9th June 2015
Despite common misconceptions it is not possible to start a business in the UAE with one Trade License and legally operate throughout the country. There is no such thing as a federal license. Each Emirate has its own licensing process. As such, it is necessary to have a Trade License, also known as a Commercial License, for each Emirate in which you are operating. Alternatively, if you are operating in the free zones, it is necessary to have a license issued by the respective free zone authorities.
Deciding where to set up is really a matter of determining where your clients are likely to be based. Frequently, companies set up in the UAE with one Trade License and gradually expand into additional Emirates as their business develops.
Although, considered a slower working pace to its Dubai neighbour, Abu Dhabi's business tends to be based upon relationships and there is very much a community feel. Abu Dhabi is an attractive place to do business and also has a planned and structured approach to its development and diversification from its reliance on oil via its Economic Vision 2030.
It is the federal capital and tends to attract foreign companies wanting to work directly on federal contracts. In such instances, licenses issued by Abu Dhabi's Department of Economic Development (DED) will be required.
Oil & Gas
Companies wanting to engage directly with the National Oil & Gas companies will also need to be based in Abu Dhabi and will require a special approval from the Supreme Petroleum Council.
Abu Dhabi Global Market has a number of free zone options. Existing free zones include: TWOFOUR54 (media), Abu Dhabi Business City (business and logistics), MASDAR (primarily green and sustainability-focussed), Kizad (manufacturing and logistics) and Abu Dhabi Global Market (ADGM) (financial). Being based in a free zone is perfect if you are dealing with other companies based in that free zone or overseas; however, it should be noted that to legally work with onshore companies, an agent should be appointed as a middle man.
Dubai appears to be more well known internationally and thus is often the first port of call for companies considering expansion into the UAE. It thus attracts Foreign Direct Investment based on its reputation for rapid expansion. Just like companies are attracted to Dubai, so is the talent that could potentially make up your workforce - so some companies see this as a key advantage as they want to be based where they will easily attract key employees. Dubai is more cosmopolitan and attracts SMEs with its faster pace, rapidly developing infrastructure and EXPO2020 win. It is also the country's historical trading hub.
To work directly with the government departments in Dubai, it will be necessary to obtain a license issued by Dubai's Department of Economic Development (DED).
Oil & Gas
Companies based in Dubai, wanting to work with the National Oil & Gas companies will need to do so via an agent or third party.
The number of free zones in Dubai is increasing rapidly. Many are sector specific. As mentioned above, free zone locations are ideal for contracting with other companies based in that free zone or overseas; this is not the ideal route if your anticipated clients are based onshore as you should not be contracting directly and an agent would need to be appointed.
Mega Projects - Abu Dhabi and Dubai
Both Emirates have a number mega projects underway. Those wishing to be involved with the numerous mega projects should incorporate where the respective projects are based.
At present, Abu Dhabi is developing its new International Airport due to be opened in 2018; a cultural district on Saadiyat Island, including renowned international museums The Louvre and Guggenheim; and, the country's first railway, Etihad Rail, is well underway with the first phase completed and the contract for the second phase awarded in Q1 2015, which will connect Ruwais in the Western Region with Mussafah and Khalifa Port (Abu Dhabi's industrial and logistics zones).
At present, Dubai is in the process of developing the EXPO2020 site, including major transport expansion of the Dubai Tram; Mall of the World will be the world's largest mall with more than 100 hotels connected; and various Theme Parks are being developed by various brands to position Dubai as the hospitality centre of the Middle East.
There are myriad opportunities in the UAE. Research the country and the opportunities. Identify potential contracts and clients. Use this knowledge to help determine where you should initially set up and speak to Gateway Group to chat through your market entry options.
Related Blogs that you may be interested in:
Free zone or onshore? CLICK HERE
How to start a business in Abu Dhabi CLICK HERE
For sponsorship, company formation and assistance with your Abu Dhabi company's ongoing compliance requirements, contact Gateway Group of Companies. Email us at: info@GatewayToAbuDhabi.com