International Trade


                    



When the Winds of Change Blow, Some People Build walls and others build Windmills - Chinese Proverb


Starting a Business in UAE
By Aditi 

The United Arab Emirates (UAE) is having a Gross Domestic Product (GDP) of USD 570 billion (2014). It has stayed as an oil-driven economy for a few decades until recently but has successfully diversified. 71% of its economy is earned from non-oil sectors today. A substantial contribution towards diversification is from its huge construction projects, widening manufacture base and services sector. Effect of thriving tourism also puts in sizably into this economic spread.
Unification in 1971 brought the seven emirates together (Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain), and thrived towards collective development which lacked before unification. The economy shifted from being fishing, pearl-diving and seafaring to cultured pearls and oil-based wealth. on-oil trade of UAE has grown more than 27 times from 1981-2012.
According to 2013 data, the United Arab Emirates makes the 25th largest export economy globally. With a national GDP of USD 402 billion, exports from UAE were worth USD 197 billion and imports were valued at USD 205 billion during 2013. The top exports include Crude petroleum (USD 92.9 billion), refined petroleum (USD 24.6 billion), gold (USD 17.9 billion), petroleum gas (USD 11.9billion) and raw aluminium (USD 3.69 billion). Top imports of UAE are gold (USD 15.7billion), jewellery (USD 15.5billion), broadcasting equipment (USD 11.4billion), cars (USD 10.5billion) and refined petroleum (USD 9.3billion). World Shipping Council confirms that the two of the globe’s 50 container ports are stationed in UAE and Dubai boasts of its port’s position listed among top 10 best container ports. Key industries that are in huge demand to venture into UAE are- services of construction, materials, supplies, professional services, aerospace companies, energy, tourism products and services, luxury hotels, creative arts, culture, entertainment, cutting edge- products and high-end medical services.
How to establish a business in UAE?
World Bank ranking of Ease of Doing Business has put UAE on top 31. The market of UEA is open to the outer world through the ways of Joint Partnerships or through Free Trade Zones. 

Starting a local business entity:

Register a company under and obtain a trade licence (from DED). Gain the approval from the concerned Department or ministry if specific permissions are required. (Locally incorporated entities may be formed under the UAE Civil Code or incorporated under Federal Law No. 8 of 1984 Concerning Commercial Companies (as amended by Federal Law No. 15 of 1998) (the Companies Law)).
Under UAE civil code: (non-commercial civic activities) (the professional services company; the speculative venture partnership; or an Islamic Shari’a-compliant arrangement known as a Mudaraba)
Most consultancy services including law, medicine and research falls under this category. Such an entity may be 100% foreign owned though a national agent must be employed by all such entities. The national agent will provide them services of applying with the government of UAE for the required licences, permits and visas. The provisions of the Companies Law do not apply to entities formed under the UAE Civil Code.
Entities formed under the Companies Law:
The Companies Law requires companies to adopt one of the following forms:

Limited Liability Companies
Private Joint Stock Companies
Public Joint Stock Companies
Joint Participation Ventures (or Private Unlimited Companies)
Limited Partnerships (or Simple Commandite Companies)
Partnership Limited with Shares (or Share Commandite Companies)
General Partnerships (or Joint Liability Companies)
 
Operating through Free Zone

Major benefit of forming a business entity in Free Zone is that the entity can be completely foreigner owned. There is no minimum capital requirement for a representative office. However, many free zones have made it mandate for a business to spring in Free Zone should have a capital around USD 13600. These FTEs can operate under the terms and regulations enlisted in their licence and cannot operate outside FTZ. Licences differ among Free Zones but all of them only allow you to do business among Free Zones or internationally.

Commercial Agency Relationship

This is an entity without the foreign national’s physical presence in UAE. He can tie up with a wholly local owned entity or UAE national. Large scale import or export of goods from UAE can resort to this form of doing business. Under this form, the foreign business and the commercial agent agree to the terms of the sales commission, the territory of the distributorship and the duration of the relationship. Exclusivity, commissions and termination are the protection afforded to agents under the UAE Commercial Agencies Law.

Opening A Branch Or Representative Office (Outside Of A Free Zone)

As per articles 313 to 316 of the Companies Law, a representative office may only conduct marketing and administrative functions on behalf of its foreign parent. However, obtaining a trade licence and employing a national are just as mandatory.
A note about Joint Partnership:
An Emirati should own at least 51% of stake in the business in partnership with a foreign national. The licencing is mandatory whose procedure varies between Emirates. Chamber of Commerce in each Emirate is the first body to be approached if one wants to start a business. (Here are the links for each Chamber of Commerce- Abu Dhabi Chamber of Commerce, Dubai Chamber of Commerce and Industry, Sharjah Chamber of Commerce & Industry, Umm al-Qaiwain Chamber of Commerce & Industry, Ra’s al-Khaimah Chamber of Commerce & Industry, Fujairah Chamber of Commerce)

Required documents in general:
Registration and licencing application, as well as proof of reserved trade name.
Photocopy of applicant’s passport and applicant’s naturalisation identification.
Approval issued by other Government authorities according to the type of activity.
Applicants under 21 years should submit a permission to do business from the court.
After initial approval receipt, all the above-mentioned documents along with the photocopy of office lease including plot number needs to be submitted. Original photocopy of the Memorandum of Association duly authenticated by the Notary Public also to be submitted to seek final business approval.

How to start Export and Import business in UAE:

Department of Economic Development (DED) has to be furnished with company registration application and the proposed company name and notarize the company’s MoA (Memorandum of Association) in the DED. After filing all the company documents with DED and the Emirati’s Chamber of Commerce, you obtain a trade licence.
Apply for an establishment card in the Ministry of Labour and register the native worker with the Ministry’s General Authority for Pension and Social Security.
You need to apply and obtain one or more of these licences- Commercial licence (covers all trading activities), Professional licence (covers export and import of professional services), Industrial licence (to cover industrial or manufacturing activities).