Entering the Emirati market opens the door to a unique economy among global businesses and commerce. The UAE, founded in 1971, is a federation of seven states – Abu Dhabi, the capital; Dubai, the most populous; plus Ajman, Fujairah, Ras Al Khaimah (joined in 1972), Sharjah and Umm Al Quwain. The Emirates’ economic foundation is built on having 10% of global oil supplies plus 20% of the world’s natural gas reserves (contributing 30% of the Gross Domestic Product combined). The modern-day UAE, however, has made impressive strides towards diversification away from a traditional labour-intensive economy.
Development of hydrocarbon reserves, tourism, renewable energy, aviation, telecommunications and advanced technologies have added to an international profile already boosted by the world-class airlines Emirates and Etihad. The Emirates is the most culturally mixed of the Arab nations, with a population of around 10 million, including 90% expatriates. At the same time, a host of multinationals add to the appeal for foreign investment.
International companies seeking a foothold in this Middle East market must set up a subsidiary to hire staff and operate payroll – an essential step even though there is no federal personal income tax. The usual option is to open a limited liability company, operating under the Commercial Companies Law, either ‘onshore’ on the mainland or in one of the ‘offshore’ 47 Free Trade Zones.
Complying with the Commercial Companies Law means satisfying various requirements, including:
There are speedier alternatives to launching a subsidiary, however, with Bradford Jacobs opening the door to a hassle-free route into the United Arab Emirates.
Work alongside our Professional Employer Organisation (PEO) recruitment specialists, then utilise our Employer of Record (EOR) in-country experts to handle every aspect of compliance. Employers can depend on our in-depth knowledge of the UAE and how to navigate its legislative issues that revolve around the Commercial Companies Law.
The UAE is a magnet for foreign investment and workers, but there are inevitably issues when complying with the relevant employment legislation. In the UAE, this revolves around the Labor Law, amended in February 2022, in many key areas, including employment contracts. These laws lay down the employers’ obligations and their employees’ statutory rights.
Opening a business in any overseas territory can be challenging. Moving staff worldwide means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance? Drawing up an expansion blueprint is not enough; your business plan must answer all these questions. By partnering with a PEO and EOR such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in the UAE. But for those who want to ‘go it alone’, here are some of the necessary steps.
The United Arab Emirates (UAE) is a federation of seven states offering attractive and prosperous destinations for business. The government has implemented many policies to promote a healthy and thriving commercial environment. Deciding where to locate your office while setting up your company is essential to success in the UAE. A physical office is a legal requirement for obtaining a company license in most Emirates; plus, it can be linked to the visa quota companies are allocated to onboard foreigners. However, locating in one of the many Free Trade Zones can provide solutions such as co-working spaces and shared facilities.
Taking advantage of all this country has to offer to optimise profits, and comply with regulations, means researching and looking for the expertise needed to steer you in the right direction. As a PEO, we can assist you by utilising our local know-how and applying our 20 years of global experience.
When looking for an office in the UAE, some of the considerations are:
What the four largest Emirates have to offer:
Abu Dhabi is the largest Emirate and the richest, the capital city with 95% of the country’s oil production. Its infrastructure is second to none and has the facilities to accommodate international commerce with companies such as Deloitte, EY, PwC and KPMG, to name a few. The Industrial City of Abu Dhabi (ICAD) spans over 40 sq. km., providing companies with excellent roads and access to ports and airports. Hubs and business clusters benefit from good communications, connectivity and manufacturing facilities in engineering, construction, and chemicals, as well as high-tech companies with cutting-edge factory space available. Six Free Trade Zones (FTZ) offer diverse finance, media, technology, renewable energy, and industry specialities.
Dubai has a dominant oil and gas sector but also shines in construction, real estate, recruitment, and e-commerce; in fact, Dubai is a digital city with businesses thriving online. It welcomes businesses, and start-ups flourish due to high demand and buying power. It has some of the most iconic modern buildings in the world! Attractions for companies include more than 20 FTZs, world-class financial centres, a multinational educated workforce with an easy atmosphere for business, low set-up costs, and no physical office needed.
Sharjah should be seen as an opportunity for go-getting entrepreneurs as it has excellent potential with lower costs, such as affordable property prices. It offers the same benefits as Abu Dhabi and Dubai, with policies welcoming investment but no need for capital to set up a business. However, it has relaxed business regulations with unlimited visa issuance; therefore, companies can onboard more global talent. They also rely on more sustainable energy solutions rather than the hydrocarbons in the oil and gas production areas of other emirates.
Ras Al Khaimah has richly diverse in history and economy. It has the fourth largest population of the seven Emirates but can still draw investors and businesses to its shores and into the Ras Al Khaimah Free Trade Zone. It is close to Dubai for business but has ready access to Port Saqr and UAE’s principal airports. It offers easy and quick company set-up processes and can supply licenses for industry, consultancy, trading, and commerce. There is no tax on income or profits or on capital repatriation. Additionally, there are affordable office facilities in any of the four dedicated enterprise parks such as the Business Park, Industrial Park, Academic Zone and Technology Park One.
The United Arab Emirates is ideally located to service the Arabian Peninsula, Africa and South Asia as a manufacturing centre. The UAE was ranked the most competitive sector in the region for industrial performance by the United Nations Industrial Development Organisation (UNIDO), and 28th in the world for ‘value added’ manufacturing per capita.
As of 2021, manufacturing accounted for AED 133bn (USD 36bn) with ambitions to reach AED 300bn (USD 82bn) by 2031 with policies aimed at important sectors such as food and agricultural technology, petrochemicals, medical and space technology with bank investment of AED 30 billion (USD 8 billion) to stimulate employment and productivity.
Manufacturing opportunities exist for new and start-up companies but finding the best manufacturer to partner with is the first step. Choosing wisely can mean the difference between success and failure. A good partnership can build client relationships and assist with cultural and language difficulties, especially when launching a new product into the marketplace. A good manufacturer can be a boon for business and essential when hitting targets for quantities and quality.
However, at the start of any relationship, especially amid new customs and commercial climates, it is prudent to seek references when vetting a company and to practice due diligence when placing orders. Here are some questions to consider when looking for a manufacturer in the Emirates:
After setting up your company, locating an office and partnering with a local manufacturer, you now have a product to sell. The best approach in the UAE is to use a local agent for a specific Emirate or a large distribution company to cover the whole of the country, especially if your office is in one of the Free Trade Zones to manage product registration. The main areas of distribution rest with wholesalers, and major retailers such as supermarkets, department stores and shopping malls, with the trend swaying towards telephone and online sales, which have increased to keep up with demand.
A top-rated distributor will be experienced with the larger markets and distribution channels and supply chains of other Middle East nations, Africa, and South and West Asia. They will have a handle on any changes in the marketplace or emerging trends, such as online shopping. A good partner can help formulate goals according to your business plan and budget and inform you of rules and changes in the law to stay compliant before distributing.
Vetting a distributor can be problematic for new companies in a new country; here are a few considerations:
Finding the right distributor can mean success for both of you. It is not just about getting your merchandise from one place to another; it’s also about growing and developing together, expanding your horizons into new markets farther afield and increasing your market share. Tips on finding your distribution partner include the following:
Some advantages of entering the Emirati market include the following:
Some challenges of entering the Emirati market include the following: