ROLE OF GOVERNMENT ENTITIES IN COMPANY FORMATION & BUSINESS SUPPORT IN THE UAE

This article has been researched and written by Thomas McNelliey and the team at Creation Business Consultants and has not used AI in generating this article

In the UAE, government agencies are integral to the company formation in the UAE because they provide additional business support services as well. They are key to creating a good business atmosphere and facilitating growth. Reporting to a government agency is typically dependent on local registration and licensing of businesses, as the government ensures that a business is properly registered and licensed for its business activity and adheres to local regulations.

In addition, government agencies in the UAE are responsible for a number of free zones that are targeted towards both local and foreign investors, with different incentives for registered businesses. The foreign-owned companies can fully own the businesses, as these free zones give them 100% foreign ownership with usually no tax benefits. Government agencies are responsible for customs and trade regulations, implementing trade standards (International market standards) as well as tariffs and other regulations for importing and exporting goods.

Furthermore, government agencies in the UAE are actively sponsoring and promoting foreign investment, with ministries such as the UAE Ministry of Economy (MoE) and emirate-level departments of economic development creating policies, incentives and initiatives to attract investment. The Ministry of Economy is responsible for developing the policies in conjunction with their business plans and strategy to fund Small and Medium-sized Enterprises (SMEs) through government-owned banks. In that regard, they are promoting entrepreneurship and business advancement. Additionally, certain government agencies like the Securities and Commodities Authority (SCA) regulate the financial markets and trading of securities. Lastly, government agencies such as the Ministry of Economy provide protection for intellectual property rights on the global and national levels.

The UAE government entities also oversee labour regulations and employee rights protection through the Ministry of Human Resources and Emiratisation (MOHRE). Likewise, the improvement of infrastructure, such as transportation, utilities and technology, is vital to the business environment, and the government needs to invest in such improvements for businesses to thrive.

Moreover, government support services, such as business advisory, market research, and access to incubators and accelerators, provide a valuable service to entrepreneurs and startups, who oftentimes do not have a grasp on how to navigate business here. The list of services, enforced policies, and regulations can be endless. For example, the government also regulates environmental issues and enforces sustainability, sometimes enforced by the UAE Ministry of Climate Change and Environment (MOCCAE). The government also helps promote international trade, facilitated by diplomatic relations and agreements managed by the UAE Ministry of Foreign Affairs (MOFA) and International Cooperation. Ultimately, the contribution of UAE government agencies aids in the UAE’s emergence as a business destination globally by balancing the support between both local and international businesses.

WHAT ARE THE COMPANY REGISTRATION AUTHORITIES IN THE UAE?

1. Department of Economy and Tourism (DET)

The Department of Economy and Tourism (DET)  functions at the emirate level and is responsible for business registration within the emirate; every emirate shall have a different DET authority.

Key functions:

1. To approve commercial and industrial licenses and permits.
2. To enforce local laws and licensing conditions.
3. To maintain company name registrations with approvals for trading names.
4. To regulate the business activities in the emirate.

2. Free Zone Authorities

The UAE has several free zones, with each representing its authority. These free zones are designed to encourage businesses and, in particular, companies that have the desire for total foreign ownership and the benefits of a tax-free environment.

Key functions:

1. To facilitate the establishment of businesses located in the UAE free zones within the free zone territory.
2. To carry out licensing processes and permitting for companies operating in the free zone.
3. To provide residents of the free zone with the full business infrastructure to conduct their businesses, including customs clearance, storage and office.
4. To provide incentives and benefits that are specific to industries located in the free zone to encourage company growth.

3. UAE Central Bank

The Central Bank UAE The Central Bank of the UAE regulates the banking and financial services sector, as well as licensing and regulations of banks and financial institutions.

Key functions:

1. Regulates, licenses, and supervises banks, financial institutions and payment service providers.
2. Maintains stability and integrity of the financial system.
3. Direct monetary and credit policy to further the economic objectives of the UAE.

4. Securities and Commodities Authority (SCA)

The Securities and Commodities Authority (SCA) is responsible for the regulation of securities and commodities markets in the UAE.

Key functions:

1. Supervision and regulation of securities trading, including stocks and bonds.
2. Promotion of transparency and equity within financial markets.
3. Licensing and oversight of financial intermediaries such as brokerage enterprises.

5. UAE Ministry of Economy

The UAE Ministry of Economy develops economic policy, including foreign investment, and provides for the protection of intellectual property.

Key functions:

1. Coordinates foreign direct investment via policy intervention and initiatives.
2. Managing and ensuring patents, trademarks, copyrights, and enforcing the protection of IP rights.
3. Coordinates and promotes economic diversity and expansion.

6. Ministry of Human Resources and Emiratisation (MOHRE)

Ministry of Human Resources and Emiratisation (MOHRE) is the governing authority for labour and employment in the UAE.

Key functions:

1. Develops labour law and regulations for employment contracts and conditions of employment.
2. Administers work permits and visas for foreign workers.
3. Regulates labour disputes and promotes fair employment practices.

INITIATIVES TAKEN BY THE GOVERNMENT TO BENEFIT YOUR UAE COMPANY FORMATION PROCESS

The UAE government has launched a number of measures to simplify the company formation process and provide a more conducive environment to do business in, including establishing many free zones across the UAE. Free zones allow 100% foreign ownership, repealed taxes, and relaxed regulations, which simplify and allow companies to form and run in a free Zone. More recently, free zones have begun to allow companies to obtain “instant licenses,” which provide licenses from 1-8 hours. Additionally, online registration platforms minimise administrative burden. Investor regulations, foreigners having 100% ownership, E-visas and investor visas are recent additions to provide incentives for foreign investment and help business formation and startup processes. Long-term investor visas are also attractive.

TAKEAWAY

The UAE startup ecosystem is flourishing. This is aided not only by government services and reforms, but also by an efficient banking system, as well as developing infrastructure and tax incentives. All these efforts help to stimulate local or foreign investment, ease the ability for individuals or businesses to operate, improve the economy, and play a positive role in growth and innovation in the UAE economy.

Our team of professionals can guide you every step of the way, from an upfront assessment of your current structure to the design and implementation of a plan for restructuring that caters specifically to your needs and business. Contact us for more information, email [email protected] or call UAE +971 4 878 6240.