Success tips when doing business in Abu Dhabi in 2023
- The week commences on Saturday and extends through Thursday, Friday being the day of rest. Government offices are closed on Thursdays and Fridays;
- Formal or informal business meetings often do not run in the same way you may be used to. There may be others in the room who are friends and family and they may arrive during the business meeting, people may arrive late and go in and out of the room during the business meeting, people may come in and interrupt on other matters, mobile phones will be used constantly;
- Your joint venture partner or shareholder must not merely be a nominee for the sake of meeting the rules of foreign company incorporation. You should choose a partner that actually brings a lot to the table, including local knowledge your business would need;
- To optimize the success of your new business venture in the UAE, Healy Consultants recommends your firm i) complete a feasibility study ii) prepare a detailed business plan iii) communicate with the Abu Dhabi Chamber of Commerce iv) speak to your local UAE embassy and v) communicate with Healy Consultants Clients who successfully launched their business in Abu Dhabi;
- Foreign companies should be aware i) statistics and market data are usually imprecise ii) transactions tend to take longer than expected iii) more frequent and longer market visits are required, at least initially iv) complex business procedures are common;
- During business meetings, Arabs spend a lot of time discussing things in general and then once they are comfortable will talk business with you. Expecting them to directly come to the point and discuss business is seen as rude and must be avoided;
- If invited to the home of an Arab, you should always accept and take every opportunity to become acquainted with local people. Your Arab host will be generous and interested in you. However, you should avoid debating politics and religion as your opinions might be regarded as ill-informed or even offensive, even if they seem acceptable to you from a western perspective;
- Learn enough Arabic to communicate the pleasantries, greetings and responses. You will enjoy peoples’ reactions. However it is important to use the Arabic language respectfully because Arabs believe it is designed to carry the word of God;
- Arabs are hospitable and place a great deal of emphasis on an outward expression of politeness and quiet demeanor. Arabs rarely say a direct ‘no’ to a proposition, so you must listen and observe carefully. If the response is ‘leave it with me’ or ‘I’ll think about it’, there is a good chance that the project will go nowhere;
- Avoid putting an Arab in a position where he might suffer a ‘loss of face’ in front of other Arabs. He will especially appreciate this, if he notices your action;
- While Abu Dhabi is considered a cosmopolitan city, it is still an Islamic state and follows the Islamic culture. It is important for foreign companies to respect this and make themselves aware of the Islamic traditions in business;
- Foreign entrepreneurs need to be aware of how they must treat women in the workplace. Examples include:
- Not all UAE women are comfortable shaking hands with foreign men. You need to wait for the woman to put her hand out first before putting forth your own hand;
- It is also not acceptable to touch a woman even in a friendly manner on the shoulder or other places at any time in the office;
- It is common for men and women to sit at different areas of the office. What this means is that you need to designate part of your office where all the men would sit and another part of your office where the women would sit.
- An essential factor in starting a business in Abu Dhabi is to thoroughly research the business sector you are planning to invest in. Healy Consultants recommends our Client prepare a detailed business plan including an extensive market study and evaluation of competitors.
Interesting facts about Abu Dhabi
- Abu Dhabi comprises almost 87% of the UAE’s total land area. The population is 2.2 million. Expatriates make up 81% of the population. Arabic is the official language and English is the dominant language in business;
- Proven oil reserves 92.2 billion barrels. Proven gas reserves 212 trillion cubic feet. Abu Dhabi generates 60% of the GDP of the United Arab Emirates;
- Abu Dhabi’s sovereign wealth fund, the Abu Dhabi Investment Authority (ADIA), currently estimated at US$875 billion, is the world’s wealthiest sovereign fund in terms of total asset value;
- Foreign companies or individuals cannot own land in Abu Dhabi. All land in the Emirate is owned by the Ruler, HH Sheikh Zayed, except that which he has gifted to individual citizens, government departments or companies. All sales of land require the consent of the Ruler. Generally only Abu Dhabi nationals can own land in the Emirate;
- Oil and gas producing companies pay corporation tax at a flat rate of 50% on their taxable income. Foreign banks pay a 20% tax on profits;
- Cigarettes are subject to a 100% customs tax and the alcohol a 50% customs tax;
- The UAE became a member of the United Nations and the Arab league in 1971. It is a member of the International Monetary Fund, the Organization of Petroleum Exporting Countries, World Trade Organization and other international and Arab organizations;
- In 2010, Brazil emerged as Abu Dhabi’s biggest export destination while the US topped the list of major import sources;
- To live in Abu Dhabi, an expatriate must possess i) a residency visa ii) accommodation lease agreement iii) a personal bank account iv) obtain a labour card and v) an alcohol license;
- A valid UAE driving license is required to drive a private car. If awaiting your visa, a temporary license can be issued. An international license will allow you to drive a rental car.
Frequently asked questions
How long does it take to incorporate a company?Healy Consultants can legally complete company registration within four weeks.
What is the minimum number of directors/shareholders required for an Abu Dhabi business?In order to set up an Abu Dhabi LLC, a minimum of 2 shareholders and 1 director is required. However, the director does not need to be a resident.
Are there any restrictions on ownership of company?For a limited liability company (LLC), the foreign investor cannot currently hold more than 49% of the shares. At least one or more UAE nationals must hold 51% of the share capital of the company. However, plans are being considered to allow for higher % foreign ownership.
Does an Abu Dhabi business require a company secretary?Yes, a company secretary is required.
Is the company’s register available for public viewing?Yes, the public can view the company’s register at the Abu Dhabi Chamber of Commerce.
Is an Abu Dhabi company subject to an annual audit?All business entities are required to submit annual audited accounts to the UAE authorities. However, an annual return is not required.
What are the requirements for setting up a limited liability company (LLC)?Abu Dhabi LLC needs a trade/commercial license (as well as other licenses and registrations) to enable them to carry on business in Abu Dhabi. In addition, the company should be registered with the Abu Dhabi Chamber of Commerce and Industry. The minimum required capital should be deposited into a bank account, prior to company incorporation.
Are there any restrictions on the business a company can purse?Abu Dhabi LLC is not permitted to carry on the business of insurance, banking, or the investment of money for third parties.
What are the tax implications of an Abu Dhabi company formation?The new corporate tax rate is 9%, which is among the lowest in the world. This newly introduced tax rate in the UAE will be effective from 1 June 2023.
Is there customs tariff when trading with other Gulf countries?As a legal entity incorporated in a member state of the Gulf Cooperation Council (GCC), an Abu Dhabi LLC is not subject to customs tariffs when trading with other GCC states (Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia).