Registering an Import-Export Business in the UAE: A Step by Step Guide
The UAE is a major and strategic trading partner for the USA and represents both a market in itself and a gateway to the wider Middle East, for importing goods from the USA. We will take a look at how to set up and register an import/export company in the UAE, what Free Zones are, and how you could benefit from them. This guide is a stepping stone to understanding the processes involved, though you should always consult government sources, or specialized import brokers to make sure you have access to the current guidance.
How to Register an Import/Export Business in the UAE
Foreign ownership is usually limited to 49%, with the remaining 51% to be held by UAE nationals, when establishing a local company or any commercial entity within the UAE.
Under the Commercial Companies Law (CCL), there are five forms of recognized commercial entity. They include:
- general partnership
- limited partnership
- public joint-stock company
- limited liability company (LLC)
- private joint-stock company
When registering a business, whether a local or a foreigner, you need to decide whether you need to register in a ‘Free Zone’ or on the ‘Mainland’ UAE. Basically, there are two factors that come into play here. If you’re a foreigner, you will be unable to register any business without a majority shareholder who is a local in the mainland. This restriction is entirely lifted in a Free Zone.
Secondly, If you are UAE national, or have a UAE national partner, the main benefit of registering an import business in a Free Zone, is customs-free transit onto other countries in the region. If you’re importing purely into the UAE itself for resale, then you may find a mainland business more cost-effective. We will explore the basic steps for both routes.
UAE Free Zones
The Free Zones in the UAE are within the territory of UAE geographically but are considered outside UAE Customs. For import/export business between a Free Zone and a foreign company, the Free Zones are exempted from customs duties while shipping your goods to the UAE. Today there are numerous free zones across the UAE.
These Free Zones offer a wide variety of benefits to businesses and a degree of flexibility, including:
- Up to 100% foreign ownership through branches, single or multiple shareholder companies – known as Free Zone Enterprises (FZEs), Free Zone Companies (FZCOs) or Free Zone Limited Liability Companies (FZ-LLC)
- no local agent required for branch offices of foreign companies
- no customs duties on imports and re-exports (except re-exports into onshore UAE)
- special assistance in getting work permits for staff
- guaranteed exemptions from corporate taxes
The following is a guide to setting up one of these Free Zone businesses.
There is a list of free zones in the UAE at the bottom of this article – check the website of each that you are considering using, for the most up to date regulations and guidance to setting up a business.
The biggest difference in setting up a business in the mainland or in a free zone is in the ownership regulations. For the mainland, if you are a foreigner, you will need an Emirati (UAE national) to be your local sponsor.
This means the local sponsor will own 51% of the business shares, while the remaining 49% ownership of the shares rests with the ex-pat. These shareholders may not invest in your company but will still be a legal owner of majority shares. However, the expatriate partner can be the managing partner of the company and hold 100% operational powers.
Sponsors will not be involved with the day to day activities of the company. In the case of professional firm formation, the ex-pat is allowed to own the firm 100%, but a sponsor – officially called local service agent (LSA) is still a requirement. You can associate with a sponsor – for both local shareholder and local service agent on a mutually-agreed annual fee.
If you are an Emirati, the above will not apply to you, and you are free to register your business in your name or in partnership.
Websites of Local Economic Authorities
- Abu Dhabi – Department of Economic Development
- Dubai – Dubai Economy
- Sharjah – Economic Development Department
- Ajman – Department of Economic Development
- Umm Al Quwain – Department of Economic Development
- Ras Al Khaimah – Department of Economic Development
- Fujairah – Fujairah Municipality
- The Pathway to Invest in The UAE mainland – Ministry of Economy
- Starting and managing business – Abu Dhabi government portal
- Start your business in Dubai – Dubai Economy
- Doing business in Fujairah – Fujairah Government
- Process and requirements to start a business – Sharjah Investment and Development Authority
Broadly speaking, the below steps are the same, whether registering within a Free Zone, or within the UAE mainland.
1. Determine Your Type of Legal Entity
The first step to setting up a company registered is to determine what type of entity you are going to create. While there are fewer restrictions on company structure for Emiratis setting up a business on the mainland, there are only two options within a Free Zone.
There are two types of entities you can set up in a Free Zone;
- Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZ Co.)
- Free Zone Establishment (FZE)
The difference between these business types is in the number of shareholders and whether the shareholder is a local person or any other person. Each Free Zone has its own governing bodies, which you should consult in regard to the type of business you would like to start.
The Dubai Multi Commodities Centre (DMCC) allows forming a limited liability company, which could be a newly formed entity with single or multiple shareholders or a wholly-owned subsidiary of a local or foreign company.
Capital requirements depend on the Free Zone you are looking to start your business in, and fees are mentioned below.
2. Choose a Trading Name
While you are deciding upon the type of legal entity your business should take, you should choose a trading name.
In most cases, you should check either with the respective free zone authority or the Department of Economic Development about the permitted trade names and whether the intended name has already been registered.
In general, for the DED to approve the proposed trade name, the key requirements are that the trade name:
- must not violate the public morals or the public order of the country
- must be followed by the legal form of the company, for example (LLC, FZE, DMCC, etc.)
- has not been previously registered
- is compatible with the required type of activity and legal status
- should not contain names of any religion, or governing authority, nor names or logos of any external bodies.
3. Apply for a Business License
The type of business license you will need to apply for depends on the primary activity of your business, and the zone in which you set up. Check with the respective Free Zone or the respective DED. Most import companies will find that the UAE has a very streamlined system for helping with imports. For import/export business between a Free Zone and a foreign company, the Free Zones are exempted from customs duties while shipping your goods to the UAE. This makes it particularly easy to use as a central hub, before shipping goods to other countries in the area.
The Dubai Multi Commodities Centre (DMCC) allows establishing ‘single-family offices’. These have the standard FZ LLC structure. They can provide services to a family member, family business, family entity (corporate structure), or family trust. It can be owned by one or more individuals or a corporate entity where all shareholders are of the same family. This setup may benefit UAE-national family business startups.
4. Registering an Office Space
A part of registering a company is the address and contact details you will be using. If you’re operating a base in the UAE, you need an address. Now is the time to look at office space within the trade zones.
Depending on what zone you’re looking to base in, there are plenty of options for business space – examples:
- You can either buy or lease office spaces in Free Zones. Office requirements depend on the number of employees and the volume of business activity of your company.
- In DMCC, you can choose from a flexi desk of 20-30 sq. m., a flexi office of 200-265 sq. m., or offices running through multiple floors totaling up to 2,000 sq. m. each.
- In Dubai Airport Free Zone, you can choose between ‘Office Packages’, ‘Smart Desk Office Packages’ and ‘Executive Office Packages’.
- Hamriyah Free Zone Authority provides over 100 executive offices suites ranging in size from 15 m2 to 42 m2 with conferencing and internet facilities.
- No restrictions on office location within the mainland for Emiratis.
Additionally, the Dubai Multi Commodities Centre (DMCC) lets you set up’ single-family offices,’ with the standard FZ LLC structure. The purpose of these offices is to provide services to family members, businesses, entities (corporate structures), or trusts. Ownership can be by individuals or a corporate entity whose shareholders belong to the same family.
5. Pre-Approvals, Registration, and Fees
Companies established in Free Zones are governed by the rules of the respective Free Zones. Companies established within the mainland are governed by the rules of the local authority. To get the necessary approvals, you need to apply with the correct documents. Although the list of documents may change between zone, and business scale, here we have a general guideline of documents you are likely to require.
A. Initial Approval
For this step, you may be asked for a combination of all of the below.
- Completed application form
- Business plan
- Copy of existing trade license/registration certificate (if you are an existing company, applicable for a local company only)
- Colored passport copies of the company’s shareholder/s and the appointed Manager/Director for the new company
- Specimen signature of the company’s shareholder/s and the appointed Manager/Director for the new company
- Two years’ audited financial reports for a corporate entity or certificate of reference from a personal bank of the individual shareholder
- NOC from current sponsor (for individuals)
- Unit title deed
- Letter of Intent
- Registry Identification Code Form (RIC) for Manager/Director (Original and notarized)
After getting initial approval, you need to pay registration fees and license fees. The fees depend on the type of license required and are listed below. At this stage, you would need to submit:
- A completed application for registration
- Board Resolution appointing Manager/Director (Notarised and attested)
- Power of Attorney given to Manager/Director (Notarised and attested)
- Memorandum and Articles of Association (Notarised and attested)
- Specimen signature of Manager/Director (Notarised and attested)
- Passport-size photo of Manager/Director against a white background
- Share capital information
There is no minimum capital requirement at twofour54 Abu Dhabi.
In KIZAD, you can form an LLC for which the minimum paid-up capital should be AED 150,000.
In Dubai Airport Free Zone, you can form an FZ Co. with a minimum share capital of AED 1000. Each share should be in the denomination of AED 1000.
In DMCC, the minimum share capital for forming a free zone company is AED 50,000 per company and AED 10,000 per shareholder. For a company to be issued a General Trading Licence, it should have a minimum of AED 1 million share capital.
In Hamriya Free Zone, you can form an FZE with a share capital of AED 150,000.
Find the most up-to-date info about fees and other requirements directly from the UAE government here.
D. Licensing and Visa Processing
When all the above has been completed, the following will happen;
- Lease agreements will be prepared by the authority
- Then a trade license will be issued
- Visa processing will start, where necessary for owners and employees
These are the major steps to registering a business within the UAE – though we do recommend that you use a professional service to help you with this and to ensure you comply fully with the regulations. A full list of Free Zones and links to their homepages can be found below.
- Find an insurance company to provide health insurance coverage for your employees – Insurance Authority
- Register in the supplier’s register to do business with UAE Federal Government entities – Ministry of Finance
- Find a list of banks to open a company bank account in the UAE – Central Bank of the UAE
6. Opening a Bank Account
You can use any local or foreign bank operating in the United Arab Emirates for your personal or company bank accounts. You must use the International Bank Account Number (IBAN) in all transactions and wire transfers from and to the UAE.
- Passport copy
- UAE visa copy
- Emirates ID copy
- Salary certificate or NOC letter from the sponsor
- Trade license copy (for a company)
- Additional requirements may apply on a case to case basis
List of Free Zones in UAE
Free Zones in Dubai
List of Free Zones in Abu Dhabi
List of Free Zones Fujairah
Free Zones Ras al Khaimah
Free Zones in Sharjah
Other Free Zones in the UAE
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