Jumpstart: Establishing a business in the UAE

5 minute read
08 October 2020


We live in strange times but the UAE continues to innovate and actively engage in attracting business to the UAE and the regulatory framework encourages the establishment of new businesses.

As the UAE looks to kick start the economy we are launching "JUMPSTART", JUMPSTART is a series which will be focussed on the key legal considerations for start-ups looking to establish themselves in the UAE. It is particularly aimed at start-up companies as they look to establish their presence and seek early stage funding. The tech sector is particularly vibrant with the Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM) and other free zones all vying for the next unicorn.

The series will feed into a comprehensive document covering the key legal considerations for setting up a business in the UAE and a dedicated page on our website which will include a shopping list of standard documentation.

The Middle East is a fast-growing region and the UAE, strategically located in the Arabian Peninsula and sharing borders with Saudi Arabia and Oman, is quickly becoming a global commercial hub with increasingly liberal economic policies. By setting up a business here you are well placed to take advantage of the opportunities a growing international business centre brings.

In this introduction we look at some high level reasons that you might look to establish a business here whether a regional headquarters, manufacturing plant or tech start up.

  • The UAE is increasingly chosen as the hub for both existing or international businesses either operating in, or looking to expand into, the Middle East, Gulf Cooperation Council (GCC) and beyond into Africa. The UAE is attracting increased investment into sectors such as technology, transport and infrastructure, which is proactively encouraged by the Government to promote innovation with ambitions to make Dubai a Smart City.
  • The UAE is constantly innovating and seeking opportunities to increase its attractiveness as the regional hub for any international business. An example is the creation of the "free zone" corridor linking the port, Jebel Ali free zone and Al Maktoum airport, making the UAE and the GCC a highly attractive geographical destination for international business and investment.
  • Historically reliant on oil and gas, the UAE has spent the past decade diversifying its economy into other sectors, including tourism, institutional investments, healthcare, technology and real estate.
  • The UAE has also put itself at the forefront of regional geopolitical thinking which has been supported by increasingly progressive actions and policies: 2019 was the Year of Tolerance and included a visit by the Pope; in September 2020 the UAE signed the Abraham Accord, a normalisation agreement with Israel to drive economic growth between the two countries; and gender equality has been high on the political agenda for a number of years, Women represent 50 per cent of the UAE Federal Council and most recently in September 2020 a federal decree was passed implementing equal pay legislation.
  • We continue to see international businesses seeking to set up operations in the UAE, with multinational companies seeking to make this their regional headquarters - more recently businesses with a focus on the technology sector including a significant increase in ecommerce platforms and other disruptive technologies.
  • Trends are towards a more investor-friendly framework, with the laws moving towards greater flexibility in relation to 100 per cent ownership.
  • There is significant encouragement from the UAE government for the technology sector, with a growing number of government-linked and family-backed incubators in support of start-ups and innovation taking place in the healthcare sector too.
  • The region is generally a tax-free jurisdiction, although the UAE introduced value-added taxation for the first time in January 2018, which is applied at a uniform rate of 5% on goods and services that are not zero-rated or exempt.

We recognise that any start-up needs to focus its time and resources on building their business, and that the legal processes are often viewed as distractions from that. However, to protect the value you are building, both now and in the future, it is vital that you start as you mean to go on with the right corporate structure and key legal protections in place.

The series will hopefully shed light on the key requirements and give you some idea of the structures available to you and the key legal considerations that you should take account of when contemplating opening a business in the UAE.

Please don't hesitate to get in touch with us should you have any questions on the issues we cover: we look forward to getting to know you and your business.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.