in obtaining the appropriate trade license for our clients based on their specific business activities. Our team will prepare all necessary documents and handle all the paperwork, so you can focus on growing your business.
Choosing Relin Consultants as your business formation partner offers you the peace of mind that your company is in good hands. We are committed to providing exceptional support and service, and strive to ensure a smooth and seamless company formation experience for our clients. If you’re looking to form a company in Abu Dhabi, consider reaching out to us for more information on our business setup services.
FAQs
Is It Better To Set Up A Business In An Abu Dhabi Free Zone?
Whether it is better to set up a business in an Abu Dhabi free zone or not depends on your business’s specific circumstances and goals. Free zones can offer certain benefits such as 100% foreign ownership, 100% repatriation of capital and profits, 0% import and export tax, 0% personal income tax, and corporate tax exemptions for up to 50 years, no currency restrictions, and a wider range of business activities.
How Many Free Zones Are In Abu Dhabi?
There are eight free zones in Abu Dhabi.
They are – Khalifa Industrial Zone Abu Dhabi, Masdar City Free Zone, Abu Dhabi Airport free zone, Abu Dhabi global market, Media Zone Authority-Abu Dhabi, Abu Dhabi ports company free zone (ADPC), Industrial City of Abu Dhabi (ICAD), Higher Corporation for Specialized Economic Zones(ZonesCorp).
What Makes Abu Dhabi Such A Great Place To Set Up A New Company?
Abu Dhabi is a great place to set up a business for many reasons. Some of them are listed below.
- Strategic Location: Abu Dhabi is strategically located at the crossroads of Europe, Asia, and Africa, which makes it an ideal location for businesses looking to tap into the broader Middle Eastern market.
- Strong Economy: Abu Dhabi has a strong economy, driven by its oil and gas industry, which provides a stable and predictable business environment.
- Pro-business environment: Abu Dhabi has a pro-business environment with a range of investment incentives and support programs available to businesses.
- Tax incentives: Abu Dhabi offers a range of tax incentives, including low corporate tax rates and exemptions, which can help to reduce the overall cost of doing business.
- Free zones: Abu Dhabi has a number of free zones that offer a range of benefits to businesses, such as 100% foreign ownership, 100% repatriation of capital and profits, 0% import and export tax, 0% personal income tax, and corporate tax exemptions for up to 50 years, no currency restrictions, and a wider range of business activities.
Can A Foreigner Start A Business In Abu Dhabi?
Yes, a foreigner can start a business in Abu Dhabi
How Much Does It Cost To Set Up A Business In Abu Dhabi?
The business setup company cost in Abu Dhabi on the mainland can range from anywhere between US$10,000 to US $30,000.
Can A Non Resident Open A Company In Uae?
Yes, non-residents can open a company in the United Arab Emirates (UAE). The process and requirements for doing so may vary depending on the specific type of business and location in the UAE.
Non-residents can open a company in the UAE in the following ways:
- Free Zones: Non-residents can open a company in any of the UAE’s free zones which are areas designated by the government for specific economic activities. In these areas, companies can be 100% foreign-owned and have access to benefits such as 0% personal and corporate income tax, 100% repatriation of capital and profits, and exemptions from import and export taxes.
- Mainland companies: Non-residents can open a company in the mainland UAE, but the company must undertake those business activities that are approved by the UAE government. Otherwise, a local shareholding is mandatory.
- Offshore company: Non-residents can open an offshore company in the UAE. This type of company is not allowed to conduct any business activities within the UAE, but it can be used for holding assets and investments, and for tax planning and international trade.
Is Abu Dhabi Tax-Free For Expats?
Abu Dhabi is generally considered to be tax-free for expats, as there is no personal income tax in the emirate. However, it’s important to note that this tax-free status applies only to individuals and not to businesses. Businesses in Mainland Abu Dhabi are subject to corporate tax.
For expats, this means that they do not have to pay any taxes on their salary or other forms of income earned while working in Abu Dhabi. However, it’s important to note that some expats may be subject to taxes in their home country on income earned while working in Abu Dhabi.
Do I need a sponsor for a new business setup in Abu Dhabi?
According to the new rule by the UAE government, overseas investors are permitted to set up a company in the UAE in the majority of industries without a local sponsor.
The UAE government has made a significant effort to make doing business easier and to attract entrepreneurs and foreign investors with this change in ownership rules.
What is the capital requirement for a company setup In Abu Dhabi?
The minimum share capital requirement for establishing a company varies depending on the type of company (i.e freezone or mainland) and the location of the freezone.
Typically, the minimum share capital ranges from US$1 to US$ 50,000 per company. It is important to note that these requirements may vary, and it is always best to check with the specific free zone authority for the latest and most accurate information.
What is the corporate tax rate for companies in Abu Dhabi?
The corporate tax rate for companies in Abu Dhabi is 9%. However, it’s important to note that this rate applies to companies operating in mainland Abu Dhabi, not those operating in free zones. Free zone companies are generally exempt from corporate tax. You can refer to UAE corporate tax for additional information.
How long does it take to incorporate a business in Abu Dhabi?
The time it takes to incorporate a business in Abu Dhabi can vary depending on the type of business and location. The time frame also depends on the availability of the required documents and the responsiveness of the relevant government agencies.
Approximately it will take 15 weeks for the company formation process in Abu Dhabi.
How do I register a company name in Abu Dhabi?
The process of registering a company name in Abu Dhabi can vary depending on the type of business and location, but in general, it includes the following steps:
- Conduct a name search: Before registering a company name, it’s important to conduct a name search to ensure that the desired name is available and does not infringe on any existing trademarks or company names.
- Submit the application: Once you have chosen a name, the next step is to submit an application for the name registration to the Department of Economic Development (DED) or the relevant free zone authority.
- Provide required documents: Along with the application, you will need to provide the required documents, such as the trade licence, legal documents, and proof of address.
- Obtain name reservation certificate: Upon the successful submission of the application, the DED or free zone authority will issue a name reservation certificate, which is valid for a period of 30 days.
- Register the company: Once you have obtained the name reservation certificate, you can proceed with the registration of the company by submitting the necessary documents and paying the fees to the DED or free zone authority.
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