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Doing Business in UAE
Due to its great geographic location, its role as the Middle East’s regional commerce center and its efforts in the creation of free trade zones, the UAE is emerging as one of the world’s best places for doing business. To the prospective investor, the UAE presents an extremely favorable business environment; excellent infrastructural facilities coupled with professional expertise and personalized services.
Benefits in starting a business in the UAE
If you are looking to start a new business in the UAE, or move your running business here, the foremost aspect to consider is what type of establishment and license your company will operate under. In the Commercial Companies Law of the UAE, there are five types of business establishments from which foreign entities, interested in establishing a formal presence in the country, can opt for.
1. Permanent Establishment as a Limited Liability Company (LLC)This is the most common type of establishments in the UAE and there are several different methods by which it be achieved. The Commercial Companies Law mandates that each LLC established in the UAE, has one or more UAE national partner(s) who hold at least 51 percent of the company’s capital. However, through a Memorandum of Understanding, these terms can be adjusted to suit the investor's purposes.
2. Civil Company or Sole ProprietorshipThis type of establishment allows sole traders to operate as a civil company. A civil company or a sole proprietorship covers a range of professions from owning a restaurant to a tailoring service and so forth. Civil companies are usually used by a profession and require a local service agent. The service agent has no involvement in the company's business operations, management or profit sharing. The agent will merely be a figurehead representative when drafting legal agreements and establishing other business documentation.
3. Branch OfficeA branch office has the same legal identity as its parent company overseas and conducts business under its name. While each emirate has its own licensing rules for branch offices, this type of establishment can carry out a variety of activities as approved by the Department of Economic Development of the relevant Emirate. Branch offices are regarded as fully-fledged businesses permitted to enter into contracts and conduct other activities as specified in its license.
4. Commercial Agency AgreementForeign companies may engage in a commercial agency arrangement which is defined as any arrangement whereby a foreign company is represented by a UAE agent to distribute, sell, offer, or provide goods or services within the UAE for a commission or profit. The agent must either be a person holding UAE nationality or a company that is 100 percent owned by UAE nationals. The agent must be registered with the Ministry of Economy. Unless otherwise agreed in writing between a foreign company and its commercial agent, an agent is entitled to receive a commission on the sale of products in his or her designated emirate, irrespective of whether such sales are made by or through the agent.
5. Free Zone Establishment (FZE) or Free Zone Company (FZCO)Free zones allow for up to 100 percent foreign ownership and are subject to reduced or different trade barriers, tariffs, and quotas. However, free zone companies may only operate within the free zone boundaries and are generally limited to performing the activities listed in their license. If a free zone company chooses to operate outside these boundaries, it must adhere to the requirements of the UAE Commercial Companies Law in compliance with the licensing procedure in the applicable emirate. Generally, free zones are designated by the government to a specific commercial sector. The types of licences that can be issued in a Free Zone are:
• TRADE LICENCE: This allows the registered entity to practice activities which are related to import, export, and distribution of items and goods as specified in the license.
• SERVICE LICENCE: This allows the registered entity to carry out only specified services.
• INDUSTRIAL LICENCE: This allows the registered entity to import raw material, manufacture, and process, assemble, package and export the finished product.
Procedure of free zone company formation in the UAE
SUBMIT APPLICATION FORM
Complete relevant application form for desired entity and submit with required documents to free zone's sales office.
Subject to document review (activity & security check), initial approval and invoices are issued to the client.
FEE PAYMENT & LEGAL DOCUMENT SUBMISSION
Payment of related fees and submission of legal documents.
ISSUE OF LETTER FOR BANK ACCOUNT & AGREEMENT
Free zone to issue a letter allowing the FZE/FZCO entity to open a bank account & deposit capital (only applicable for FZE/FZCO).
Free zone to issue lease agreement.
SIGN AGREEMENT & FZE/FZCO TO SUBMIT SHARE CAPITAL LETTER
Client signs lease agreement and returns to freezone along with bank share capital letter.
Registration documents & licence issued.
Free Zones in the UAE:
Abu Dhabi Airport Free Zone (ADAFZ)
Higher Corporation for Specialized Economic Zones (HCSEZ)
Industrial City of Abu Dhabi (ICAD 1 и ICAD 2)
Khalifa Port and Industrial Zone (KPIZ)
twofour54 (Two Four Fifty Four / 54) media and production free zone
Dubai Airport Free Zone (DAFZ)
Dubai Car and Automotive City Free Zone (DUCAMZ)
Dubai Flower Center Free Zone – в Дубайском аэропорту
Dubai Gold and Diamond Park
Dubai Health Care City (DHCC)
Dubai Industrial City (DIC)
Dubai International Financial Centre (DIFC)
Dubai Internet City (DIC)
Dubai Knowledge Village (KV)
Dubai Media City
Dubai Multi Commodities Centre (DMCC)
Dubai Gold and Commodities Exchange (DGCX)
Dubai Silicon Oasis
Dubai Technology and Media Free Zone (TECOM) – включает DIC, DMC, DKV
Economic Zones World (EZW) – включает Techno Park, Dubai Auto Zone, Jafza International, JAFZ
Jebel Ali Free Zone (JAFZ)
Hamriyah Free Zone
Sharjah Airport International Free Zone (SAIF)
Ajman Free Zone (AFZ)
Fujairah Free Zone (FFZ)
Fujairah Creative City
RAK Free Trade Zone (RAKFTZ или RAK FTZ)
RAK Investment Authority Free Zone (RAKIA FZ)
Ras Al Khaimah Media Free Zone (RAKMFZ) – RAK Media City
Umm Al Qaiwain
Ahmed Bin Rashid Free Zone (ABRFZ)
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