Investors and talented independent professionals globally are increasingly interested in business opportunities in Abu Dhabi and the UAE. The city has a lot to offer businesses, from its prime location to its many business incentives. As one of the country’s most prominent emirates, Abu Dhabi is quickly becoming a hub for companies in various industries interested in setting up a business in the UAE. Today, we will tell you everything you need to know about business setup in Abu Dhabi step by step.
There are plenty of compelling reasons to start a business in Abu Dhabi. The emirate is quickly establishing itself as a business-friendly environment with many entrepreneurial opportunities.
In particular, there are two vital beneficial aspects of business setup in Abu Dhabi. First, you will benefit from the incredibly business-friendly environment, taxation and ownership policies of the UAE. You will also enjoy the specific benefits and excellent services offered by the Emirate of Abu Dhabi. Let’s take a closer look at both.
In addition to its excellent strategic location, the UAE also offers other advantages for businesses, such as
- Investor-friendly policies: For several years, the UAE government has been promoting several investment policies to make it easy for foreign investors to settle and start businesses in the UAE. Some of those policies are:
- 100% business ownership
- No restrictions on foreign currency transactions
- Full repatriation of profit and investment amount
- Adjustment of weekdays to match the international business days
- Lower taxes: Investors and startups have always considered the UAE as one of the global tax havens. Historically, the UAE has not charged any personal or corporate income tax. Although there is a planned 9% corporate taxation starting from January 2023, it is only applicable for a net profit exceeding AED 375,000, which will keep many startups and small businesses out of the tax bracket.
- Excellent infrastructures: The UAE government has focused on building world-class infrastructures for several years. Two of the world’s best airlines, Etihad and Emirates, are based in Abu Dhabi and Dubai. The two emirates also boast the world’s busiest airports in terms of international passenger traffic. In addition, the UAE has built a state-of-the-art healthcare system with excellent hospitals and clinics.
- One-stop services: The UAE’s business centers across the country provide all the necessary services for business setup, from company registration to licensing and visa services. Also, the UAE’s economic free zones let you easily access many essential business services such as office space, banking facilities, tax registration, and warehouses.
In addition to the excellent facilities you will find when setting up and operating a business in UAE, let’s look at some compelling reasons to choose Adu Dhabi as your business location out of the seven UAE Emirates.
- Largest Emirate: Abu Dhabi is the largest of the seven emirates that make up the UAE. It covers an area of 67,340 square kilometers, about 84% of the UAE’s total area. Abu Dhabi, Al Ain, and Al Dharfa are the three main regions of the Emirate. Abu Dhabi also contributes approximately 60% of the UAE’s total GDP.
- Vast population: The emirate has more than 1.5 million people, about 15% of the UAE’s total population. Having a large population gives your business a larger potential customer base.
- Ease of business setup: The Abu Dhabi Department of Economic Development (ADDED) is the government body responsible for issuing business licences and regulating commercial activities in the Emirate. The authority has taken many steps to streamline the business establishment process in the region, such as approval of instant licences and digitisation of the entire application process.
- Free zones: Abu Dhabi is home to several free zones, which offer 100% foreign ownership, 0% corporate and personal tax, and relaxed labour laws. Free zones are designated areas where businesses can operate with minimal government restrictions.
Now that we know the pros of setting up a business in the UAE let’s discuss how to proceed with your business setup in Abu Dhabi.
So, you have decided to start a business in Abu Dhabi. Excellent! You must address some requirements before starting your business registration or licensing process at Abu Dhabi.
The first step is to figure out which type of business entity is the best fit for your company. Then you’ll need to find the appropriate licence type for your desired business.
This is probably one of the most important decisions you will make for your business. The type of business entity you choose will determine the legal structure of your company, how it is taxed, and the level of liability protection for its owners.
Some of the most common business entities in Abu Dhabi are:
- Sole Proprietorship
- Limited Liability Company (LLC)
- Civil Company
- Branch Office of a local company, GCC Company, or foreign company
- Joint Stock Company (Public and Private)
- Holding company
You can also set up a Representative Office, a business entity allowing foreign companies to carry out activities in Abu Dhabi without engaging in commercial trade.
The documentation and approvals required for business setup in Abu Dhabi depend on the business activity and chosen entity type.
Note that in many cases, you may require a business plan for your establishment in Abu Dhabi. The business plan must also correlate with your preferred business entity type.
For instance, if you want to open a limited liability company, you must provide an ownership structure within your business plan and demonstrate how you will manage the financing.
The next step is determining the business activity and type of licence required for your company. The Department of Economic Development (DED) in Abu Dhabi issues different kinds of economic licences for various business activities.
A few examples are
- Freelancer Licence: You can work as an independent consultant related to your area of expertise.
- Abu Dhabi Trader Licence: The trader licence allows you to buy and sell goods within Abu Dhabi. The licence authorises you to trade any legal goods.
- Tech Licence: If your business is related to the tech industry, the Abu Dhabi Tech Startup Commercial licence lets you set up a tech business in no time and enjoy the fee incentives for being a priority sector for commercialisation. If you qualify for the incentives, you can directly apply for a tech licence from a specialised government project called Hub74 Incentive Programme.
- Rowad Industrial or Industrial Licence: If your planned business activity involves industrial activities, large-scale manufacturing, or cargo handling, you can apply for an industrial licence. Abu Dhabi’s Industrial Development Bureau (IDB) oversees industrial licence issuance. The industrial licence or Rowad Industrial will allow the establishment of large-scale industrial facilities in a designated industrial area.
- eCommerce Services: The economic development and regulatory authority of Abu Dhabi requires any business to apply for an eCommerce service licence in addition to their economic licence if the business wants to sell or offer any of their products or services through website or social media channels. So this acts like an added functionality over your existing economic licence.
- Abu Dhabi Virtual Licence: If you live outside UAE and still want to start a business in Abu Dhabi, the Abu Dhabi government lets you have a virtual business licence. The licence will allow you to perform several business and trading activities without maintaining a physical office in Abu Dhabi.
Fortunately, the licensing process does not take much time, as Abu Dhabi has introduced instant licensing for most of its economic licence types. When you have all the required documents, you can obtain your instant licence in Abu Dhabi in less than six minutes.
You can choose one of the several Abu Dhabi free zones to establish your business venture or set up your business on the mainland. The type of business activity, company ownership, and your target market will all play a role in deciding whether a mainland or free zone company is the right option for you.
There are pros and cons to both options. For instance, the UAE government has decided to keep the Abu Dhabi or Dubai free zone corporate rate to 0% when the new tax regime comes into effect in January 2023. However, the mainland business will have to pay a 9% corporate tax for their net earnings exceeding AED 375,000.
Despite the tax benefit you get at the free zones, you should keep in mind that a business licence in a free zone will cost much higher compared to the Abu Dhabi mainland, similar to the Dubai mainland company formation.
You must carefully evaluate all the factors to decide which option is best for your business. Assistance from a professional business setup consultant in Abu Dhabi will help you make an informed decision.
When you are sure about your business activity, required licensing type, and location choice, it’s time to start the incorporation process for your business in Abu Dhabi.
The Abu Dhabi Department of Economic Development (ADDED) has introduced a self-service portal known as TAMM, where you can apply for an economic licence, submit all the required documents, and pay the required fees online.
You can either start the application from the TAMM website or visit one of the physical service centres of TAMM, located in the ADDED building, Al Forsan, Al Ain City, Al Dharfa region, and a few other locations during business hours.
For more details on how to start a business in Abu Dhabi, you may also consult the government-run Abu Dhabi Investment office website.
Next, you will have to indicate your business category. Each of the categories will automatically populate a list of sub-categories. Currently, the business categories are services, trading, industry, professional, craft, technology, tourism, agriculture, contracting, and oil & gas.
After selecting your business category, the system automatically generates a customised application checklist and required fees for your business or trading licence.
If your business requires additional approval from concerned authorities, you must contact them directly to obtain the approval documents. You may also need to prepare other documents like a business plan and memorandum of association (MoA) for your business. Additionally, you will require valid visa and identity documents for all business shareholders and the local contact person.
In the final step, you can pay the licensing fees directly from the TAMM portal. Depending on the licence type, receiving your licence may take a few minutes to two business days.
The cost of setting up a business in Abu Dhabi will depend on the type of business you want to set up, its size, and the number of employees you plan to hire. Some of the costs you should consider include:
- Economic licence fees: AED 790 for most business activity types (include up to 6 business activities, each additional activity will cost AED 100)
- MoA attestation fees: AED 50
- Licence issuance fees: AED 50
- Establishment Card fees: AED 315
- Chamber fees: AED 50 (if applicable)
- Free zone fees:
- Khalifa Industrial Zone Abu Dhabi (KIZAD): Starting from AED 11,000
- Abu Dhabi Global Market free zone: Starting from AED 16,000
The above fees are official administrative fees and do not include several other professional fees often required when setting up a business, such as legal, accounting, and visa processing fees.
In addition, you must also consider the cost of space rental and hiring employees. Depending on your business type, you may also have to secure additional approvals from relevant authorities, such as health authorities or municipality offices, which will increase your cost.
Overall, the minimum cost of a business setup in Abu Dhabi may start from AED 25,000. Effective management and documentation during the application process of launching your business in the UAE will help you minimise the cost in the long run and get the best value for money.
Abu Dhabi is an excellent location for businesses interested in expanding their operations to the UAE. The emirate offers a variety of benefits to businesses, including a prime location, ample business opportunities, and attractive business incentives.
Virtuzone has a team of expert consultants who can help you with every step of your business setup in Abu Dhabi, from business formation and licensing to comprehensive VAT and tax consultation. Contact us today to get started!