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Company Registration in Abu Dhabi

Healy Consultants Group PLC
30 October, 2014

There are many advantages to incorporating a company in Abu Dhabi.  One being that the country owns a staggering 9% of the world’s oil reserves and another 5% of the world’s natural gas.  Abu Dhabi is the fifth largest exporter of oil in the world and is extremely wealthy.  Therefore, the United Arab Emirates has a constant yearning for international products and services.  A second being that the country is reducing its dependence on oil, and is following the success of Dubai by growing its industrial and service sectors.  There are constantly new hotels, amusement and theme parks, shopping malls, supreme residential complexes, art galleries, and museums being built.  A third being that the government is invited international companies to develop and enhance its business sectors which include real estate, services and tourism, health care, financial services, and industrial.  A fourth is that Abu Dhabi is the second best business gateway to the Middle East and Africa, after Dubai.  It has the most developed logistics and transportation infrastructure, which is great for importation and exportation.  Along with this, it also allows duty free exports t 17 countries within the Middle East.  And lastly, there is a huge prediction that Abu Dhabi will be the most livable city on the Middle East and Africa.  This is because: the country is made up of a cosmopolitan, multinational population living and working in Abu Dhabi, there is a well-developed infrastructure for tourism, banking, entertainment, and business, a high quality office and residential accommodation, reliable power and utilities, and first class hotels, hospitals, spas shops.

There are several businesses entities in Abu Dhabi.  These include: wholly foreign owned entities, different Abu Dhabi entities, limited liability company, free zone companies, Abu Dhabi professional services company, a foreign branch office and a foreign representative office, joint ventures, sole proprietorships, and public shareholding company.  A wholly foreign owned entity allows foreign entrepreneurs to wholly own a free zone limited liability company without having a United Arab Emirates national shareholder.  These foreign investors are able to incorporate a limited liability company in order to provide professional services. These services can include: IT and management consultancy, legal and accounting, and marketing consultancy.  A foreign company is able to register a branch in Abu Dhabi in order to invoice UAE customers, sign local sales contracts, and receive income from local customers.  A foreign company can also register a representative office in Abu Dhabi in order to employ in activities such as promoting the business of the parent company, and conducting market research.  The most commonly chosen business entity used to carry out all business in Abu Dhabi is a limited liability company. This type of entity allows a company to be separate from its owners, shareholders, and the directors.  However a limited liability company must employ a minimum of one director and two shareholders, it must have a minimum issued share capital of US$41,000, and is it is mandatory that a United Arab Emirates national be the shareholder or/and sponsor.  There are also free zone companies in Abu Dhabi.  This business entity is most suitable for foreign companies who wish to use United Arab Emirates as a regional manufacturing or distribution base.  With this type of entity being used primarily by import and export orientated companies.  A foreign branch office and a foreign representative offices in the United Arab Emirates may be 100% foreign owned, so long as a local agent or sponsor is appointed.  These business entity types are only allowed to be established by foreign manufacturing and construction companies.  Although an Abu Dhabi representative office is 100% foreign owned and controlled, it is prohibited from making direct sales within the United Arab Emirates.  This type of entity can only enlist in activities such as the promotion of the business of the parent company, and market research.  In order for the government to issue a license to foreign company branches or representative office, there must be a bank guarantee of US$13,000 provided to the Ministry of Commerce.  Sole proprietorships, commonly used by doctors, engineers and lawyers, allow foreigners to invest in Abu Dhabi as sole trades.  There is a required minimum capital of US$37,000.  The sole proprietorship must be appointed by a United Arab Emirates national as the service agent.  A public sharing company, also known as a public joint stock company, is usually used for large projects or operations which involve a large investment of funds or raising private or public capital.  This business entity requires a minimum share capital of US$2.7 million, a minimum of 10 founders (at least 51% are UAE nationals), and a board of directors which consists of a minimum of three to a maximum of fifteen persons.  Along with this, the chairman and a large portion of the directors must be United Arab Emirates nationals.  And lastly, Abu Dhabi partnerships, this business entity is exclusively available to United Arab Emirates nationals.

The United Arab Emirates is liberated of all taxes, including: personal income tax, capital gains tax, value added tax, withholding tax, and corporate tax.  Only oil, gas, and petrochemical companies, and branch offices of foreign banks are obligated to pay corporate taxes.  All goods which are imported into the United Arab Emirates are obligated to go through customs clearance.  All companies’ annual audited financial statements need submitted to the Ministry of Commerce within four months of the accounting year end.  The United Arab Emirates has Double Taxation Avoidance Agreements with a number of countries, some of these countries include: Belgium, Canada, China, Singapore, Egypt, Finland, France, Romania, Poland, Pakistan, New Zealand, Thailand, Italy, Ukraine, and Germany. 

Every business entity in Abu Dhabi must appoint a manager.  This manager is usually appointed by the memorandum of association or by a separate management contract.  All business activities must receive government approvals and permits and licenses.  Particular products such as food, medical equipment, cosmetics, and medicine must be registered with the government.  The Department of Economic Development, a statutory board that regulates and controls the licensing procedures of all business entities, prohibits two different classified business activities under one license.  Also, foreign countries are only permitted to carry out business after it is licensed by the Department of Economic Development. The deregistering of a company can be a long and tedious process, as it is dictated by the government, and the process can take approximately six months.

There are also some challenges in setting up a business in Abu Dhabi that need to be considered.  The total amount for registering a company in Abu Dhabi is expensive, and includes: collective government fees, mandatory office rentals, mandatory hiring of staff, and a high paid up share capital.  In order to legally sell goods in the United Arab Emirates, the foreign company must legally designate a United Arab Emirates national as a shareholder or as an agent.  United Arab nationals tend to have indirect control over businesses, due to a large majority of company visas and licenses being sponsored by United Arab Emirates nationals.  The government favors United Arab Emirates nationals, and companies which employ these nationals.  Along with this, business practices and laws are somewhat unfair, as they favor nationals over foreigners in all disputes over business and investments.

About the Author

Healy Consultants Group PLC

Since 2003, Healy Consultants assists international Clients with company incorporation services worldwide. Our services include: company registration, opening of corporate bank account, accounting and tax services, legal services, jurisdiction comparisons...more.

To inquire more information about global business set up; call us on +65 6735 0120 or email us at email@healyconsultants.com


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