Free Trade Zones

Open the UAE | Industry Outlook

Open the UAE

Tom Keya, legal consultant executive Ruthberg LLC and founder of mental health platform Soulh, details how businesses can successfully expand in the UAE

Written by: Tom Keya

The United Arab Emirates is a modern economic marvel and one of the greatest success stories of the 21st century. Starting out as an unspectacular port city, Dubai has grown into one of the most attractive places in the world. More important, however, is how the openness and ease of doing business that the UAE offers has made it an economic powerhouse. With a GDP of over $400 billion and ambitious plans to grow and diversify its economy, it’s no wonder Dubai, and the UAE in general, is such an attractive prospect for businesses seeking to grow in the Middle East.

Economic opportunities and emerging markets in the UAE

With a strong economy, excellent infrastructure and transport links, the United Arab Emirates is widely regarded as a desirable place to do business.

However, like many countries, the UAE has suffered a deep recession due to the COVID-19 pandemic. This economic trajectory was largely caused by downturns in vital sectors like tourism and oil. Fortunately, tourism is slowly recovering, while oil prices are soaring. However, it is the UAE’s commitment to reducing its dependence on oil that offers companies the best opportunities for expansion.

E-commerce is an example of an industry that the UAE is trying to develop rapidly. To this end, the government has created e-commerce free zones in the Middle East and North Africa (MENA). These contain specific infrastructures, such as e-commerce logistics units, multi-client warehouses and end-to-end warehousing services like order management systems.

Similarly, the UAE has moved quickly to put in place a regulatory framework for Blockchain, crypto and DeFi businesses. This will help attract talent and companies in the sector and encourage them to settle in specially designed free zones.

Opening an office in the UAE: free trade zone or mainland?

When expanding into the UAE, one of the most important decisions – if not the most important – is whether to choose between a free trade zone (FTZ) or the mainland. Knowing the differences between the two and matching them to your business needs is crucial to avoiding challenges down the line.

Open an office in a free zone

Setting up a branch in a free zone allows foreign companies to retain 100% ownership of their business. There are more than 45 free trade zones in the United Arab Emirates, of which more than 30 are located in Dubai. Opening a business in one of the free trade zones is designed to be simple – as a way to attract foreign investment. Every free zone is different: with specific zones best suited to particular business activities. Subsequently, each free zone has different precise requirements on how to legally establish an office or branch.

Considering all this, there are several factors you need to consider when deciding on the best free trade zone to set up an office in. This includes :

• Commercial activities

• Need for physical space, ie offices, warehouses, etc.

• Number of employees: i.e. how many visas you will need to apply for

• Do you need to be near a port or airport?

Once you have chosen the right free trade zone, the process of opening a business is as follows:

• Choose a legal structure for the business

In a free zone, your company can be:

– Free Zone Limited Liability or Free Zone Company

– Establishment of free zone

The main difference is the number of shareholders. But not all free zones allow both structures, so study each structure carefully.

• Select a business name

Your business name should meet a few requirements, such as not featuring “Dubai” or “United Arab Emirates” and not referencing any religious names or iconography.

• Apply for a business license

Depending on your planned business activity and business offering, you may need to apply for multiple business licenses.

• Choose office space

The details will depend on the number of employees you want to hire and the business activities you offer.

• Register your business and get licenses

Submit all forms, licenses, financial reports, legal documents, etc. relevant documents and pay all relevant registration and license fees to the competent authorities of the free trade area.

• Start the visa application process for your employees

Now that your business is registered, now is the time to start operating your staff.

Opening of an office in the mainland of Dubai

The process of opening a business in mainland Dubai shares many of the same administrative steps as opening a business in a free zone. The main difference is having to find a local Emirati sponsor. Additionally, your Emirati partner will need to retain a 51% stake in your business.

However, if it is a significant additional step that transforms all of your company’s shareholders, it has some advantages. First, you will have fewer restrictions on how and where you operate; you will not be bound by the regulations of your free zone and the licenses you hold. Second, there is no limit to the number of personnel visas you can apply for.

Life Considerations for Staff Relocating to the UAE

Once the documents for your business have been submitted and approved, it is time to obtain visas for your staff. If you open a business in a free zone, you will be allocated a quota of work visas for your employees. This quota depends on the free zone, the size of your office space and your registered business activities.

First, each employee must apply for an employment entry visa. When they have it, they can apply for an Emirates ID card (Resident ID card), then they will receive their residency visa and work permit.

However, in addition to the visa application process, every employee coming to work in the UAE will have to go through a short cultural assimilation process. For your staff to be successful in the UAE, they must learn and respect cultural norms, public holidays and religious holidays.

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About the Expert

Business development strategist and mental health advocate, Tom Keya currently works and lives in Dubai, United Arab Emirates. Tom is the founder of Soulh – a wellness company focused on technology and supplements to help mental health in the workplace. In addition to philanthropic and strategic work in this sector, Tom also writes regularly for various online publications on workplace mental health and a number of other topics.

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