How to set up a logistics company in the UAE

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Why Set up a Logistics Company in the UAE? Strategically positioned between East and West, the UAE is now recognised as a world-class hub for international commerce. Of note its focus on logistics. This strategic geographical location has led to…

by | Jan 12, 2021 | 0 comments

Why Set up a Logistics Company in the UAE?

Strategically positioned between East and West, the UAE is now recognised as a world-class hub for international commerce. Of note its focus on logistics. This strategic geographical location has led to the emergence of UAE as a major multimodal transit and re-export hub.

Exploiting the opportunity afforded by being placed on a transcontinental trade route, the UAE has become the regional leader in logistics and caters to the trade demand from Europe, Asia, Africa, USA and the Middle East. A progressive approach to foreign investment and an extensive double taxation treaty regime the UAE has become a country of opportunity for foreign businesses.

Mainland or Free Zone, which is right for you?

In the UAE there are two main jurisdictions for companies: Mainland and Free Zone. You can set up the company in either of them.

A Mainland DED license allows your company without any limitations to trade and provide services anywhere in the UAE or internationally.

Free-trade Zones are special economic areas set up with the objective of offering tax concessions and customs duty benefits to expatriate investors.

set up a logistics company in the UAE

Pro’s to a Free zone company:

  • 100 % ownership with no local sponsor or agent
  • LLC company – limited liability
  • Easy and flexible setup

.

Con’s to a Free Zone company:

  • Operating locally with clients outside the jurisdiction of your Free Zone license is not allowed by UAE law
  • Jurisdiction limitations will be experienced when collaborating with big local, Mainland brands / government entities

.

*Regardless of the jurisdiction you choose, there may be a requirement to obtain an external approval from the authority. This will depend on the the activity you go with.

All UAE Free Zones are restricted to operate only inside that particular Free Zone or internationally. Jurisdiction limitations do apply to ensure business is undertaken legally.

If your clients are mainly international companies outside the UAE, this structure is perfect for you. If however you plan to provide services to large Mainland corporations that are audited by the Federal Tax Authority, you will be required to have a Mainland branch or to register a license under the Mainland economy department.

In the UAE, any kind of commercial activity in the Mainland requires an LLC structure (limited liability company; 51% UAE Local sponsor, 49% foreign partner) with some exemptions to ACTIVITIES OF STRATEGIC IMPORTANCE.

Logistics related activities with the name of external approval if required:

  1. Sea Freight & Passengers Charters Dubai Maritime City Authority – electronic approval required – after the DED license is issued
  2. Customs BrokerDubai Customs approval – electronic – obtaining of customs broker activity approval, initial approval request from DED and for registration customs will cost around 700 AED. Online registration can be done via Dubai trade Portal.
  • Cargo Loading & Unloading Services
  • Cargo Packaging
  • Sea Cargo ServicesDubai Maritime City Authority – electronic approval
  • Air Cargo Services – Dubai Civil Aviation Authority  – Service fee is around 6,520 AED and approval time will take 1-2 working days.
  • Shipping Containers Loading & Unloading Services
  • Sea Shipping Lines AgentsDubai Maritime City Authority – electronic approval

.

STEP ONE

Trade Name Reservation with the Department of Economic Development (DED)

Requirements:

Upon submission of the above documents, the DED will issue the Trade Name Reservation Certificate (valid for 3 months, renewable for the same period upon request, subject to payment of the same trade name reservation fee).

Time Frame: Approx. 1-2 working days (subject to availability of all supporting documents)

STEP TWO

Initial Approval from the Department of Economic Development (DED)

Requirements:

Receipt addressed to the Dubai Municipality for the external approval.

Time Frame: Approx. 4 – 6 working days (subject to availability of all supporting documents)

STEP THREE

Execution and signing of the MOA in DED

Time Frame: Same working day (subject to availability of all supporting documents)

STEP FOUR

Commercial License Issuance by the DED

Requirements:

a. All documents submitted to the DED listed in Step 2;

b. Trade Name Reservation Certificate – copy (to be obtained from Step 1);

Time Frame: Approx. 4 working days (subject to the availability of all supporting documents)

After the Mainland license has been issued the company should register within the Immigration and Labor system. After completion, there will be the option of partners and employees visa registration.

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