Frequently Asked Question
What licenses are required to start a business in the UAE?
The type of license depends on your business activity and location (Mainland, Free Zone, or Offshore). Common types include Commercial, Professional, and Industrial licenses.
What is the difference between a Free Zone and Mainland company?
Free Zone companies enjoy 100% ownership and tax benefits but have limited ability to trade directly in the UAE market without a distributor. Mainland companies can trade anywhere in the UAE.
Do I need a local sponsor or service agent to start my business?
Previously, a local sponsor was required for Mainland LLCs. However, as of June 2021, most Mainland business activities allow 100% foreign ownership without a local sponsor. A local service agent may still be required for certain professional licenses.
Is VAT registration mandatory for all businesses in the UAE?
Businesses with taxable supplies and imports exceeding AED 375,000 annually must register for VAT. Voluntary registration is allowed if annual turnover exceeds AED 187,500.
How often do I need to file VAT returns?
VAT returns are generally filed quarterly or monthly, depending on the Federal Tax Authority’s (FTA) allocation.
What is the new Corporate Tax in the UAE?
Starting June 2023, a 9% corporate tax applies to profits exceeding AED 375,000. Small businesses may be eligible for relief under certain conditions.
Can I open a business bank account easily in the UAE?
Business bank account opening can take 1–4 weeks and requires proper documentation, a valid license, office lease, and sometimes a business plan or invoices.
Is bookkeeping mandatory in the UAE?
Yes, maintaining proper accounting records for at least 5 years is required by law and essential for VAT and corporate tax compliance.
What are the penalties for non-compliance with VAT or tax regulations?
Penalties include fines starting from AED 1,000 for late filings to more severe penalties for evasion or incorrect reporting.
Can I run a business from home in the UAE?
Yes, under the eTrader license (Dubai) or certain Freelance Permits (other Emirates), you can operate from home without a physical office.
Do I need an annual audit for my business?
Free Zone and some Mainland companies require annual financial audits. Requirements vary by jurisdiction.
How can I legally hire employees for my business?
After obtaining a valid license and office space, you can apply for employee visas through the Ministry of Human Resources and Emiratisation (MOHRE) or Free Zone authority.
What is ESR and does it apply to my company?
Economic Substance Regulations (ESR) apply to companies in relevant activities like banking, insurance, holding companies, etc. Non-compliance leads to fines and license suspension.
Can a single person own a company in the UAE?
Yes, through a Sole Establishment, Civil Company (for professionals), or Single Shareholder LLC in certain Free Zones or Mainland under 100% foreign ownership rules.
What are the ongoing costs for maintaining a business in the UAE?
Costs include license renewal, visa renewals, audit/reporting fees, accounting, office lease (if applicable), and government compliance fees.
