Business Setup in Abu Dhabi

Abu Dhabi, the capital of the UAE, is one of the fastest-growing economies in the Middle East region. It contributes to around 62% of the UAE’s GDP. As the economy booms, opportunities for businesses to grow and flourish are on the rise. This blog outlines the key benefits and costs of setting up a business in Abu Dhabi, along with a step-by-step guide to help you get there easily.

Benefits of Setting Up a Business in Abu Dhabi

A business setup in Abu Dhabi offers attractive benefits to entrepreneurs as it is the capital city. These include strategic location, tax incentives, ease of doing business, diverse workforce, business-friendly ecosystem, and many more.

Strategic Location

Being the capital city, Abu Dhabi is interconnected to all major cities in the UAE. Its strategic location also provides access to global markets in Europe, Asia, and Africa. Its position within the UAE and internationally thus facilitates trade. Its time zone makes it suitable for conducting business with 75 countries, allowing seamless international operations.

Tax Incentives

Abu Dhabi’s tax system falls under the broader UAE framework, offering:

• 0% tax on personal income 
• 9% corporate tax (one of the lowest globally)

Ease of Doing Business

Abu Dhabi creates a favorable business environment through supportive infrastructure and business-friendly government policies. The UAE ranks first in the Middle East region for the ease of doing business.

Diverse Workforce

Abu Dhabi’s population of around 3.8 million includes people from over 200 nationalities, providing businesses access to a diverse talent pool.

Costs of Setting Up a Business in Abu Dhabi

As a business owner, you would initially incur some costs to set up your business in Abu Dhabi. Some of these costs are one-time, while others may be recurring. The major costs you would incur include:

• License and registration fees (one-time)
• Lease/rental fees (recurring)
• Visa fees (recurring)
• Bank account opening charges (one-time)

Please remember to verify these costs with the relevant governing authority. The costs vary based on location (mainland vs free zone) and business requirements. Some locations offer a package of license, visa, and workspace, streamlining the setup process.

Streamline Your Business Setup in Abu Dhabi with Our Expert Guidance

In this section, we provide comprehensive support while you consider your business setup in Abu Dhabi. With our in-depth knowledge of local regulations, we help you navigate the many complexities step by step, saving time and resources for a successful start.

Step 1: Choose the Type of Business Activity

Verify if your chosen business activity is permitted in Abu Dhabi and a license is available. Abu Dhabi offers six types of licenses:

1. Industrial
2. Commercial
3. Professional
4. Tourism
5. Agricultural
6. Occupational

Note: Not all kind of licenses may be available in the mainland or each free zone

Step 2: Select the Right Jurisdiction

You can set up your business either in the mainland or free zones of Abu Dhabi. Each of these options comes with its own pros and cons. It’s important to take a moment to understand the differences between the two options.

Mainland

If you set up your company in the mainland, you can benefit from:

• Access to entire UAE market without restrictions
• Low setup costs
• No minimum capital requirement 

Free Zones

If you set up your company in a free zone, you can benefit from:

• 100% foreign ownership
• Dual licensing options
• Exemptions on personal and corporate tax
• No import/export restrictions
• 100% repatriation of capital and profits
• Minimum paperwork to set up

Abu Dhabi has 6 free zones—Abu Dhabi Global Market, Khalifa Economic Zone Abu Dhabi, Masdar City, Abu Dhabi Airport Free Zone, twofour54, and Industrial City of Abu Dhabi.

The nature of business activity and the core benefits you want can help you decide on the right jurisdiction to set up your operations.

Step 3: Choose the Type of Business Entity

Once you have chosen the area of business and jurisdiction, you must take an important decision about the legal structure for your business. This decision influences the minimum capital requirement, number of shareholders you can have, extent of liability burden of the owner, and number of employment visas you can obtain. Hence, you must choose a legal structure that complements your business objectives.

In the mainland, you can choose an appropriate legal structure for your business from these:

• General partnership
• Limited partnership
• Limited liability company
• Public joint stock company
• Private joint stock company
• Civil company
• Branch of local, foreign or free zone company
• Sole establishment
• Holding company

In a free zone, the legal structures permitted include:

• Free zone limited liability company
• Free zone company
• Free zone establishment
• Branch of existing local and foreign company

The legal structure offered may vary with the free zone.. 

Step 4: Apply for Initial Approval

First, you must decide on a trade name for your business. It should be succeeded by the type of legal structure acronym you have chosen. It should not be misleading, violate public morality or previously registered. The trade name certificates must be renewed post-validity.

Initial approval helps you get a green light from the Abu Dhabi emirate. It states that there is no objection to setting up your business.

If you are a foreign entrepreneur, you must also obtain the approval of the General Directorate of Residency and Foreigners’ Affairs.

The general list of documents required for initial approval are:

• Application form
• Identity proof of the company’s shareholders and directors (passport)
• Business plan
• Letter of intent
• Source of wealth-some text
  • For a corporate entity, the audited financial reports of the past two years can be provided
  • For an individual, bank statement can be provided
• Notarised and original registry identification code of manager/director
• Memorandum of Association for limited partnership, limited liability company, public joint stock company, and private joint stock company.

Some additional approvals might be needed for certain business activities.

Step 5: Get Your Business License

The next step after the initial approval is to pay the registration and license fees. The fee charged varies with the jurisdiction and the type of license. At this stage, you must submit certain documents to the registrar. These include:

• Completed registration application
• Share capital information
• Memorandum of Association and Articles of Association
• Board resolution appointing the director

Step 6: Set Up Your Operations

Having obtained your license and completed your business setup in Abu Dhabi, you can successfully start your business operations. To ensure smooth conduct of business, you must:

• Obtain your visa
• Open a bank account
• Secure an office space (if you want to operate offline)

These services are offered as a package while applying for a license by certain authorities.

If business setup in Abu Dhabi seems like a daunting task and you need assistance, Commenda offers a free consultation. Book one today. We are trusted by 250+ businesses to aid in incorporation, and we would love to help you too!

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