How To Setup A Business In Abu Dhabi
Updated 25th February 2024
Welcome to our comprehensive guide on setting up a business in Abu Dhabi! Whether your an entrepreneur looking to launch new company, or an established international corporation intending to expand into Abu Dhabi, you're in the right place. As the capital of the United Arab Emirates, Abu Dhabi is one of the most dynamic business hubs in the Middle East, fueled by a flourishing economy. Notably, in the third quarter of 2023, Abu Dhabi experienced an impressive 7.7% growth in its non-oil GDP⁽¹⁾, highlighting the emirate's remarkable
economic momentum.
10 Essential insights: How to setup a business in Abu Dhabi
Understanding the local business landscape and its regulations is essential for a smooth and successful setup process. Let's embark on this exciting journey together as we unveil 10 essential insights to guide you through the intricacies of establishing your business in Abu Dhabi.
Keep in mind that simply arriving and starting a business isn't enough. In Abu Dhabi, it's essential to legally register your company and obtain a Trade License. Be prepared for regulations that may differ quite significantly from what you're accustomed to in other places.
Mainland license or free zone license?
Your initial decision revolves around whether to establish your business on the mainland or within a free zone. This choice carries significant implications for your operations. Assessing the nature of your business activities and understanding your target market's geographical location will be the factors to consider in making this choice.
The free zones in Abu Dhabi each centre around a specific sector, but there is always a need for an eco-system of support services too. The current free zones in Abu Dhabi are:
Abu Dhabi Airport Free Zone Abu Dhabi Airport Free Zone is ideal for the company involved in logistics, airport services, cargo and business services, with facilities at Zayed International Airport, previously known as Abu Dhabi International Airport, Al Ain International Airport and Al Bateen Executive Airport.
Masdar City Free Zone Sustainability-focused companies head to Masdar City Free Zone, which isn't just the most sustainable free zone in Abu Dhabi, but in the whole of the UAE. It boasts one of the largest clusters of LEED Platinum buildings in the world and net-zero buildings under construction. Not surprisingly it's core focus is attracting clean-tech, energy and innovative startups. In October 2023, a Smart and Autonomous Vehicles Industry (SAVI) cluster was launched within the free zone.
TWOFOUR54 Abu Dhabi's creative free zone is TWOFOUR54, attracting media, production, content creation, entertainment and gaming companies, and creative freelancers. The free zone relocated from the main island of Abu Dhabi across to Yas Island in 2021 where it boasts is Creative Hub for the ecosystem of creatives working under its licensing framework⁽²⁾. Expanding further, huge film studio and production facilities are currently under development at a plot in Kezad⁽³⁾.
Kezad Kezad is home to Abu Dhabi's trade, industrial and logistics companies. Formally operating as Kizad (Khalifa Industrial Zone Abu Dhabi) and Zones Corp (Specialised Economic Zones), Abu Dhabi Dhabi Ports Group amalgamated them to create Kezad (Khalifa Economic Zones Abu Dhabi Group) in 2022. It footprint covers zones throughout Abu Dhabi including Khalifa Port, Musaffah, Al Ain and Al Dhafra.
Tawazun Free Zone Launched in 2023, Abu Dhabi's newest free zone, Tawazun Free Zone, for is ideal for defence and security organisations and associated supply chain and strategic manufacturing companies.
Abu Dhabi Global Market (ADGM) ADGM free zone, which whicha expanded its geographical coverage in 2023 to include both Al Maryah Island and Al Reem Island, is the financial free zone in Abu Dhabi. It's home to banking and investment, wealth and asset management funds, brokerage, virtual asset, crypto, securities and fintech companies.
For the remainder of this article, it is assumed that you are intending to start a mainland company in Abu Dhabi.
Which trade license do I need in Abu Dhabi?
Choosing the right legal structure and economic license (trade license) for your company in Abu Dhabi is an essential decision that regulates the core elements and obligations of your business. From ownership regulations to business setup requirements, the chosen structure and license dictate fundamental aspects of your company including paperwork needs, permissible business activities, liability, staffing restrictions, premises requirements and fees.
Abu Dhabi has undergone significant regulatory reforms in recent years, resulting in changes to available legal structures and licensing options. The relaxation of foreign ownership restrictions, coupled with the introduction of new license types, has made establishing a company in Abu Dhabi more appealing to foreigners.
The most common types of licenses in Abu Dhabi are the Freelancer license, Trader license, Establishment license, and Limited Liability Company (LLC) license. Click on any of these license types to explore our comprehensive Abu Dhabi licensing information pages, offering insights into everything you need to know before starting your company."
Understanding the business setup cost in Abu Dhabi
Understanding the setup costs and ongoing fees is important when establishing a company in Abu Dhabi. Initially, there are one-time expenses to consider, such as expenses for legal documents and any legal translations, notary fees, company registration, signage and company stamps. You may also engage the services of a trusted company formation specialist, such as Gateway Group, to manage the business setup process on your behalf. Additionally, there are trade license fees and commercial lease costs. These costs vary depending upon the type of trade license you opt for.
Being aware of the ongoing fees and obligations is essential for ensuring your company remains active and compliant for smooth operations and for effectively controlling your budget. Ongoing costs include the following: annual trade license renewal, annual renewal of your Tawtheeq lease if your license requires a commercial premise, financial audit, corporate tax and VAT once your company reaches the respective thresholds.
As an aside, ate renewal of your trade license will incur financial penalties. Non-renewal doesn't mean the company is considered closed following license expiry. Closing a company requires a dissolution or liquidation process to formally close it down and remove it from the commercial register.
Do I need a local sponsor in Abu Dhabi?
100% foreign ownership in Abu Dhabi is now permitted; however, whilst foreign ownership activities in Abu Dhabi are in abundance, there are still a number of activities where foreign ownership restrictions remain in place.
If the business activities you need for your new company in Abu Dhabi permit 100% foreign ownership, you do not need a local sponsor. However, just because you don't need one, it doesn't mean you should automatically push forward on your own without considering how appointing a local sponsor could be advantageous to the operations of your company.
Whilst having full control is appealing, it does come with additional responsibilities relating to processing transactions through Immigration and the Ministry of Human Resources and Emirtisation (MOHRE), which may not be practical, especially for organisations which will essentially manage the Abu Dhabi operations from overseas.
In Immigration and MOHRE, only the owner, general manager or authorized PRO with a visa under the company can process transactions. Whilst it might not appear particularly onerous at a glance, this means that unless you have employed your own PRO, either the owner or the general manager need to go to these departments at each stage in the process. In practical terms, this requires knowledge of the systems and processes, handling of the documents, and spending their precious time doing this administrative task. Their attention, energy and time is diverted away from their normal day-to-day activities. Processing one visa might involve five separate visits (and that is assuming there are no hurdles along the way).
Gateway Group provides a solution to this inconvenience. By holding a minority two per cent share in the company on your behalf, it means that we can handle all of the company's Immigration and MOHRE requirements. Furthermore, as our system is directly connected to the MOHRE system we save our clients money on each MOHRE transaction; whereas, if go to a Tasheel centre to process MOHRE transactions yourself, you will incur the Tasheel processing fee per transaction, which at the time of publishing this update is AED115. To put this into context, for each new visa that you process yourself, you will need to make multiple visits to a Tasheel centre and it will cost you around AED600 ($160) extra. Speak to our Abu Dhabi business setup team for more information about how this service could be the ideal solution for your business.
The above solution is also our recommendation for companies wishing to work with ADNOC. Such companies will need the Onshore And Offshore Oil And Gas Fields And Facilities Services activity on their trade license. This activity requires a special approval which is discretionary. At Gateway Group, we already have this activity on our trade license, giving your peace of mind that we meet the approval criteria.
If the business activities for your new company in Abu Dhabi haven't been opened up to full foreign ownership, you will need a local partner. Such activities usually require a local partner to hold a minimum 51% shareholding; however there are a few business activities which aren't available for foreign ownership and are reserved for Emirati ownership only, such as the sale of fire fighting equipment.
What government approvals are needed to start a business in Abu Dhabi?
Starting a business in Abu Dhabi may require obtaining approvals from specific government departments, depending on the nature of your business activities. For instance, if you're establishing a training company, you'll need to have your accredited courses evaluated and ensure you have a dedicated training facility staffed by suitably qualified and experienced personnel. These requirements must be met and approved at the beginning of the incorporation process.
In the hospitality industry, particularly if you're involved in food and beverage services, you'll need approval for the design and layout of your kitchen. If your premises have a suitable outdoor area and you wish to offer outdoor seating during the cooler months, it will be necessary to follow the regulations and apply for a special outdoor seating permit. Additionally, if you plan to serve non-Muslim products such as pork or alcohol, you'll need to obtain additional licenses.
For companies aiming to work with the national oil & gas company, ADNOC, securing approval from the Supreme Petroleum Council (SPC), which has now been assimilated into the Supreme Council for Financial & Economic Affairs, is essential prior to embarking on their supplier registration process.
Even social media influencers are required to obtain a special license from the Media Regulatory Office, formerly the National Media Council, if they are monetizing their online activities.
Special approvals for certain business activities usually relate to safety in some way and any specific measures will ensure minimum standards are implemented and maintained for consistency, and local laws are adhered to.
Understanding and obtaining the necessary government approvals are crucial steps in ensuring compliance and the smooth operation of your business in Abu Dhabi.
Do I need a Tawtheeq to start a business in Abu Dhabi?
The introduction of new licenses in Abu Dhabi in recent years, particularly aimed at freelancers, entrepreneurs and startups, has seen the requirement for office space relaxed and in some instances removed altogether. Certain licenses still require commercial premises to be leased. Such premises must align with any specific conditions related to the business activities and be fitted out accordingly before undergoing inspection by the authorities during the incorporation process.
A Tawtheeq is a tenancy contract registered with the Abu Dhabi Municipality. It is important to obtain a Tawtheeq contract if your license-type requires you to have a commercial premise because it protects you as the lessee, if ever you needed to open a dispute or claim against the landlord. If your commercial lease is not a Tawtheeq lease, it will not be suitable for obtaining your trade license, and you won't have grounds in case of a dispute.
For budgeting purposes, it's noteworthy that commercial leases are often paid 12 months upfront in Abu Dhabi.
Trade license in Abu Dhabi without office requirements
The Abu Dhabi Freelancer License does not require a commercial lease.
The Abu Dhabi Trader License does not require a commercial lease for the first three years of operations. Thereafter, a Tawtheeq lease is required to renew the license.
The Abu Dhabi Establishment License requires a Tawtheeq.
The Abu Dhabi LLC License requires a Tawtheeq.
Securing a Tawtheeq and preparing your commercial premises for inspection are steps in the process of starting a business in Abu Dhabi which demonstrate compliance with local regulations and readiness to commence operations.
Legal documents for starting a business in Abu Dhabi
It's advisable to consider engaging an Abu Dhabi-based firm to draft or review your company documents. Prior to engagement, ensure they have experience in drafting Abu Dhabi-specific company formation documents, as this ensures they are familiar with local laws, regulations, and accepted terminology recognized by the Abu Dhabi Notary Public (which differs from Dubai). Doing so ensures that your documents comply with legal requirements and are properly executed.
Opening a business bank account in Abu Dhabi
It's advisable to start opening your business bank account as soon as your trade license is issued. It will probably take longer than you expect, several weeks or even months.
Whether you opt for an international bank or a UAE bank, the authorized signatory for your company will need to have a visa and Emirates ID and sign the bank account opening application forms in person at the bank.
Be sure to compare the bank fees and minimum balance requirements - these vary by bank and change regularly based upon the specific bank's risk appetite and central bank requirements.
Abu Dhabi employment visas
If you plan to hire staff, ensure that your Abu Dhabi license permits this and be aware of any limitations. After successfully obtaining your Abu Dhabi trade license, your new company must register with Immigration and the Ministry of Human Resources and Emiratization (MOHRE) before it can begin applying for visas.
Here are some key points to consider regarding visa processing in Abu Dhabi:
Office space requirements: Your office space should be large enough to comfortably accommodate the number of employees you intend to hire.
Labour cards: Every employee, whether Emirati or expatriate, requires a labour card to protect their employment rights. It is the employer's responsibility to apply for the labour card, which officially registers the employee with MOHRE, permitting them to work for your company. Labour cards are valid for two years and are renewable. While physical labour cards are no longer issued, electronic versions are downloadable.
Visa processing for expatriate employees: If an expat employee's spouse is sponsoring their Abu Dhabi visa, the employer only needs to provide a labour card. However, if the expatriate does not have a spouse visa, the employer must provide a visa, Emirates ID card, and labour card. The employer bears the cost of visa processing. Physical visa stickers are no longer stamped into passports; instead, they are linked to the Emirates ID card, and electronic versions are downloadable.
Health insurance: Abu Dhabi employers are required to provide health insurance to their employees and their dependents (spouse and up to three children under 18 years of age).
Salary payments: Once a labour card is issued, the employer is responsible for paying the employee's salary as per the registered employment contract with MOHRE. Salaries must be paid via the Wages Protection System (WPS), the federal payroll system that monitors companies for paying the correct amount and on time.
Emiratisation requirements: As you company grows, it will need to adhere to Emiratisation regulations.
Which Abu Dhabi license allows employees?
The Abu Dhabi Freelancer License does not permit employees.
The Abu Dhabi Trader License allows up to three employees. However, the license holder must transfer their own visa under the license first, unless they have a golden visa, and also arrange a Tawtheeq.
The Abu Dhabi Establishment License allows employees without restrictions.
The Abu Dhabi LLC License also allows employees without restrictions.
Visas are integral to most companies, so taking the time to familiarize yourself with the conditions and your obligations as an employer, while ensuring your choice of license will enable you to hire the desired number of staff, will contribute to the smooth operation of your business in Abu Dhabi.
Timescales to set up a company in Abu Dhabi
The time for setting up a company in Abu Dhabi varies based on several factors, including the type of license being applied for, the complexity of ownership structure, the need for specific fit-out of commercial premises, and any additional special approvals, permits, or licenses required for certain business activities.
In general, the average company setup times in Abu Dhabi are as follows:
The Abu Dhabi Freelancer License is usually issued in three to five working days, but it can be issued quicker.
The Abu Dhabi Trader License is typically issued in three to five working days.
The Abu Dhabi Establishment License is usually issued within a week. An instant license for an establishment is also available which is issued at the time of trade license application.
The Abu Dhabi LLC License is typically issued within three to four weeks. An instant license for an LLC is also available which is issued at the time of trade license application.
These timelines provide a general overview, but actual processing times may vary depending on your individual circumstances and specific requirements. It's advisable to consult with a trusted business setup consultant in Abu Dhabi, such as Gateway Group, to better understand the process and requirements for your specific circumstances to ensure a smooth setup experience.
Ready to set up your business in Abu Dhabi?
To simplify and accelerate your business setup in Abu Dhabi, simply scan the QR code to send a WhatsApp message directly to Awais Chughtai, Gateway Group's General Manager.
Benefit from our expertise. We don't just help you, we manage every aspect of your business setup, freeing up your time to focus on developing your new business. With our unrivaled on-the-ground support team in Abu Dhabi, let Gateway Group be your trusted partner for setting up your company. Don't delay—reach out today to get started!
Sources
⁽¹⁾ Source: Reuters
⁽²⁾ Source: Wikipedia
⁽³⁾ Source: Time Out
First published on 25th November 2014.
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Written by Jenny Hunt
Founder, Gateway Group, Abu Dhabi & Dubai, United Arab Emirates
FORBES' Top 100 Most Influential Women in the Middle East
