As a matter of practice, licenses in the UAE were grouped into the following categories:
Commercial license (also known as a Trade license) - for carrying out trade, import, export operations with certain products.
Industrial license (also known as a License for manufacturing) - for the implementation of production activities
Service license (also known as Professional License) - for the provision of services or consulting or professional activities
General trade license-for carrying out trade, import, and export operations with an unlimited number of goods.
The license categories listed above are the basis for categorizing licenses in all of the UAE, both in the mainland zone and in free trade zones. However, with the development of information technology, developments in the media and creative sector, the way of doing business in the UAE has changed dramatically. For this reason, some new types of licenses have been introduced in several free zones in the last few years, such as:
E-Commerce License-for selling goods or services through an online portal and accepting payments online.
Freelancer License-allows an individual to provide consulting or professional services as a freelancer.
It should also be remembered that the type of legal entity and the type of license are completely different things. To understand this, you need to understand the questions about the types of legal entities:
2. What are the main ways to set up a company in the UAE?
You can create three different types of companies in the UAE:
• Mainland (onshore) of the company;
• free zone companies;
* Offshore companies.
Mainland (coast) of the company. Mainland companies are established on the mainland (on land) and are registered and licensed by the Department of Economic Development (DED) in each Emirate. This requires a partner-a citizen of the United Arab Emirates, who owns at least 51% of the shares, or a local service agent. Citizens of the Gulf countries can create the mainland of the company, not having a partner, or agent in UAE. You can create a mainland company if:
• You want to establish a retail business;
• You want to do business mainly in the local market;
• You want to have more trust;
• You want to participate in government projects;
• You want fewer restrictions and more opportunities for offices.
Free zone companies. Free Zone companies are created to operate only within a specific free zone. There are about 40 free zones in the UAE. The number one advantage that each free zone offers is that foreigners can create a company with full (100%) ownership. Keep in mind that not all commercial activities are available in Free Zones. Free Zone companies for you, if:
• You want 100% ownership of the company;
• You want to get consulting or professional services;
• You want to do business as a freelancer;
• You need a cost-effective solution for organizing a business and obtaining a residence visa;
• You want to (re) export goods from the UAE;
• Your business relies more on international or regional trade.
Offshore companies (or international commercial companies). Offshore companies can only do business outside the UAE. However, they have the right to acquire assets, buy real estate in their own name, and own shares in the UAE. Shareholders and employees of offshore companies do NOT have the right to rent an office in the UAE or obtain a residence permit in the UAE under the company. At the same time, the opening of a corporate bank account is allowed.
Offshore to serve your purpose, if
• You want to open a corporate bank account in the UAE;
• You want to own assets and real estate by registering them with a company;
• You want to purchase shares in the company;
• You want to have a holding company;
* You want to engage in international business, including trading, consulting and investment activities.
3. What are the costs of setting up a limited liability company and organizing a free zone?
The cost of creation varies depending on the Emirate and depending on the free zone in a particular Emirate. On average, the creation of a Mainland company (LLC) will cost 30 000 dirhams, not counting the office rent. You can create a free zone company in the Northern Emirates for just 13,500 dirhams with the Flexi Desk options. In Dubai and Abu Dhabi, setting up a free zone company with Flexi Desk options can cost around 30 000 dirhams.
4. Categories of commercial organizations defined by the legislation of the United Arab Emirates
The following types of legal entities can be established on the mainland:
• Single Institution / Property
* Civil company
* Joint Venture Limited Liability Company (only for UAE citizens)
* Simple limited company (only for UAE citizens)
* Limited Liability company (foreigners can own up to 49% of the shares)
* Public joint stock Company (foreigners can own up to 49% of the shares)
• Private joint stock company (foreigners can own up to 49% of the shares)
* Branch (both foreign and local companies can register their branches)
* Representative office (both foreign and local companies can register their representative offices)
Categories of commercial organizations defined by the legislation of the United Arab Emirates.
On the mainland (on the shore), the following types of legal entities can be created::
• Single Institution / Property
* Civil company
* Joint Venture Limited Liability Company (only for UAE citizens)
* Simple limited company (only for UAE citizens)
* Limited Liability company (foreigners can own up to 49% of the shares)
* Public joint stock Company (foreigners can own up to 49% of the shares)
• Private joint stock company (foreigners can own up to 49% of the shares)
* Branch (both foreign and local companies can register their branches)
* Representative office (both foreign and local companies can register their representative offices)
In the free zones can be created with the following types of legal entities:
• Creation of a free zone - FZE (with only one shareholder)
• Limited Liability Company "Free Zone" - FZ-LLC or FZCO
• A branch of the company
* Representative Office
* Public companies (only in JAFZA)
5. What is a trademark?
A trade name is the legal name of a business that is used to distinguish it from other businesses, and it is registered with the relevant department of the DED or Free Zone Authority. However, a trade name is different from a trademark or trade name. Many business owners mistakenly believe that once they have registered a trade name with the appropriate authority, they have unlimited rights to the name in connection with their business. The trade name does not protect the trademark and does not grant exclusive rights to use this name. To protect your trademark and have exclusive rights to use this trademark, you must register the trademark separately.
6. What are the key criteria for hiring employees in the UAE:
* Office space: Companies in the UAE can hire staff whose number is commensurate with the size of the office space rented for business operations. There are no strict rules, but in practice one work visa is issued for every 9 sq. m. of office space.
* The nature of the business. However, depending on the nature of the business, more work visa quotas may be granted regardless of office space. For example, if the nature of a business requires employees to be out of the office most of the time, then such companies can hire as many employees as they need.
* Medical training: A visa to the UAE is issued to expatriates after passing a medical examination. Patients with tuberculosis, HIV-AIDS, syphilis, leprosy, etc. are prohibited from entering the UAE / GCC.
* Emiratisation: In certain business sectors and depending on the size of the company, there are conditions for giving preference to Emirati citizens when applying for various positions.