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What are the legal issues in starting a business in UAE?

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Staff Writer, TLR

Published on July 14, 2023, 17:41:00

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Starting business company formation United Arab Emirates UAE

Starting a business or company formation in the United Arab Emirates (UAE) can be an exciting opportunity for entrepreneurs looking to tap into a growing market with favorable tax and legal regulations. However, the UAE has legal implications to follow before setting up a business. These are some of the legal issues that entrepreneurs should keep in mind before setting up a business in the UAE. It is advised to contact top lawyers in Dubai before setting up your business to have clarity on the legal structure.

Business Ownership

Foreigners can own up to 100% of a company in free zones without a local partner or sponsor. The company cannot operate outside the free zone and needs to be registered there. If you want to launch a company outside of a free zone, you must have a local partner or sponsor who will hold at least 51% of the company's shares.

Licenses and Permits

You will need to get the relevant licenses and licenses to launch a business in the UAE. Your starting business will determine the type of license you require. A restaurant, for instance, will need a separate license from a retail establishment. It is crucial to investigate the requirements of the emirate where you intend to establish your business because each emirate has its own set of licensing laws.

Labour Laws

The UAE's employment regulations are administered by the Ministry of Human Resources and Emiratization. Companies are required to provide their employees with written contracts that detail their positions, schedules, pay, and benefits. Although there is a national minimum salary in the UAE, the exact amount may differ based on the sector and type of employment. Also, businesses are required to provide their employees with end-of-service benefits and health insurance.

Tax Laws

The favorable tax laws are one of the key benefits of starting a business in the UAE. Except for foreign bank branches and oil and gas corporations, neither businesses nor people are subject to income tax in the UAE. Businesses must, however, pay a 5% value-added tax and social security contributions for their employees (VAT). The legislation of the UAE also protects intellectual property rights, giving creators and inventors exclusive rights to their works.

The UAE has a comprehensive legal framework for protecting intellectual property rights, including trademarks, patents, and copyrights. It is necessary to register your intellectual property with the relevant authorities to protect it from infringement.

Entrepreneurs may find it beneficial to launch a business in the UAE, but it is crucial to navigating the legal system. Before launching a business in the UAE, several legal concerns, including business ownership, licensing, employment rules, and taxation, must be taken into account.

For any legal queries or information, contact ask@tlr.ae or call us on +971526443004 

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