The Process of Company Formation in Abu Dhabi

The UAE has seen remarkable growth in its economy and tourism pie chart. As a number of entrepreneurs want to be part of the fastest-growing business community, naturally, Dubai is the first choice of every business person for company formation. But if you want to take advantage of comparatively less competitive yet more opportunities to upscale, Abu Dhabi is an unmatched choice for your business setup.

Abu Dhabi is not only the largest emirate of the United Arab Emirates, but it is responsible for contributing more than half of the country's economy. With the business-friendly legislature and investor-favorable business policies, the company formation in Abu Dhabi is a promising footstep to make your business successful.

Here, today we will explore company formation in Abu Dhabi, including the process and key points to consider.

Steps for company formation in Abu Dhabi

Abu Dhabi is rapidly becoming the industrial and business hub of the United Arab Emirates that offer a wide range of business opportunities to shareholders and foreign investors from all across the world. It is also easy to start a company in Abu Dhabi due to the UAE's business policies.

Here are the steps to start a business in Abu Dhabi:

Your business activity and legal form

You must know which type of business activity you want to partake in. The business activity determines the further aspects of your business. Those events can include legal requirements and fees.

Business license registration

There are 6 types of licenses the UAE government offers to businesses based on their chosen legal activity and location.

Location is also another important factor you need to consider while starting a new company in Abu Dhabi. Depending on your chosen activity, you can either open your business in the free zones of Abu Dhabi. Or start a limited liability company (LLC) in the mainland of Abu Dhabi. The one benefit of having business in the free zone is you get to enjoy 100% complete foreign ownership of your company. Whereas, you have to share the 51% ownership of your company with a UAE national local partner if you start your company in the Abu Dhabi mainland.

Company ownership

The UAE's legal structure offers multiple types of business ownership. The ownership structure basically defines the legal forms and categories of your company setup. The following are the main categories under which all the companies in Abu Dhabi, Dubai, and other emirates of the UAE fall:

Limited liability company (LLC)

Civil Company

· Foreign company /branch

· GCC company brand

· Limited partnership

General partnership

Sole proprietorship

· Freezone company

· Holding company

Trade name

Once you have decided on the legal activities and legal entity of your company formation in Abu Dhabi, the next step is to register the trade name for your company setup. You have to register your name with the Abu Dhabi Department of economic development (ADDED). The ADDED is responsible for issuing the trade license. The following are the key points to consider with naming your business in the UAE: 

The name shouldn't hurt public sentiments

The name shouldn't contain any name of a religious, political, or influential body.

The name has to be unique and followed by the acronym of the legal form of the company. For example, LLC,

The name shouldn't be taken before and must be available in ADDED list.

Further approvals

The companies in Abu Dhabi require additional permits before getting the license or starting the business.

You need to get the permit from the general directorate of residency and foreign affairs. You can take the help of a consultant of Vigor to guide you through the process and take all the legal matters into their own hands.

Office space

It is compulsory to have an official address for your business or company in Abu Dhabi. With the tenancy contract approved by Ejari, you need to submit the license application.

Visa application

Once you get the license of company formation in Abu Dhabi, now you have the choice to sponsor visas for your family and employees if you are planning to hire.

The benefits of company formation in Abu Dhabi

Company formation in Abu Dhabi is a great way for businesses to access the great potential of the region. The United Arab Emirates offers a strong, stable, and secure business environment with many benefits that can be taken advantage of by companies.

By forming a company in Abu Dhabi, businesses can benefit from an attractive corporate tax rate, access to an international network of markets and customers, as well as an excellent infrastructure. 

The city also has a high quality of life and provides access to world-class education, healthcare, and leisure activities. All with this, investors can benefit from the strategic location of Abu Dhabi which makes it easy to tap into regional markets such as Saudi Arabia and Qatar. 

Also, Foreign Ownership Law in Abu Dhabi allows up to 100% foreign ownership in certain sectors making it easier for foreign investors to enter the local market. 

All these factors make company formation in Abu Dhabi an attractive option for businesses looking for growth opportunities.

VAT registration in Abu Dhabi

The first time VAT was introduced in 2018 in Abu Dhabi as it was applied 5% on specific goods in the sale market. VAT registration in Abu Dhabi is a requirement for businesses operating in the region. If your business has a taxable turnover of more than AED 375,000, you are obligated to register for VAT in the UAE. This includes companies that are based in Abu Dhabi as well as those that provide services from outside of the region.

In order to register for VAT in Abu Dhabi, businesses must submit an application and supporting documents such as financial statements, commercial licenses, and proof of import/export transactions.

Once registered, businesses must charge VAT on all applicable sales and purchases and pay any due taxes to the Federal Tax Authority directly on a monthly or quarterly basis.

Failure to comply with these regulations may result in significant fines or penalties. Therefore, it’s important for businesses operating in Abu Dhabi to understand their tax obligations and strictly adhere to them.

The company formation in Abu Dhabi

Company formation in Abu Dhabi requires minimal effort and the process of registration is hassle-free. As compared to the other emirates like Dubai, here you do not have to worry about the overwhelming competition.

The team of experts, Vigor corporate services can be your helping hands to walk you through the company registration, and business license process. Contact us to know more about the legal formalities of company formation in Abu Dhabi.