Tap into the talent, technology, and tax benefits of the UAE.
With its strategic location between Asia, Europe, and Africa, the UAE is a global commerce hub. It is a forward-thinking nation and a leader in digital infrastructure, boasting state-of-the-art logistics, ports, widespread 5G coverage, and smart city projects like Masdar City. Its pro-business policies, sustainability initiatives, and tax incentives make it a prime destination for future-focused companies.
This guide will explain the process, costs, and advantages of setting up a business in the UAE. We’ll also explore alternative options, such as working with an Employer of Record (EOR), for a simplified market entry.
The business benefits of registering your company in the UAE
The UAE is racing ahead as a global leader, jumping three spots to rank seventh globally in the IMD World Competitiveness Yearbook 2024. A game-changing reform in June 2021 eliminated the long-standing requirement for local sponsors, granting foreign investors full ownership of onshore businesses in most sectors—solidifying the nation’s appeal as a global investment hub.
Here is what else makes the UAE an attractive business destination:
- Favorable tax system:
- Earnings in the UAE are tax-free, which is a significant advantage for attracting and retaining talent.
- Corporate tax is relatively low (9%). Moreover, businesses whose annual taxable profits are under AED 375,000 are still exempt from this tax. Many free-zone companies also qualify for a 0% corporate tax rate.
- Free trade zones and investment incentives:
- Over 40 Free Zones allow 100% foreign ownership. Mainland regulations permit full foreign ownership in 122 economic activities across 13 sectors.
- There are no restrictions on profit transfer or repatriation of capital.
- UAE has a highly streamlined visa system that offers a renewable 10-year residence visa.
- The Dirham is stable, secure, and tied to the US dollar.
- Competitive knowledge economy and innovation hub:
- The UAE attracts top talent from across the globe, offering a competitive labor force in various sectors.
- The UAE’s Happiness Agenda signals the country’s commitment to fostering a positive and productive workplace culture.
- The country is known for its innovation. It ranks as the top Middle East Asian country for adopting AI, with AI’s contribution expected to grow 33.5% between 2018 and 2030.
- World-class infrastructure:
- The UAE offers businesses the flexibility to operate anywhere in the country, with options including free zones, industrial areas, and commercial buildings.
- The UAE also has the world’s most advanced logistics, ports, airports, and digital connectivity.
- Political stability:
- The UAE enjoys long-term political stability and an open diplomatic policy globally. It maintains over 100 active diplomatic missions abroad and hosts around 200 foreign missions within the country.
With all these benefits, it’s clear why the UAE is an appealing option for businesses wanting to establish themselves in the region.
But when it comes to expansion plans, companies often face a crucial decision: Should you opt for standard company registration or expand through an Employer of Record (EOR)? Let’s dive into the differences to help you decide.
What is the difference between standard company registration and expanding through an EOR?
When considering market entry into the UAE, businesses have two options: registering a company or using an EOR. Here’s how the two methods compare:
Aspect | Standard company registration | Expanding through an EOR |
Purpose | Establishing a legal business entity in the UAE. | Hiring and maintaining a workforce in the UAE, without creating a legal entity here. |
Control | Full control over operations | Limited control (EOR handles and takes responsibility for many HR and payroll tasks) |
Cost | Initial set up costs, ongoing maintenance fees, local legal advisory fees from time to time | Single, predictable fee |
Compliance | Your company is fully responsible for compliance | EOR handles compliance with UAE labor laws. |
Setup time | Can take weeks | Quick setup (often within days) |
Scalability | May take time and cost money | Highly scalable, flexible |
How does an EOR simplify company registration in the UAE?
An EOR is an efficient and cost-effective way to expand your business into the UAE. It legally hires employees in the UAE on your company’s behalf, so you needn’t establish a local entity here. It takes on all the compliance, payroll, and administrative responsibilities, making your market entry faster and easier.
Key benefits of using an EOR in the UAE:
- Streamlined setup: Launch your business in the UAE quickly, without the lengthy registration process.
- Payroll & HR management: Your EOR handles payroll, benefits, tax compliance, and UAE labor laws, reducing your administrative burden.
- Compliance with local labor laws: EORs typically employ a team of local experts who stay up-to-date with changing labor laws, ensuring your business remains compliant.
- Cost savings: You save on legal fees, registration costs, legal consulting fees, and other administrative expenses.
- Workforce scalability: An EOR makes scaling your workforce up or down easier by reducing your long-term commitments and compliance burdens.
- Risk mitigation: With the EOR assuming legal responsibility, you avoid risks related to compliance and administrative errors.
Now that you understand how an EOR can simplify your UAE expansion, let’s dive into the process of UAE company registration and what you must know when choosing this traditional route.
A step-by-step guide to UAE company registration
Certain businesses can register their company online in the UAE in as little as 15 minutes, thanks to the UAE government’s integrated eService Basher. To apply via Basher, you need a valid Emirates ID or UAE Pass.
However, Basher is only available for specific business activities and structures, primarily for Mainland companies. For others, here is a breakdown of the steps involved in registering your business:
Step 1: Choose your business location
You’ll need to choose the location for your business: the UAE Mainland, a Free Zone, or offshore. Each option offers different benefits based on your business needs.
- Mainland
- Flexibility to trade both locally and internationally.
- Can operate across the UAE without zone limitations.
- Foreign investors can own 100% of businesses in most sectors (due to recent ownership law changes).
- Free Zone
- 100% foreign ownership.
- Some free zone companies can enjoy a 0% corporate tax rate on “qualifying income,” but income outside the free zone may be taxed at 9% (for profits above AED 375,000).
- Can’t trade directly with the UAE local market without a local distributor.
- Offshore
- Offshore companies are designed to operate outside the UAE.
- They cannot do business inside the UAE and are mainly used for international trade, asset holding, and tax structuring.
- You must register under specific offshore jurisdictions, such as Jebel Ali (JAFZA Offshore), Ras Al Khaimah (RAK ICC), and Ajman Offshore.
- Full foreign ownership is possible.
Step 2: Identify your business activity
To establish a company on the UAE Mainland or in a free zone, the economic activity you engage in matters. It will determine the legal structure of your company and the required licenses. There are six main types of licenses: industrial, commercial, crafts, tourism, agricultural, and professional. A single license can cover multiple business activities. The UAE offers over 2,000 different economic activities to choose from.
Step 3: Choose your company’s legal structure
Some of the most common types of legal entities you can set up on the Mainland are:
- Sole proprietorship:
- Owned by one person.
- The owner (founder) is personally liable for all business obligations and liabilities.
- The requirement for Emirati ownership has been annulled, so foreign nationals can have 100% ownership of sole proprietorships.
- Limited liability company (LLC):
- Each partner’s liability is limited to their share of the capital.
- It can be owned by individuals or companies, regardless of nationality.
- It can have up to 50 partners.
- Public joint stock company (PJSC):
- A company where capital is divided into equal, tradable shares.
- Founders subscribe to a portion of the shares, with the remainder offered to the public.
- Private joint stock company (PrJSC):
- A PrJSC can have up to 200 shareholders, with capital divided into equal-value shares.
- Shares are not available for public offering.
- General partnership:
- Requires at least two partners.
- Partners share unlimited responsibility for the company’s debts.
- Limited partnership:
- Consists of one or more general partners with full liability and one or more limited partners whose liability is restricted to their capital share.
- Branch:
- Both local and foreign companies can open a branch on the Mainland or in a free zone.
- Free zone companies:
In UAE free zones, businesses can be set up under three main legal structures:- Free Zone Establishment (FZE). An FZE is a one-person company offering limited liability protection and the ability to operate independently.
- Free Zone Company (FZ Co.) Typically requires two or more shareholders.
- Free Zone LLC (FZ LLC). Similar to an LLC in the Mainland, but governed by the specific free zone authority’s regulations
It’s important to note that not all free zones register all three types of companies. Check with the specific free zone authority for their registration options. For more information on the legal forms of companies, you may need to visit the websites of the UAE’s economic departments and relevant authorities in each emirate:
- Abu Dhabi Chamber
- Sharjah Investment and Development Authority (Shurooq)
- Ajman Department of Economic Development
- Dubai Chamber of Commerce
- Ras Al Khaimah Department of Economic Development
- Fujairah Government: Doing Business in Fujairah
Step 4: Register a trade name
Choose a unique trade name that complies with UAE naming conventions. Ensure it reflects your business activity and is not already in use. You can apply for a trade name through the Department of Economic Development in your chosen emirate, either online via their website or app, or in person.
Step 5: Apply for initial approval
An initial approval is the UAE Government’s confirmation that there are no objections to a specific business being established. This approval allows the investor to proceed with the next steps and obtain the necessary license. However, it does not grant permission to start or operate the business.
Step 6: Create an MoA or LSA
The required documents for setting up a business in the UAE depend on its legal structure. Most businesses need a Memorandum of Association (MoA) or a Local Service Agent (LSA) agreement to move forward.
- If you’re setting up a limited partnership, LLC, PJSC, or PrJSC, you’ll need a signed and notarized MoA. UAE-based law firms, courts, and notary publics prepare and certify MoAs and agreements.
- An LSA is required for sole proprietorships. If a business is fully owned by non-GCC residents, it must appoint an LSA from the UAE. This agreement must be notarized or approved by a court.
Step 7: Secure your office space
In most cases, you’ll need to rent office space as part of the registration process. This is mandatory in the Mainland, but not always required in free zones.
In UAE free zones, you have different options for office space—whether you want to rent, buy land for a factory, or set up an office. If you’re going for an independent or professional license, you can either rent an office or go for a virtual office. The type of office space you need will depend on your business’s size and activity.
You can choose between fully equipped or partially furnished offices, and after getting your commercial license, you can rent or even buy the space. Typically, the free zone authority handles the rental contracts.
Step 8: Obtain additional government approvals
Obtain necessary approvals from relevant authorities, including the UAE Ministry of Economy, Ministry of Justice, local municipal department, or the specific free zone authority.
Step 9: Submit required documents
Prepare and submit required documents, such as passport copies, a business plan, proof of address, MoA or LSA agreement, and a copy of your lease agreement.
Step 10: Collect the business license
Once you’ve completed all the steps, you can pay the fees and get your business license online through the economic department’s website or visit one of their service centers.
Step 11: Register your business with the Chamber of Commerce and Industry
You must register your company in the same emirate where it was established, for example, either Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Qaiwain, Ras Al Khaimah, or Fujairah.
Step 12: Open a corporate bank account
Lastly, set up a corporate bank account to manage your company’s finances efficiently. The cost of a business bank account in the UAE depends on the bank, account type, and your company’s profile.
If you’re still unsure of which route to take, get in touch with an EOR partner like Multiplier. We’ve helped companies of all sizes set up and maintain a workforce in the UAE.
Our experts keep in touch with the latest labor and tax laws, mitigating your compliance risks during hiring, onboarding, offboarding, or payroll. It also helps you manage costs more efficiently.
The real cost of registering a business in the UAE
Understanding the costs involved in setting up a business in the UAE is crucial for accurate financial planning.
Below is a breakdown of the main costs you can expect.
Mainland company costs:
- Trade name registration: ~AED 620
- Initial approval fee: ~AED 120
- Commercial license fee: Starting at AED 10,000 (varies based on business activity)
- Office space rental: Costs depend on location, starting from AED 15,000 annually for smaller spaces.
- Local sponsorship: If needed, this can range between AED 10,000 to AED 25,000 annually.
Free zone company costs:
- Registration fee: AED 9,000–10,000
- License fee: AED 10,000–50,000 per year, depending on business activity
- Office space: Shared desks start at AED 15,000 annually, while private offices cost more
- Visa costs: Packages may include visas; additional visas typically range from AED 3,000–5,000 each
Popular free zones like DMCC, Dubai South, and IFZA offer customized packages, often including visa quotas, making them a great choice for entrepreneurs.
Offshore company costs:
- Ideal for international trade, asset holding, and tax optimization—cannot operate within the UAE.
- Company incorporation fee: Around AED 15,000–20,000
- Registered agent fee: Approximately AED 12,000 annually
- Renewal fees: Start at AED 10,000 annually
An EOR like Multiplier can significantly help you save on set up costs of setup and administration. With an EOR like Multiplier, you pay a single, predictable fee. This covers compliance, payroll, and administrative services, eliminating multiple maintenance, compliance, and consulting expenses.
Cost comparison: standard registration vs. EOR
Here’s a quick comparison between the costs of registering a company in the UAE and expanding through an EOR.
Cost category | Standard registration | EOR |
Company registration costs | Free zone: AED 17,000–AED 70,000 Mainland: AED 14,000–AED 30,000 Offshore: AED 27,000–AED 45,000 | Single, predictable fee |
Legal services | AED 1,000–AED 5,000 annually | Included in EOR service |
Public Relations Officer (PRO) or Government Liaison Officer services | AED 5,000–AED 10,000 annually | Included in EOR service |
Office fee | Starting at AED 15,000 annually | Included in EOR service |
Minimum share capital | Minimum share capital differs significantly for each free zone. It can range from AED 1,000 to AED 1,000,000 depending on the business activities and licenses. | An EOR minimizes your upfront costs |
Note: Actual costs and processing times can vary based on the free zone, specific services, legal assistance, and the nature of the business. For the most accurate and up-to-date information, consult official UAE government websites or reputable consulting firms.
Our team at Multiplier can help. Talk to them and learn how to minimize upfront costs and administrative burdens associated with traditional company registration, enabling a more agile and cost-effective expansion into the UAE market.
Why choose Multiplier for your UAE expansion
Multiplier makes your UAE expansion simple, cost-effective, and fast by streamlining your compliance, hiring, payroll, and other administrative tasks.
Key benefits of working with Multiplier:
- Effortless payroll management: Say goodbye to payroll complexities. We handle salary payments, bonuses, and other employee benefits, ensuring that all aspects of payroll are processed accurately and on time.
- Local hiring expertise: Whether you’re hiring local talent or relocating employees, we ensure employment contracts meet UAE labor laws and offer smooth onboarding for your team.
- Compliance assurance: Our experts stay up-to-date with UAE employment laws and visa requirements, keeping your business compliant.
- Attractive benefits packages: Stand out in the job market with locally tailored health insurance, end-of-service benefits, and perks that help you attract and retain top talent.
- Comprehensive HR solutions: Our easy-to-use platform streamlines everything from onboarding to leave management, making HR admin a breeze.
Ready to expand in the UAE without the hassle? Book a demo today and let Multiplier simplify your expansion.
