5 Common Business Setup Myths in Abu Dhabi – Busted!
Abu Dhabi has rapidly evolved into a global hub for entrepreneurship, attracting investors and innovators from around the world. Its strategic location, business-friendly policies, and thriving economy make it a prime destination for startups and established companies alike. Yet, despite this growth, several misconceptions still circulate about what it takes to start a business in the Emirate. In this blog, we’re busting five of the most common myths—so you can make informed decisions with clarity and confidence.
Myth 1: You Must Have a Local Emirati Partner
Fact: As of recent reforms, foreign investors can own 100% of their businesses in most sectors within Abu Dhabi, both on the mainland and in free zones. Previously, a local sponsor holding 51% ownership was mandatory. However, this requirement has been removed for most commercial activities, allowing full foreign ownership. Certain strategic sectors, such as defense and security, may still require local participation.
Myth 2: Setting Up a Business is Prohibitively Expensive
Fact: While business setup costs vary based on the nature and scale of the business, Abu Dhabi offers a range of cost-effective options, especially in free zones. These zones provide affordable packages tailored for startups and SMEs, including licensing, office space, and visa services. Additionally, the UAE's corporate tax rate is 9% for taxable profits exceeding AED 375,000, which is competitive globally.
Myth 3: The Setup Process is Lengthy and Bureaucratic
Fact: Abu Dhabi has streamlined its business registration processes. With platforms like the Abu Dhabi Business Center and the introduction of the Abu Dhabi Registration Authority (ADRA), businesses can be registered efficiently. For straightforward setups, especially in free zones, licenses can be issued within a few days. More complex businesses may take longer due to additional approvals, but the overall process remains efficient.
Myth 4: Free Zones Restrict Business Operations
Fact: Free zones in Abu Dhabi are designed to facilitate business operations, especially for companies targeting international markets. They offer benefits like 100% foreign ownership, tax exemptions, and simplified import-export procedures. While free zone companies traditionally operated within their zones or internationally, many now have mechanisms to allow operations within the UAE mainland through distributors or branch establishments.
Myth 5: Corporate Tax Applies Uniformly to All Businesses
Fact: The UAE introduced a federal corporate tax effective June 2023, set at 9% for taxable profits exceeding AED 375,000. However, certain entities, especially those in free zones, can benefit from tax exemptions if they meet specific criteria and engage in qualifying activities. It's essential for businesses to assess their eligibility and ensure compliance with the tax regulations.
Final Verdict: Abu Dhabi Means Business
Abu Dhabi's business environment is dynamic, investor-friendly, and continually evolving to support entrepreneurship.By dispelling these myths, entrepreneurs can make informed decisions and leverage the opportunities the emirate offers.
For personalized guidance on setting up your business in Abu Dhabi, reach out to our experts at Setup in Abu Dhabi.