Sharjah, the third largest emirate in the UAE, has emerged as a prime destination for entrepreneurs to set up their businesses. With 33 industrial zones and 7 free zones, Sharjah accounts for nearly one-third of UAE’s factories. The government’s focus on economic diversification, coupled with pro-investor regulations, enables business growth in Sharjah. In this blog, we explore why a business setup in Sharjah is an ideal choice, and provide a step-by-step guide on how to set up a business in Sharjah.
Why Choose Sharjah for Your Business Setup?
A business setup in Sharjah offers several benefits that make it an ideal destination to set up your business in the UAE. These benefits include tax incentives, strong support for FDI, strategic location, and a business-friendly environment.
Tax Incentives
Sharjah’s tax system falls under the broader UAE framework. This framework allows it to offer:
- 0% tax on personal income
- 9% corporate tax (one of the lowest globally)
Strong Support for FDI
A business setup in Sharjah comes with a stable and supportive regulatory environment to attract foreign investments. The reforms and policies, such as the Golden Visa, the New Companies Law, and many more, attract and aid foreign investors.
Strategic Location
Like the other emirates, Sharjah is well connected to the global markets in the East and the West via the Sharjah International Airport. It is the only emirate in the UAE with seaports in both the Arabian Gulf and the Gulf of Oman. The upcoming Etihad Rail project will ensure connectivity for inland areas to Sharjah’s major ports, improving logistical connectivity within Sharjah.
Pro-Investor Regulations
The Sharjah Economic Development Department (SEDD) has focused on easing business setup through new offerings, such as adding reservations to licenses and adding fingerprints of all parties in electronic licensing.
Step-by-Step Guide to Set up a Business in Sharjah
1. Decide the Nature of Your Business Activity
To establish a business setup in Sharjah, you must first choose the area in which your business will operate. This determines the type of license you apply for. The major categories of business activities for which you can get a license are:
- Occupational
- Tourism
- Industrial
- Commercial
- Agricultural
- Professional
2. Choose the Right Jurisdiction
Next, select the appropriate jurisdiction to incorporate your business. This determines the nature of the business entity you set up. The major types are:
- Mainland Companies
A company of this kind is situated in the UAE mainland and is registered as an onshore company with the respective Department of Economic Development (DED). If you set up a mainland company, you can benefit from:
- Access to the entire UAE market without restrictions
- Low setup costs
- No minimum capital requirement
- Free Zone Companies
A free zone company is incorporated in any of Sharjah’s free zones. It does not have access to the Sharjah mainland. If you set up a free zone company, you can benefit from:
- 100% foreign ownership
- 0% corporate tax
- No import/export restrictions
- 100% repatriation of capital and profits
Free Zones in Sharjah
There are 7 free zones in Sharjah, which accommodate a specific business category (ex: Media) or are mixed-use. If you choose to set up your business in a free zone in Sharjah, your options are:
- Sharjah Publishing City
- Hamriyah Free Zone
- Sharjah Media City - Shams
- Sharjah Airport International Free Zone
- The Sharjah Research, Technology, and Innovation Park
- Sharjah Oasis for Technology and Innovation
- Sharjah Healthcare City
- Offshore Companies
An offshore company is incorporated in one jurisdiction while its operations are carried out in another jurisdiction. In other words, the company may be incorporated in Sharjah (mainland or free zone) but operates outside of Sharjah. Such a company is required to be compliant with the business guidelines for companies in Sharjah.
If you want to understand more about the differences between mainland and free zone companies, you can refer to our blog on the topic.
3. Identify the Appropriate Legal Structure for Your Business
Now, you must choose a suitable legal structure for your business. This choice will decide the minimum capital required, the extent of the liability of owners, and the laws and regulations you must comply with.
In Sharjah’s mainland, the permitted legal structures include:
- Sole Establishment
- Branch of a GCC company
- Civil Company
- Branch of a local company
- Limited liability company
- Holding company
- Public joint stock company
- Representative office of a foreign company
- Private joint stock 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
4. Register Your Trade Name
Choose a unique trade name for your business. The chosen trade name must:
- Contain an abbreviated suffix denoting the legal structure
- Not be offensive to the general public
- Not be already registered by another company
- Be compatible with the nature of business
You can search for the availability of the chosen trade name on the Sharjah Economic Department (SEDD) app/website. Once registered, you have to renew the trade certificates periodically.
5. Apply for Initial Approval
Apply for initial approval from the UAE government by submitting the required documents. The government then issues a ‘No Objection’ certificate to allow you to establish your business in Sharjah. After this, you may apply for a business license.
The general list of documents required for initial approval are:
- Application form
- Identity proof of 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 2 years can be provided
- For an individual, a bank statement can be provided
- Notarized and original registry identification code of manager/director
6. Prepare the Required Documents
Prepare additional documents required to apply for a business license. These include:
Memorandum of Association (MOA)
A MOA is required if the legal structure of your business is a civil company, public/private shareholding company, or limited liability company.
Local Service Agreement (LSA)
An LSA is required if you are running the business as a sole proprietor.
7. Obtain Your License
Submit the MOA/LSA along with the documents provided during initial approval to obtain your license. You can apply for a license and pay the fees through the Basher platform online or offline by visiting the offices concerned in Sharjah.
In the 2024 Sharjah Investment Forum, Sharjah, in collaboration with Microsoft, launched the world’s first AI technology to issue business licenses. This reduces the time to establish your business post-document submission from 15 minutes to less than 5 minutes.
Costs of Setting Up a Business in Sharjah
Setting up and running a business in Sharjah involves both incorporation and operational costs.
Incorporation Costs
These costs are incurred before you start your business operations.
- Fees paid to obtain a business license
- Employment visa costs
- Bank account opening costs
- Renewal costs (business license, visa)
Operational Costs
These costs are incurred after you start your business operations.
- Rent/lease payments
- Employee compensation
- Maintenance costs
These costs vary with the size of the company and the area of business operations.
Conclusion
Carefully consider various factors such as your business activity, objectives, capital constraints, and customer base before deciding to go for a business setup in Sharjah. To make an informed decision and get assistance in the incorporation process, consider choosing a trusted expert, like Commenda.
Key Takeaways
- Strategic Advantage: Sharjah offers unique benefits for business setup, including tax incentives, strong FDI support, and a strategic location with excellent connectivity.
- Flexible Options: You can choose between mainland, free zone, or offshore company setups—each has its distinct advantages.
- Streamlined Process: Sharjah provides a streamlined process for business setup, from choosing a business activity to obtaining a license, with recent AI advancements significantly reducing processing time.
Viren Mathias
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