Are you thinking of establishing your company in the lively and quickly rising environment of Abu Dhabi, the Middle East’s second-largest metropolis after Dubai? Abu Dhabi provides enormous chances for companies to thrive in this competitive market. Many businesses are choosing the procedure of company registration in Abu Dhabi, owing to the appealing tax benefits accessible to them. In this article, we will provide you necessary information about the types of business structure, eligibility criteria, documentation, advantages and more. So read the complete article for more.
Procedure for Company Registration in Abu Dhabi
Here is the list of steps of procedure for company registration in Abu Dhabi are
- Business Structure Selection: Choose the appropriate business structure, with LLCs being the most widely used in Abu Dhabi.
- Business Name Selection: Choose a suitable trade name for your company, and submit a minimum of three options to the Department of Economic Development (DED) for approval.
- Local Shareholder: Identify and engage a local shareholder who will have a controlling stake of at least 51% in the company.
- Chamber of Commerce Registration: After the license is approved, your company can be registered with the Abu Dhabi Chamber of Commerce.
- Business Activity Declaration: Declare the initial business activities to the relevant authority.
- Trade Name Approval: Once approved, you’ll receive the official trade name for your company.
- Document Submission: Provide notarized articles of association and other incorporation documents to the Abu Dhabi Municipality.
- Open a Bank Account in Abu Dhabi: Open a corporate bank account in Abu Dhabi and deposit the required initial capital.
- License Application: Submit all necessary documents to the DED, with translations into Arabic if needed. Ensure these documents are attested by the Justice Ministry.
Types of Business Structure for Company Incorporation in Abu Dhabi
There are numerous business structures available when forming a company in Abu Dhabi:
- LLC (Limited Liability Company): A Limited Liability Corporation in Abu Dhabi, is one of the most frequent corporate entity types. The obligation of shareholders is limited to the quantity of shares they possess. An LLC in Abu Dhabi must have at least two owners and may have up to 50 shareholders. For an LLC establishment, a minimum capital subscription of greater than USD 40,000 is required.
- Representative Office: A foreign firm may create a representative office for reasons other than operational activity, such as market research. The formation of these offices is permitted under Article 313 of the Companies Law.
- Free Zone Corporation: Abu Dhabi has several free zones where foreign ownership is permitted and labor recruiting is not restricted. Each free zone has its own set of regulations and limits that registered businesses must adhere to.
- Branch Office: Foreign corporations may establish branch offices in Abu Dhabi by the rules stated in the Commercial Corporations Act. These offices may carry out activities comparable to their parent company, such as product marketing inside the UAE.
Eligibility Criteria for Company Formation in Abu Dhabi
To begin the procedure of company formation in Abu Dhabi, the entrepreneur must fulfill the following qualifying requirements:
- Minimum Investment: Applicants must fulfill the minimum capital criteria for Abu Dhabi business registration. The minimum capital necessary to incorporate a limited liability company is USD 41,000, whereas capital requirements for free zone enterprises vary depending on the situation.
- Appropriate Agency: While it is not required, it is recommended that applicants hire a qualified agency to handle the requirements related to company creation in Abu Dhabi, therefore expediting the process.
- Beneficial Ownership: Beneficial ownership criteria must be met by foreign firms created in Abu Dhabi. Foreign firms often sign shareholder agreements specifying these criteria. It is important to note that not all enterprises need a UAE resident to control 51% of the company; free trade zones are an example.
Documentation for Company Registration in Abu Dhabi
The following documents are required for company registration in Abu Dhabi:
- Memorandum of Association
- Articles of Association
- Copy of Documents related to Share Capital (Certificate of Paid-up Share Capital)
- Deposit Slip – Capital deposited in Abu Dhabi Bank Account
- Name Approval Certificate
- Shareholders Agreement
- Managers Appointment
- Board Resolution Copy (For a foreign company opening a branch or representative office)
- Notarized Documents
- Lease Agreement of the Premises
Advantages of Company Registration in Abu Dhabi
Here are some of the primary benefits of setting up a company in Abu Dhabi are:
- Various Business Structures: During the company registration procedure, Abu Dhabi offers many alternatives for business formations. Foreign investors may choose the structure that best meets their company objectives, providing flexibility and development opportunities.
- Several free zones: With over eight free zones, Abu Dhabi offers a diverse range of options for doing business. Investors may choose a free zone based on their requirements and interests, even forming their free zone firm.
- Tax Advantages: Because the UAE does not charge any kind of tax, whether company tax, personal tax, withholding tax, or VAT, Abu Dhabi provides excellent potential for enterprises to decrease their worldwide tax obligations. In Abu Dhabi, the only enterprises subject to taxes are those in the oil and gas sector. The city also has several double taxation treaties with other nations, which adds to its attraction to enterprises.
- Integrated Legal System: Abu Dhabi’s legal system has improved as a result of government engagement and the presence of UK and American law firms in the city. As a consequence of this transformation, a unified legal system has been established, making it simpler for companies to handle legal requirements.
- Tourism: Abu Dhabi is a worldwide hub and international financial center that attracts businesses from across the globe. The tourist industry in the city is flourishing, with several attractions and big events such as the impending FIFA World Cup in 2022. This diversified and thriving environment encourages businesses to diversify their activities.
Compliances Required for Company Registration in Abu Dhabi
The following compliances are necessary for company registration in Abu Dhabi:
- Corporate Tax: Most companies in Abu Dhabi do not pay corporate tax. However, oil and gas companies are subject to a 55% corporate tax, while foreign banks pay a 20% corporate tax.
- Social Security Contributions: Employers must contribute 12%, and employees must contribute 5% of their salaries toward social security in compliance with local labour laws.
- Custom Duties: A 5% customs duty is imposed on goods from non-GCC countries.
- Minimum Share Capital: Ensure the company has the minimum required share capital, as specified in the Commercial Companies Federal Law No (8) of 1984.
- Annual Financial Statements: Submit annual financial statements to the Abu Dhabi Ministry of Economy and the DED.
- Appointment of Manager: Appoint a manager to handle the company’s affairs, as stipulated in the Memorandum of Association.
- Annual Return Reporting: File an annual return as required by the DED.
Foreign Investment and Free Trade Zones in Abu Dhabi
It is vital to know that a business incorporated in Abu Dhabi cannot be 100% foreign-owned. The appointment of an Abu Dhabi citizen who would hold at least 51% of the firm is a crucial criterion. This national might be a UAE resident. However, the country’s multiple free trade zones provide an opportunity for enterprises to have 100% foreign ownership in specialized areas.
Abu Dhabi has over eight free trade zones, which creates an appealing environment for international investors interested in business formation. These zones provide the most advantages, including tax breaks that make the registration procedure even more tempting.
Company formation in Abu Dhabi is a regulated and multifaceted procedure that provides a plethora of chances for entrepreneurs and investors eager to capitalize on the region’s dynamic market. To attract foreign investment and drive economic development, the Abu Dhabi government has created a business-friendly climate with a clear and open legislative framework.
To successfully establish a business in Abu Dhabi, one must traverse several legal procedures, such as getting the requisite licenses and permissions, selecting the appropriate form of legal organization, and ensuring compliance with local and federal regulations. Numerous free zones that provide tax breaks, complete foreign ownership, and other benefits ease the process, as does the Department of Economic Development (DED), which gives guidelines for onshore business formation.
The cost of company formation in Abu Dhabi is around AED 9,000 to AED 29,000 for a standard company registration package.
The ADDED website allows you to register a business in Abu Dhabi online. Certain papers, such as the company’s MOA and AOA, must still be submitted in person.
The procedure for registering a company in Abu Dhabi can take between 2 and 4 weeks.