The United Arab Emirates encompasses a thriving business environment that attracts worldwide investors and entrepreneurs. Its favorable tax regime, entrepreneurial climate, and strategic location have made it one of the top business destinations. However, it also comes with its unique set of rules and regulations that a start-up should adhere to achieve success.
If you want to set up your start-up in the UAE, we’ll walk you through the important legal considerations. So, shed your light on the specific legal aspects of the business to establish your company and unlock new fruitful opportunities.
Fulfill 10 Legal Requirements to Successful Start A Business In The UAE
By careful implementation of the following guidelines, you’ll make your start-up prosper and boost your ROI.
1. Wisely Choose Your Industry And Sector
The first step for launching your business is to choose an industry and sector. Use your attentiveness, preferences, and entrepreneurial goals to make the right decision. This step will help you determine the number of license(s) you’ll need and its requirements. For instance, some permits require additional approval from government authorities.
2. Formulate Your Legal Structure
Once you have chosen your industry and sector, the next step is to formulate your legal structure.
UAE contains different legal structures for businesses, mainly including mainland limited liability companies and free zone companies. If going for a free zone, then you’ll have two common law areas to pick: DIFC and ADGM. Study them in depth to make a mindful decision.
Most mainland activities don’t provide 100% ownership to foreigners in the United Arab Emirates. If planning to set up your company in a mainland zone, take an Emirati partner to streamline all your entrepreneurial activities. This rule may not apply to all companies running in the mainland zone. Further specific requirements will vary according to the nature of your business.
3. Select Your Location
The United Arab Emirates consists of seven emirates, each has its specific entrepreneurial requirements. Thoroughly investigate this matter and select the one that aligns with your business goals. Take all factors into account, including the cost of operation, living expenditure, the availability of skilled employees, logistics, and the distance between your target markets.
4. Create Your Business Model
Create a clear and professional business model to gain clarity on how your company will make money. It ideally explains the way a company will produce products, market, and drive sales. We recommend you go for offshore or free zone companies, they require less investment and offer higher profits. Persuasively design your business model if you’ll present it to your potential investors.
5. Register Your Company And Obtain Necessary License
Here comes the perfect time to register your company and obtain the applicable license, whether commercial industrial, or professional. The process may vary depending on your business type and legal structure. Thinking of a unique trade name for your company is the first step for registration. Apply for initial approval from the Department of Economic Development (DED) or your chosen free zone authority.
Obtain necessary permits from third parties depending on your business activity. Prepare and submit legal documents, including a Memorandum of Association (MOA) or Business Agreement, along with the applicable fee. Propose your final application to receive a Dubai Trade License or Free Zone License.
6. Follow UAE Labour And Employment Laws
You may start searching for suitable candidates and employ them to build up your team after getting a license. Understand the labor and employment laws generally practiced in the UAE, plus try your best to comply with them. Abide with the employee rights, such as visas, working hours, wages, and perks.
Key labor law considerations require you to use employment contracts with a bilingual format, including Arabic and English. Your company must provide health insurance to all your employees while running in the UAE. Additionally, compliance with the UAE Wage Protection System (WPS) is a must to ensure timely payment of employee salaries.
7. Safeguard Intellectual Property Rights
If you don’t want someone else to your logo or trademark, safeguard your intellectual property (IP) rights. It may include various legal types, such as patents, copyrights, trademarks, and trade secrets. The process to protect your intellectual property rights requires you to register your company’s trademark, logo, and additional unique elements.
Keep track of any exclusive rights or industrial designs related to your company’s products/services and protect them through copyright registration. Get the signatures of your team members or partners on non-disclosure agreements (NDAs) to safeguard your valuable secrets and confidential information.
8. Create Real Estate And Property Agreements
Acquire a suitable commercial property and ensure your business complies with the proper laws practiced in that area. Secure long-term leases and agreements that align with your operations and sign legally binding tenancy contracts. For this, you may undergo registration with local authorities and adhere to rules and regulations set forth by local communities. Obtain applicable utility connections or permits to let your start-up run in the commercial space without hindrance.
9. Acquire Financial Support And Agreement With UAE Banking Laws
Approach local banks and venture capital firms, or seek financial support through government initiatives to maintain a strong financial position. Maintaining accurate monetary records according to UAE regulations on accounting and taxation is a must.
Abide with the UAE Central Bank rules, especially the Anti-Money Laundering (AML) regulations. Comply with the United Arab Emirate’s strict due diligence requirements for foreign transactions and partnerships. You can also partner up with an experienced law firm to streamline your compliance and entrepreneur setup experience.
10. Pay Attention To The Tax Considerations
Companies in the United Arab Emirates are subjected to a certain range of taxes, such as corporate, value-added, or customs duties. Pay attention to the implications of the duties for your company and comply with the relevant ones.
You can apply for a free zone exemption if your start-up is operating in a free zone and does not deal with the UAE marketplace. Also, check whether your company can obtain a tax residence certificate to benefit from the tax treaties of the UAE. However, the offshore entities wouldn’t be able to satisfy these requirements.
Final Verdict
Starting a business in the UAE offers incredible opportunities, but it’s essential to deal with legal matters attentively. By choosing the right industry, structuring your company wisely, and complying with local laws, you can set a solid foundation for success.
Protecting your intellectual property, securing proper licenses, and paying tax obligations are all crucial steps to ensure your business thrives. Thus, carefully executing legal considerations will help your start-up avoid potential pitfalls and achieve long-term growth in this dynamic market.
