Business Setup in Abu Dhabi

The industrial heart of the UAE, Abu Dhabi is the country’s second most populated city and a key hub for the export of crude oil, industry, and business. The emirate boasts a number of major free zones, a strong economy responsible for a huge part of the country’s GDP, and business-friendly policies.

As such, opening a business in Abu Dhabi presents a multitude of advantages, making it a very promising destination for entrepreneurs and investors alike.

Advantages of company setup in Abu Dhabi

The emirate provides a plethora of advantages for entrepreneurs willing to establish a business here, such as:

1. Strategic location. Similar to Dubai, Abu Dhabi's location at the conflux of Europe, Asia, and Africa facilitates access to global markets.

2. Economic stability. The emirate’s economy is backed by significant oil reserves and diversified sectors such as tourism, finance, and renewable energy.

3. Business-friendly policies. Over the years, Abu Dhabi's government has created a favorable business climate, including tax incentives, streamlined regulations, and simplified procedures for company formation.

4. Infrastructure. The city boasts modern infrastructure, including world-class transportation networks, telecommunications, and other facilities.

5. Skilled workforce. Abu Dhabi's emphasis on education and training has resulted in a skilled and multicultural workforce with expertise in various fields.

6. Free zones. The emirate offers several free zones with special incentives and privileges for businesses, such as fairly cheap and customizable setup packages.

7. Quality of life. Providing all sorts of life-quality amenities, Abu Dhabi offers great living conditions to expatriates and their families, attracting talent from around the world.

9. Investment opportunities. The city and the emirate offer diverse investment opportunities in a multitude of industry sectors, from renewable energy and real estate to technology, and hospitality, catering to different business interests and preferences.

10. Supportive ecosystem. The authorities in Abu Dhabi provide strong and proactive support to businesses through various initiatives, grants, and programs aimed at fostering innovation, entrepreneurship, and sustainable economic development.

11. Low tax burden. Despite the fact that the UAE is no longer a tax-free jurisdiction, its tax legislation is one of the most favorable, with only 9% Corporate tax and 5% VAT. In addition, businesses with revenues below 375 000 AED are exempt from Corporate tax. Free zone companies that gain income from qualifying activities are also subject to zero tax.

Best business type to start in Abu Dhabi

Determining the best business type to set up in Abu Dhabi depends on various factors, including market demand, your expertise, and the regulatory environment. However, considering the advantages Abu Dhabi offers, certain business types tend to thrive more:

• Tourism and Hospitality
• Technology and Innovation
• Real Estate and Construction
• Renewable Energy
• Healthcare Services
• Education and Training
• Financial Services
• Logistics and Transportation
• Retail and E-commerce
• Consulting and Professional Services

Ultimately, carefully exploring the local market, assessing your skills and resources, and considering the regulatory framework will help you determine the best business type for your company setup in Abu Dhabi suited to your goals and available opportunities.

How to start a business in Abu Dhabi: setup process & requirements

Everyone who wants to start a business in Abu Dhabi needs to understand at least the basics of the setup process. Company setup in Abu Dhabi involves the following course of action:

1. Identify your business activity. Before you start your journey of business setup in Abu Dhabi, decide what you want to do there. Begin by pinpointing the specific business activity you aim to pursue in Abu Dhabi. Study the market to understand the demand, competition landscape, and feasibility of your chosen activity within the local framework. Assess the suitability of your business activity concerning the preferred location and the regulatory requirements for setup.

2. Select a suitable legal structure. Pick the legal entity that aligns with the nature and scale of your business operations. Options include sole proprietorships, LLCs, partnerships, free zone companies, different types of JSCs, and company branches. Carefully consider which one best suits your business goals and objectives.

3. Pick your future company’s name. When choosing a name for your company, it's essential to select a distinct trade name that conforms with your business's identity and objectives. Adhering to the naming guidelines outlined by the Department of Economic Development (DED) is paramount to ensure that your name options comply with regulatory standards and are likely to receive approval.

4. Secure mandatory permits and licenses. In order to commence operations in Abu Dhabi, it is imperative to acquire the requisite licenses and permits from the pertinent authorities, tailored to your selected business type – from a trade license to a freelance permit. Compliance with regulatory standards is pivotal to facilitating a seamless and expedient licensing process, averting any potential delays or complications.

5. Pick the ideal location. Explore a diverse array of options to pick the one that best fits the specifics of your company setup. Whether it's a commercial space, an office, a virtual desk, or a warehouse, the choice depends on your operational needs and strategic objectives. Numerous free zones in Abu Dhabi offer comprehensive packages that encompass both premises and licenses tailored to various company types and activities.

6. Complete the registration process. Depending on your business jurisdiction, register your entity with the relevant authorities such as the DED for mainland businesses or a particular free zone authority in case of a free zone setup. Ensure meticulous preparation of all requisite documents, follow the prescribed registration process, and be prepared to pay the mandatory registration fees as per the prevailing regulations.

7. Provide your staff with work permits and visas. In preparation for building your workforce, acquiring the necessary visas and work permits for your staff members is imperative. The common documentation typically includes Emirates ID, medical examination records, and health insurance coverage, but there may also be other requirements in place as well.

8. Establish a corporate bank account. Upon successful registration of your business entity, the next pivotal step is to open a corporate bank account to facilitate the functional efficiency of your business funds. Furnish the requisite documentation to the chosen bank, including your Memorandum of Association (MOA), trade license, and identification papers.

9. Ensure tax compliance. It's essential to acquaint yourself with the prevailing tax framework in Abu Dhabi, understand the specific requirements applicable to your business type and chosen jurisdiction, be it free zone or mainland, and ensure thorough adherence to your tax obligations.

Business setup cost in Abu Dhabi

To estimate the business setup cost in Abu Dhabi, you must consider an array of factors, including registration fees, licensing costs, office space expenses, visa fees, and others. Typically, a free zone setup costs less, as free zones offer setup packages that allow for cutting some expenses down. However, free zone authorities typically disseminate relevant data through channels such as newsletters directed to registered company proprietors and reliable sources, so it’s hard to specify concrete numbers.

Here's a breakdown of the potential business setup costs in Abu Dhabi involved:

1. Business registration fees. Expect to pay initial registration fees to the relevant authorities such as the DED or the corresponding free zone body.

2. Licensing costs. The costs of business licenses and permits are based on the particular business activity and jurisdiction in question. In the mainland, a trade license will cost AED 20,000 on average, while in some free zones the price starts at AED 11,000.

3. Office space expenses. Renting or leasing office premises is a substantial expense for businesses. The cost comprises factors such as size, location, facilities, and amenities. Free zone companies may opt for flexi-desk arrangements or serviced offices, which offer cost-effective options as opposed to typical lease agreements.

4. Visa fees and work permits. If you plan to hire employees, you'll incur expenses related to visa processing, work and residency permits, health insurance, etc.

5. Bank account setup. Opening a corporate bank account involves certain charges, including account setup fees, minimum balance requirements, transaction fees, and annual maintenance fees.

6. Legal and consulting fees. Engaging legal advisors, consultants, or public relations officer services to navigate business setup procedures, licensing, visa processing, and ongoing regulatory compliance can incur additional costs.

7. Miscellaneous expenses. There may be other expenses such as office furnishings, utilities, employee salaries, insurance premiums, marketing and branding expenses,  technical infrastructure, etc.

To succeed in starting a business in Abu Dhabi, it's essential to conduct thorough research and budgeting to accurately estimate all the aspects of planning, company registration, legal and tax compliance, as well as financial management. Consider addressing your questions to business setup consultants in Abu Dhabi or existing businesses in the region to gain insights into the common relevant issues and optimize your plans for a successful venture launch.