Abu Dhabi, the capital city of the United Arab Emirates, is an attractive business hub for global entrepreneurs and investors. Unlike Dubai, the commercial powerhouse of the UAE, Abu Dhabi offers a wealth of opportunities for entrepreneurs and established companies.
But how do you tap into this thriving market? The first step is to setup a company in Abu Dhabi that aligns with your business objectives.
This article will guide you in navigating the process of obtaining a business license in Abu Dhabi.
Benefits of Business Setup in Abu Dhabi
Abu Dhabi, UAE, is a powerhouse of economic growth and innovation. Here’s why setting up a company here could be your best business move:
- Political and economic stability
- Zero personal and corporate tax (with some exceptions)
- 100% foreign business ownership
- Strategic location between East and West
- World-class infrastructure and logistics
- Access to a skilled workforce
- High quality of life for expatriates
Types of Business Structures in Abu Dhabi
Before diving into the business licensing process, it’s crucial to understand when setting up a company in Abu Dhabi, you’ll need to choose the right legal structure as per your business operational requirements. The main options include:
- Limited Liability Company (LLC): The most common structure, requiring a minimum of 2 shareholders.
- Branch Office: An extension of a foreign company, allowing 100% foreign ownership but with limited activities.
- Representative Office: Ideal for market research and liaison purposes, but cannot engage in commercial activities.
- Free Zone Company: 100% foreign ownership allowed, with specific benefits depending on the chosen free zone.
- Sole Proprietorship: Suitable for single owners looking to start a small business.
Types of Business Licenses in Abu Dhabi
Abu Dhabi offers different types of business licenses, your chosen activities will determine which license you need to apply for, and you may require multiple licenses if your business spans different sectors.
- Commercial License: For trading activities and retail businesses.
- Professional License: For service-oriented businesses and consultancies.
- Industrial License: For manufacturing and industrial activities.
- Tourism License: For businesses in the hospitality and tourism sector.
Steps to Get a Business License in Abu Dhabi
Obtaining a business license in Abu Dhabi involves several key steps. While this process may seem straightforward, each step involves nuanced requirements and potential challenges. It is beneficial to work with experienced business setup consultants like Corporate Business Services (CBS) to navigate the intricacies efficiently.
- Choose your business activity and structure.
- Select a trade name and get it approved by the Abu Dhabi Department of Economic Development (ADDED).
- Obtain initial approval from the ADDED.
- Secure necessary approvals from relevant government departments based on your business activity.
- Find a local sponsor or partner (if required).
- Lease office space and obtain Tawtheeq (tenancy contract).
- Submit all documents to the ADDED for final approval.
- Pay license fees and receive your business license.
Business Setup in Abu Dhabi Mainland Vs. Freezones
When setting up your business in Abu Dhabi, you’ll need to decide between mainland and freezone options. Your choice will depend on your business model, target market, and long-term expansion plans. Each has its own set of advantages.
Company Formation in Abu Dhabi Mainland:
- Allows you to conduct business throughout the UAE
- Requires a local sponsor or service agent (for most business types)
- Subject to federal and local regulations
Company Formation in Abu Dhabi Freezones:
- Offer 100% foreign ownership
- Provide tax exemptions and customs duty benefits
- Limited to operating within the freezone or internationally
List of Freezones in Abu Dhabi
Abu Dhabi boasts several freezones, each catering to specific industries:
- Abu Dhabi Airport Free Zone (ADAFZ)
- Khalifa Industrial Zone Abu Dhabi (KIZAD)
- twofour54
- Masdar City Free Zone
- Abu Dhabi Global Market (ADGM)
What is the Cost of Abu Dhabi Trade License?
The initial cost of obtaining a trade license in Abu Dhabi can vary widely depending on factors such as:
- Type of business activity
- Business structure
- Office space requirements
- Number of visas needed
VAT and Corporate Tax in Abu Dhabi
While the UAE has long been known as a tax-free haven, recent changes have introduced some taxes:
Value Added Tax (VAT): Implemented in 2018 at a rate of 5% on most goods and services.
Corporate Tax: Introduced in 2023 at a standard rate of 9% for taxable income exceeding AED 375,000.
Do I Need a Local Sponsor to Start a Company in Abu Dhabi?
For mainland companies, a local sponsor holding 51% of the company shares is generally required. However, recent changes allow 100% foreign ownership in certain sectors. Free zone companies can have 100% foreign ownership without a local sponsor.
How Can CBS Assist You?
Navigating the intricacies of business setup in Abu Dhabi can be challenging. That’s where Corporate Business Services (CBS) comes in. As a leading business consulting firm in the UAE, CBS offers comprehensive support for your business setup in the UAE, from initial planning to license acquisition and beyond.
Our team of experts can guide you through every step of the process, ensuring compliance with local regulations and helping you make informed decisions about your business structure and location. Whether you’re looking to set up in Abu Dhabi, Dubai, or any other emirate, CBS has the knowledge and experience to make your business dreams a reality. Book a Free and personalized consultation with our expert advisors in UAE.
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