As more and more companies look to the UAE as their first foray into the Middle East and emirates look to make themselves more attractive to outside investment, the number of options for company set up in the UAE continues to grow. New free zones are being built and expected this year for the first time is 100% foreign ownership in some sectors.
There are two main options for companies in the UAE, a limited liability company that requires a local sponsor or a free zone company that allows 100% foreign ownership.
Limited Liability Company (LLC)
The main reasons companies choose an LLC is flexibility to undertake business in any part of the UAE and with local and government departments; no limit on the number of visas they can take (although this still depends on the size of the office taken); large number of office spaces in mainland Dubai; more options for business activities.
Companies can take one of three main licensing options, a professional licence for activities such as the provision of non physical services e.g. a management consultancy; a commercial license for the provision of physical services or trading activities such as a retail store; and a branch or representative office using a local service agent.
Free Zone Company
There are multiple free zones across the UAE including; DMCC, D3, Jebel Ali and DTWC in Dubai; Abu Dhabi Global Market, Masdar City and Twofour54 in Abu Dhabi; Fujairah Creative City; Ajman Free Zone and UAQ Free Trade Zone.
Each free zone has strategic placement and specializes in particular industries. For example in Dubai, D3 is the design district and Jebel Ali has a port so deals with logistics and shipping. In Abu Dhabi, Twofour54 is for Media companies and Fujairah Creative City provides for companies working in media, events, consulting, music, entertainment, design, tech, communication and marketing.
Companies looking to set up in a freezone do so for multiple reasons including; 100% foreign ownership; 100% repatriation of capital and profits; no corporate tax; no personal income tax; no import/export tax; easy start-up and licensing procedures; no need to know a UAE national to partner with.
Each type of licence has its own benefits and companies need to look at a long term plan before deciding which one is right for them. Below we can see the main differences between the two company set up methods.
|Can do business in the mainland and free zones, as well as outside of the UAE. This applies to professional and commercial licenses.||Can do business within the same free zone or outside of the UAE.|
|Must have a UAE national either as a local partner or a local service agent.|
In commercial LLC structure: UAE national has 51% ownership and expat has 49%.
In professional LLC structure: expatriate has 100% ownership and has local service agent.
|100% ownership by the expatriate.|
|Every mainland office requires a minimum of 200 sq ft to be leased out on an annual basis before DED will issue a license.||Free zone licenses can be issued with or without a physical space. Free zone businesses are able to utilize flexi desks and smart offices.|
|There is no limitation for visas for mainland companies. Mainland businesses are issued an electronic quota of visas from Ministry of Labour (MoL) and as office space increases so does the number of visas available.||Generally, free zone licenses on the smart office package receive 2 visas, however, some free zones offer 3-6 visas. If a free zone business requires more visas then a warehouse or physical office space must be leased to avail more visas.|
|The time required to set up your business depends on your local partner, but can take anywhere from 3-6 weeks.||The time required to set up the business varies from free zone to free zone, but can take anywhere from 3-6 weeks.|