United Arab Emirates: Setting Up A Business In The UAE

With a strategic location for international trade, efficient and modern infrastructure, the presence of special economic zones and free zones, political stability, a proactive entrepreneurial environment, economic diversification, a vast pool of highly skilled and multicultural international labor, a well-developed banking and financial sector, tax incentives, innovation, research, and a constant focus on improving the quality of life for its residents, the UAE offers a high standard of living, quality healthcare, top-tier education, and a good quality environment. This attracts expatriates and international businesses from all over the world, particularly, from Europe, the United Kingdom, Asia, the Middle East, and Africa.

Important measures have also been introduced to build confidence in the local judicial system and facilitate dispute resolution for foreigners. For example, it is expected that parties entering into contracts in the UAE have the right to decide, with some exceptions concerning labour and local real estate law, whether the relationship should be governed by a different law, or to choose an alternative jurisdiction in case of disputes, such as the Dubai International Financial Centre (the "DIFC") court, or opt for arbitration at a venue of their choice.

The DIFC is a special financial zone located in Dubai, with its legal system based on English common law, regulated by DIFC laws, and distinct from the civil law system based on Sharia law that prevails in other parts of the UAE. All these elements are part of a well-structured strategy, not only economic but also geared towards creating a favourable environment for investments and businesses, ensuring long-term economic success.

As part of their growth journey, the UAE has organized to offer a wide range of investment options for various economic players, both domestic and foreign, covering almost all sectors of interest, traditional and innovative alike. Significant efforts are directed towards fostering an ideal environment for developing innovative industries such as emerging technologies like cryptocurrency, gaming, and artificial intelligence.

Focusing on the practical side, those looking to start a business locally have various options, such as establishing an "onshore" company commonly referred to as "mainland" or opting for one of the numerous "free zones" available today.

"Mainland" companies are registered within the UAE territory, outside of the free zones. They are subject to the provisions of the Commercial Companies Law of the UAE and can operate freely throughout the UAE and abroad without any restrictions.

"Free zones", on the other hand, are well-defined geographic areas where companies can be established. They are chosen based on specific features of a particular free zone and typically come with additional regulations and restrictions, especially when operating outside the free zone. The choice of a specific free zone is typically based on the specific business requirements and related advantages, including tax incentives.

Additionally, Ras Al Khaimah, one of the rapidly growing emirates of the UAE, offers various opportunities for entrepreneurship and investment. Here, one may find the Ras Al Khaimah Economic Zone ("RAKEZ"), a special economic zone that provides an attractive environment for businesses in various sectors, including trade, manufacturing, and more, along with a range of services and benefits for companies.

The choice between mainland and a specific free zone, given the diverse options available, will depend on the specific needs of the company, business sectors, operational requirements, and should be carefully analyzed with the support of qualified professionals to avoid ending up with an inadequate or even useless instrument for the intended purpose.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.