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  • Writer's pictureJenny Hunt

Setting Up A Business In The UAE: Which place is better Abu Dhabi or Dubai?

9th June 2015 (Updated 9th September 2023.)

Despite common misconceptions it is not possible to start a business in the UAE with one Trade License and legally operate throughout the country. There is no such thing as a federal license. Each Emirate has its own licensing process. As such, it is necessary to have a Trade License, also known as a Commercial License, for each Emirate in which you are operating. Alternatively, if you are operating in the free zones, it is necessary to have a license issued by the respective free zone authorities.


Whilst the term trade license continues to be used throughout the country; last year, Abu Dhabi Department of Economic Development (ADDED) renamed its licenses: economic licenses.


Deciding where to set up is really a matter of determining where your clients are likely to be based. Frequently, companies set up in the UAE with one Trade License and gradually expand into additional Emirates as their business develops.


Why setup a business in Abu Dhabi

Abu Dhabi is the capital of the United Arab Emirates. It's also the largest of the seven emirates and boasts a diverse geography with mountains, desert, coastline and over 200 islands making up its total land mass.


Although, considered a slower working pace to its Dubai neighbour, Abu Dhabi's business tends to be based upon relationships and trust, and there is very much a community feel. It is usual to meet prospective Emirati business partners on multiple occasions for coffee, often at short notice, as part of their getting to know you. The discussions won't be solely about business.In fact, the business is likely to form a small part of the conversation, towards the end of the meeting. Instead, the majority of the conversation will be about finding out about who you are. These meetings are extremely important as they will determine whether or not the prospective Emirati business partner likes you, has things in common with you, trusts you and will do business with you.


Abu Dhabi is an attractive place to do business and also has a planned and structured approach to its development and diversification away from its reliance on oil via its Economic Vision 2030.


Diversifying away from its reliance on oil, and thus reducing the volatility of its GDP, Abu Dhabi is building a sustainable, value-added economy by increasing the number of companies operating in Abu Dhabi across a variety of sectors, empowering women, appropriately skilling it's youth, developing reforms to attract SMES and top talent from overseas, encouraging entrepreneurship and investing in key sectors: technology, health, education, tourism, renewable energy and transport. The 22 year plan, which was launched in 2007, aimed to increase non-oil contribution to GDP from 41% (2007) to 64% (2030). The successful and ongoing implementation of reforms, has thus far resulted in Abu Dhabi achieving a non-oil contribution to GDP of 52.8% in Q1 2023.


Abu Dhabi boasted the fastest growing economy in the MENA region in 2022 at 9.3%. It's GDP reached AED840b, of which 30% was from the oil sector.


Federal Contracts

Being the capital of the UAE, Abu Dhabi has traditionally attracted larger foreign companies, which are tendering for large federal or Abu Dhabi government contracts. For this purpose, licenses issued by Abu Dhabi's Department of Economic Development (DED) will be required.


Oil & Gas

Companies wanting to work directy with ADNOC, Abu Dhabi National Oil Company, need to be based in Abu Dhabi and will require a special approval from the Supreme Petroleum Council.


Company which engage in work requiring access to critical national infrastructure will need to register with CICPA to be able to apply for CICPA security passes to get the access. Among other requirements, the National Guard Command, which is the new name for CICPA, requires companies to have an Abu Dhabi mainland trade license and SPC approval, and for the individuals needing the CICPA passes to have Abu Dhabi visas under the registering company.


Abu Dhabi Free Zones

Abu Dhabi has a number of free zone options, including: TWOFOUR54 (media), Abu Dhabi Airports Free Zone (business and logistics), MASDAR City Free Zone (primarily green and sustainability-focussed, space, innovation), Kezad (trade, logistics and industrial), Abu Dhabi Global Market (ADGM) (financial), and Tawazun Free Zone (military and security).


Being based in a free zone is perfect if you are dealing with other companies based in that free zone or overseas; however, it should be noted that to legally distribute goods to mainland companies, an agent should be appointed as a middle man. Free zone companies can provide services to mainland companies providing they carry out the services within the geographical boundaries of the free zone.


Abu Dhabi free zone companies can apply for a supplementary license on the Abu Dhabi mainland called a Dual license, without the need for leasing additional commercial premises, providing their free zone license has a physical location registered to it rather than a flexi-desk. However, not all activities are available for dual licenses, so check in advance.


Why setup a business in Dubai

Dubai is well known internationally and thus is often the first port of call for companies considering expansion into the UAE. It attracts Foreign Direct Investment (FDI) based upon its reputation for rapid expansion, numerous world records, positive attitude and strategic development plans.


Just as companies are attracted to Dubai, so are the top talent that could make up your workforce, which is advantage for companies wanting to attract high skilled professionals. Dubai has grown from a historical trading port, with traditional dhows importing and exporting goods along the Dubai Creek, into the cosmopolitan city that it is today, with a skyline of shiny skyscapers. With its faster pace and rapidly developing infrastructure, Dubai tends to attract the SMEs.


Government Contracts

To work directly with the Dubai government, it is necessary to have a mainland license issued in Dubai by Dubai Economy & Tourism.


Oil & Gas

Dubai companies can work with Dubai's flagship oil company called ENOC (Emirates National Oil Company). Be aware, that an additional license in Abu Dhabi may be required if CICPA security passes are needed to gain access to critical national infrastructure. Companies based in Dubai, wanting to work with the ADNOC will need to do so via an agent or third party, or invest in an additional license in Abu Dhabi.


Free zones

There are over 50 free zones in Dubai. Most are sector specific. Dubai free zones are ideal for companies contracting with other companies based in the same free zone, or overseas.


Mega Projects in Abu Dhabi and Dubai

Both Emirates have a number mega projects underway. Those wishing to be involved with the numerous mega projects should incorporate where the respective projects are based.


Two of the current mega projects in Dubai include: Burj Binghatti, the world's tallest residential tower in Business Bay, due for completion in December 2026, with a project value of $80 million. Palm Jebel Ali, a reignited mega project of hotels, beaches, leisure attractions and residential accommodation, is well underway, with 95% of the reclamation work completed at the start of the year and 98% of the breakwater construction completed, but it will take years for all of the facilities to be built.


Two of the current mega projects in Abu Dhabi include: The UAE Rail Programme, with a project value of AED200 billion consists of three key projects: the first is freight rail, the second is passenger rail, and the third is an integrated transportation service, an innovation center will connect a light rail network in the cities to the passenger railway. The Guggenheim Abu Dhabi, the infamous museum brand which is being constructed in the cultural district on Sadiyaat Island, and is due to open in 2025, has a project value of AED1 billion.


Setting up a business in the UAE

There are myriad opportunities in the UAE. Research the country and the opportunities. Identify potential contracts and clients. Use this knowledge to help determine where you should initially set up your business. Speak to the Business Setup Team at Gateway Group for the easiest online company registration in the UAE.


 

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Written by Jenny Hunt

Founder, Gateway Group, Abu Dhabi & Dubai, United Arab Emirates

FORBES' Top 100 Most Influential Women in the Middle East

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