Doing Business in the United Arab Emirates

Along with economic diversification away from oil and gas, the UAE has also focused on attracting and incentivizing foreign direct investment. This has steadily increased over the past decade, and in 2023, the UAE managed to attract inflows of $30.688 billion, ranking it as second in the world for FDI. Several initiatives and programs have been used to help the UAE achieve this level including the NextGen FDI initiative started in 2022 with programs to help digitally-based businesses build their platforms and scale within the country. 

A more traditional route the UAE has taken is the creation of over 40 free zones around the country. In these zones, foreign nationals and foreign corporations can fully own their entities and repatriate 100% of their profits. These entities are also 100% exempt from CIT (corporate income tax) and customs duty. Businesses in these zones are fast and easy to set up and are supported by top-quality infrastructure. 

According to the World Bank, the UAE is one of the easiest places in the world to set up a business, even in the so-called “mainland” outside of these free zones. With a score of 94.8% and a rank of 17th globally, foreigners can set up entities here quickly. Only two main steps are required for men to set up a limited liability company (LLC) and this can be done in as few as 3.5 days. However, women must obtain official permission from their husbands to set up their businesses and this can add a day to the process. 

Foreign investors, if they don’t set up in Free Zones, choose to register their concerns in the UAE as either resident LLCs or offshore LLCs. The main difference is that offshore LLCs can only do international business and can’t enter the local markets. Most LLCs can be completely foreign-owned though a few exceptions may require the use of a local Emirati agent. For an LLC, you only need one shareholder and one director and can have a minimum paid-in shared capital of just $1.

CIT is 9% in the UAE which is one of the lowest rates in the world, but businesses don’t even pay CIT on their first 375,000 AED (UAE dirham) of profit (roughly 102,000 USD). VAT is levied at just 5%, but that is reduced to 0% for any goods exported outside of the GCC (Gulf Cooperation Council) region. 

Employees in the UAE are protected by a minimum wage of 300 AED for workers without high school certificates, 400 AED for high school graduates, and 500 AED for post-secondary graduates. However, these minimums are far below average monthly salaries which average around 15,000 AED/month. Employees generally work eight hours a day and not more than 48 hours a week without overtime which is paid at 125% of normal wages. Workers are entitled to 21 consecutive days of annual leave as well as ten paid public holidays each year.