United Arab Emirates Entity Setup

An LLC in the UAE is a privately held small business entity and considered an independent legal entity on incorporation. It requires a minimum of two and a maximum of fifty shareholders. Unlike public joint stock companies, LLCs cannot publicly trade their shares. An LLC must have at least one director and one manager, who can be the same person.

An LLC in the UAE is a privately held small business entity and considered an independent legal entity on incorporation. It requires a minimum of two and a maximum of fifty shareholders. Unlike public joint stock companies, LLCs cannot publicly trade their shares. An LLC must have at least one director and one manager, who can be the same person.

These entities are set up in specific jurisdictions under the UAE’s offshore company laws. A legal corporate entity created with the goal of conducting business outside of both its registration jurisdiction and the place of its ultimate ownership is known as an offshore company.

Foreign companies engaged in manufacturing and trading activities abroad can set up branch offices in the UAE. Branch offices are not allowed to carry out manufacturing activities on their own but can subcontract those to a local manufacturer. Before commencing operations, the branch office requires approval from the UAE’s Ministry of Economy. Commercial activities of any nature are not allowed for a branch office.

A new business entity created through a partnership between foreign and UAE investors, in which the partners jointly share the profits, losses, management responsibilities, and operation expenses. The advantages of joint ventures are that the foreign company can utilize the well-established contact network, distribution, marketing channels, and the available financial resources of the UAE partner. A JV also offers the investors to jointly manage the risks involved with the new business and limit their individual exposure by sharing the liabilities.

The UAE government abolished the requirement for a minimum paid-up capital for LLCs in 2020. However, the Ministry of Economy may require a specific amount of capital depending on the nature of the business.

Foreign companies can set up wholly owned subsidiaries in sectors where 100% foreign ownership is permitted under the UAE’s foreign investment law. Once a company has been duly registered and incorporated as a UAE company, it is subject to UAE laws and regulations as applicable to other domestic UAE companies.

A local service agent is required to represent the branch office or subsidiary in the UAE. The agent must be a UAE national or a company wholly owned by UAE nationals.

UAE corporations must have at least two officers, one executive director and one secretary.

A local office or a virtual office capable of accepting letters/post is mandatory before incorporation. The local office address acts as the registered office of the entity in the incorporation documents.

A company name has to conform to the UAE’s strict titling conventions. Otherwise, the relevant economic department is not going to approve your company name. The local Department of Economic Development registers the trade name, while the Ministry of Economy registers the trademark.

Registering a company name requires a company to get preliminary approvals from the Licensing Section of the Dubai Department of Economic Development (DED). For example, the DED needs to approve the company’s activities, trade name, and various ownership identities. Afterwards, the incorporating agency can check the availability of the name, reserve the name, and even make payment to reserve the name online at the DED’s website.

Depending on the legal form of a business, you will need to fill in and sign a memorandum of association (MoA) or a local service agent agreement (LSA). Only UAE-based law firms, courts, and notary public are authorized to prepare and attest to MoAs and agreements.

UAE corporations can expect the entire process to take from 8 – 20 days. The completion time depends on the approval the corporate name, as well as, how accurately the applicant completes the registration documents.

Foreign investors can now collect the business license from the relevant Department of Economic Development service centers or secure an online electronic copy. 

VAT is a consumption tax that is charged on goods and services in the UAE. It was introduced in 2018 and has a standard rate of 5%. VAT registration is mandatory for businesses that have a taxable turnover of AED 375,000 or more in the UAE. Businesses that do not meet this threshold can also voluntarily register for VAT. Failure to register for VAT can result in penalties and fines.

According to Article 6 of the Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, known as the ‘UAE Labour Law’, it is illegal for a person to work in the UAE without a valid work permit issued according to the procedures set out by Ministry of Human Resources and Emiratisation (MoHRE).

FTA E-Services registration is mandatory for businesses that are registered for VAT in the UAE. The FTA E-Services portal is used to file VAT returns, make VAT payments, and manage VAT transactions. Failure to register for FTA E-Services can result in penalties and fines.

Auditors must be appointed if a corporation is joint stock or a limited liability. UAE corporate entities, in turn, must file their audited financial statements with the Ministry of Economy, and have their trade licenses renewed (if applicable).

The final step is to decide the bank to work with. UAE has a highly developed banking infrastructure that startups and hyper growth companies alike benefit from. The process of establishing a bank account can be an unexpectedly long process that many companies do not sufficiently plan for. This can include extensive application documents, notarized director documents, KYC documentation and in person signatures. Common local banks in UAE include First Abu Dhabi Bank (FAB), Emirates NBD, Dubai Islamic Bank (DIB), Abu Dhabi Commercial Bank (ADCB) and Mashreq Bank.