DOING BUSINESS IN ABU DHABI IN 2023
Since 2003, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with i) Abu Dhabi company registration ii) determining what class of business license to apply for iii) deciding whether a UAE national sponsor will help iv) banking and cash flow considerations v) immigration and recruitment strategies and vi) office rental solutions.
|Compare different Abu Dhabi entities||LLC||Free zone (FZ)||Branch Office||Rep Office|
|Time to incorporate||6 weeks||4 weeks||8 weeks||8 weeks|
|Cost to setup||US$22,633||US$26,350||US$37,400||US$14,750|
|Physical office required||Yes||Yes||Yes||Yes|
|Is doing business in Dubai permitted?||Yes||Yes||Yes||No|
|Allowed to sign sales contracts with local clients?||Yes||Yes||Yes||No|
|Can apply for visa?||Yes||Yes||Yes||Yes|
|Public register of shareholders and directors?||Yes||No||No||No|
|Required appointments||LLC||Free zone (FZ)||Branch Office||Rep Office|
|Local shareholder required?||Yes||No||No||No|
|Key facts||LLC||Free zone (FZ)||Branch Office||Rep Office|
|Abu Dhabi corporate tax rate||0%||0%||0%||0%|
|Client is required to travel||No||No||No||No|
Abu Dhabi business setup summary
- The business vehicles in Abu Dhabi most commonly preferred by foreigners include the free zone entities and, for GCC corporates, a branch office of their overseas company;
- An Abu Dhabi LLC cannot be 100% foreign owned and must grant 51% shareholding to a local UAE national. Consequently, most foreigners willing to do business in the country opt for a commercial agreement;
- Our Clients will find Abu Dhabi free zones as an attractive regional manufacturing and distribution base;
- Abu Dhabi free zone entities can be wholly-foreign owned in all sectors of the economy;
- Abu Dhabi does not impose corporate or personal income taxes nor any other withholding taxes;
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Benefits and problems
Benefits of Abu Dhabi company registration
- One advantage of Abu Dhabi business registration is that it owns 9% of the world’s proven oil reserves and 5% of the world’s natural gas. The country is the fifth largest exporter of oil in the world and is super wealthy. Consequently, the UAE has an insatiable appetite for international products and services;
- Another advantage of Abu Dhabi company registration is that its business law is being reviewed and amended by the UAE Government. The new regulations are aimed at removing unnecessary authority burdens and creating a freer and more unified legal system;
- Abu Dhabi’s economy is growing at 7.5% per annum and annual GDP is expected to be five-fold by 2030. It is an oasis for foreign entrepreneurs looking to sign big contracts.
- Abu Dhabi is reducing its dependence on oil and will repeat the success of Dubai, growing its industrial and services sectors. This massive economic change presents a lower cost alternative to Dubai. For example, Abu Dhabi is aggressively building industrial free zones to compliment Dubai;
- To rival the successful Dubai tourism sector, Abu Dhabi is aggressively building hotels, amusement and theme parks, shopping malls, luxurious residential complexes, art galleries, and museums. The Emirate is planning to invest US$230 billion in various tourism projects over the next five years. By 2020, the Emirate is expected to attract 4.9 million tourists. This growth presents business opportunities for international investors;
- The government is inviting international firms to develop its business sectors including real estate, services and tourism, health care, financial services, and industrial. We encourage our international Clients to pursue these investment opportunities.
- An Abu Dhabi entity is an excellent way to book global profits while minimizing international taxes because UAE does not impose i) corporate tax ii) personal income tax iii) withholding taxes iv) VAT and v) capital gains tax;
- Only oil/gas companies and branches of foreign banks pay corporate taxes at 55% and 20% respectively;
- A company in Abu Dhabi is a great tax planning vehicle enjoying the benefits of 66 double tax avoidance agreements with countries including Canada, China, India, Germany and Singapore.
- Abu Dhabi came in third place as the biggest financial capital in the Middles East and Africa region. The Global Marketplace financial free zone centre will house hundreds of financial companies, insurance companies, banks, and asset management companies. Earning tax free profits within a liberal economy free of exchange controls;
- Given the uncertainty around global bank secrecy, there is a massive influx of capital. UAE banks hold massive cash deposits and are perceived to be a safe haven.
- Abu Dhabi is located at the centre of the crossroads of trade routes of the East and West, connecting Europe and Asia as well as Africa and Central Asia. This enables all the businesses incorporated in the Emirate to benefit from an international trade flow;
- The gulf Emirate has an excellent connectivity to different parts of the world through its world-class sea ports, thereby making it a leading trading centre of the world;
- It is extremely easy and quick to fly in and out of Abu Dhabi to any other part of the world due to its excellent location in the Middle East.
Problems with Abu Dhabi company registration
Foreign entrepreneurs should be aware of the following challenges:
- Effective 1 January 2019, locally-incorporated Abu Dhabi entities, foreign entities registered in Abu Dhabi and limited partnerships engaging in i) holding company activities ii) banking business iii) distribution and service centre business iv) finance and leasing v) fund management vi) headquarters business vii) insurance viii) intellectual property holding and ix) shipping are required to employ local staff and lease a physical office. For more information on UAE economic substance requirements, click here;
- The cost of Abu Dhabi business registration is expensive including i) multiple government fees ii) compulsory office rentals iii) compulsory hiring of staff and iv) high paid up share capital. For example, an Abu Dhabi LLC requires a minimum of US$41,000 paid up share capital;
- All companies registered in the UAE must i) create and maintain a register of their ultimate beneficial ownership (UBO) and ii) submit UBO data to the relevant registrar or licensing authority;
- To sell goods within the UAE, a foreign company must legally appoint a UAE national as a shareholder or as an agent. For example, an Abu Dhabi LLC must be 51% owned by a UAE citizen;
- The majority of company visas and licenses are sponsored by UAE nationals, giving them indirect control over the business;
- Business practices and laws still favor UAE nationals over foreigners in disputes over business and investments. Disputes with UAE shareholders and agents cause serious problems for foreign investors. Courts can impose precautionary restraint on company assets pending the adjudication of a commercial dispute;
- The government tenders favor i) UAE nationals ii) companies with UAE nationals;
- If creditors petition winding up and the court auditors find incomplete accounting records explaining insolvency, then shareholders and directors will personally pay outstanding company liabilities;
- The public transportation system is not fully developed in the Emirate of Abu Dhabi. Therefore, it is extremely inconvenient to commute from one part of the Emirate to another without a private car;
- In 2020, the UAE introduced new regulations requiring all UAE companies to maintain and submit registers of their i) Ultimate Beneficial Owners (UBOs) or Real Beneficiaries ii) shareholders and iii) directors. Fortunately, information contained within company registers is kept confidential by the authorities.
Best uses for an Abu Dhabi company
Gateway to the Middle East and Africa
- After Dubai, Abu Dhabi is the next best business gateway to the Middle East and Africa (MEA). It boasts the most developed logistics and transportation infrastructure, perfectly suited for import and export. It allows duty free exports to 17 countries in the Middle East. Its business entities enjoy a favorable image in the MEA;
- Abu Dhabi is the second most business friendly city in the MEA with simple import and export policies and no trade barriers or quotas. Its liberal employment laws attract the most qualified labor in the MEA;
- There are no restrictions on inward investment, currency accounts, or the repatriation of capital and earnings.
- Most cities in the Middle East and Africa (MEA) do not positively view foreign companies. By contrast, Abu Dhabi boasts favorable laws for foreign entrepreneurs, protecting investors’ interests;
- It is a perfect tax exempt headquarters for the MEA, extracting funds from regional subsidiary companies in the form of dividends, management fees, and royalties;
- By 2020, Healy Consultants predicts Abu Dhabi will be the most livable city in the MEA, comprising i) a cosmopolitan, multinational population living and working in Abu Dhabi ii) a developed infrastructure for tourism, banking, entertainment, and business iii) high quality office and residential accommodation iv) reliable power and utilities v) first class hotels, hospitals, schools, shops, etc;
- Corruption hardly exists as it contradicts Islamic traditions.
- By 2020, Abu Dhabi will be a cauldron of international entrepreneurs, where 90% of the population is foreigners. The perfect ingredients for creativity and exchange of skills across industries and cultures, stoked by a liberal, entrepreneurial free market. The East and West blend quite happily, side by side in Abu Dhabi’s business and social arena.
- Abu Dhabi is establishing world class industrial zones to drive the economic diversification process with priority given to petrochemicals, building materials, chemical industries, metal industries, food industries, oil and gas services, and transportation sectors. With low cost of labor and land rental, together with low utility costs, we encourage our international Clients to pursue these investment opportunities.
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Useful links for Abu Dhabi
Government and public authority websites:
- Abu Dhabi Dept of Finance
- Abu Dhabi Central Bank
- Abu Dhabi Stock Exchange
- Abu Dhabi Chamber of Commerce
- Abu Dhabi airports
- Visiting Abu Dhabi
- Morison Menon Abu Dhabi
- Abu Dhabi Economic Vision 2030
- Doing Business in Abu Dhabi
- Opportunity Abu Dhabi
- Visa Application Form
- Abu Dhabi Banks
- Cost of Living Reports