Intrigued by import-export? Here’s how to get started in the UAE

20 September 2018 Category :
UAE freezone

The UAE is world-renowned for many things: its immense oil riches, the bright lights and sky-high buildings of Dubai, 7-star hotels, buzzing business districts and vast deserts. However, one thing above all else draws envious glances from around the globe – its strategic location.

Not only is the UAE perfectly placed to do business with both established and emerging markets in Europe, Asia, the Middle East and Africa, but with two-thirds of the world’s population within an eight-hour flight, it’s the ideal hub from which to trade with all corners of the globe. This position is only strengthened by comprehensive road, sea and air links: the UAE is home to some of the world’s busiest airports and seaports.

Naturally, such infrastructure along with the UAE’s position at the crossroads of busy trade routes between Europe, China, the Indian subcontinent and the Middle East and North Africa (MENA) region makes it hugely popular with import-export business. In 2016 alone, the UAE exported USD 174bn worth of goods, with imports reaching USD 196bn in the same year. It’s perhaps unsurprising then that the trading licence is one of the most sought-after in the Emirates – with overseas entrepreneurs commonly choosing to set up in the UAE’s many free zones.

In 2016 alone, the UAE exported USD 174bn worth of goods, with imports reaching USD 196bn in the same year.

The flexibility of such licences only serves to increase their popularity. A general trading licence, for example, allows businesses to import and export a number of different products – from cosmetics to construction materials – under a single licence. What’s more, trading licences also accommodate several different strategies. For example, you can import wholesale to sell to distributors within the UAE, set up a trade hub to import from external markets and re-export outside the UAE, or combine with an e-commerce licence to import goods and sell to the local market.

Everything you need to know about import-export in the UAE

Whatever route you choose to go down, there’s a few things you need to know before you get started.

1. Setting up in a free zone: Setting up an import-export business in a UAE free zone is incredibly straightforward and usually only takes a matter of days. You can choose from any of the UAE’s 49 free zones, however some may be better suited than others. If you intend to import and export primarily by sea, for example, then Jebel Ali Free Zone (JAFZA) is likely a good home as it is directly linked to the busy Jebel Ali port. On the other hand, if you will mostly be moving cargo by air, Dubai Airport Free Zone (DAFZA) is better suited. You may also wish to set up in a free zone that is already home to other large organisations – both Aramex and IKEA have warehouses in Dubai South while Franke and Mahindra trade from Ras Al Khaimah Economic Zone (RAKEZ).

2. Affordable startup: As well as being quick and easy, launching an import-export business in the UAE is also very affordable. The cost of setting up in popular free zones such as JAFZA (AED 15,000) or Sharjah Media City (SHAMS) (AED 11,500) can be very reasonable. If you intend to store goods, you’ll also need to lease warehouse space. JAFZA offer warehousing starting from AED 350-600 per square metre, per year. What’s more, if you’re really looking to keep startup costs low, there are many free zones that require no paid upfront share capital.

office_space_uae3. Partnering requirements: When setting up an import-export company in a free zone, you’ll be required to work with a local partner to trade throughout the mainland. Many entrepreneurs choose to collaborate with local distributors such as Aramex to handle these mainland logistics. Others combine this with their own e-commerce platform to cut out the middle man – selling directly to customers online and delivering goods via Aramex.

4. Customs considerations: No matter where in the world you set up, if you’re importing or exporting, you’ll need to consider customs. To bring goods into the UAE by sea or air, you’ll need to request an import code from UAE customs. Once you have this, you can import goods through any of the UAE’s ports. As for costs, here in the UAE, goods that pass through customs from a free zone to the local market are liable for duty of up to 5% (though this varies depending on the product). When setting up your business, keep in mind that customs duty can add up fast and if you are importing high volumes of goods to sell to the local market, a mainland setup may make more financial sense.

5. Plenty of visa options: When launching your import-export business in a UAE free zone, you’ll be able to apply for multiple visas for you and your employees. The exact number you can apply for will depend on where you set up, as each free zone has its own maximum cap. Some, like SHAMS, allocate a total of six visas while others will allow you to apply for more depending on the size of your office or warehouse. The common rule of thumb is 100 sq ft of office or warehouse space per visa.

6. It’s easy to sponsor dependants: As a business owner in the UAE, it’s not just easy to apply for visas for you employees, you can sponsor dependants for their visas as well. Whether you require a visa for a spouse, child, or domestic staff, the process is straightforward: entry permit, status adjustment, a medical fitness test, then Emirates ID registration and visa stamping. As this is such an important process, it’s a good idea to get advice from an expert in setting up UAE free zone businesses to ensure that before starting an application, both you and those you are hoping to sponsor meet the entry criteria.

7. Set up with multiple shareholders: While it’s certainly possible to go it alone with your import-export enterprise, you can also set up your business with multiple shareholders. These can be individuals, corporate entities or a combination of the two.

While it’s certainly possible to go it alone with your import-export enterprise, you can also set up your business with multiple shareholders.

8. Easy to arrange your corporate bank account: Once you’ve received your licence to trade in the UAE, you’ll have everything you need to open your corporate bank account. The application process is quick and simple. Free zone staff can advise on the best bank to suit your needs – and can even arrange meetings in-branch for you, should you wish. A company formation specialist can also provide the same service – or alternatively, you’re welcome to approach any local or international bank on your own.

Go global – launch your import-export business in the UAE

Inside the UAE’s USD 370bn import-export market are exports to India (USD 18.4bn), Switzerland (USD 16.9bn), Japan (USD 15.7bn), China (USD 11bn) and Oman (USD 10.6bn), along with imports from the vast markets of China (USD 25bn), the USA (USD 17.2bn), India (USD 15.5bn), Germany (USD 14.7bn) and the Japan (USD 9.2bn).

And the goods passing through the Emirates are just as varied as the countries they are travelling to and from. Some of the UAE’s top imports and exports include jewellery, cars, and metals such as gold, silver and aluminium.

There really is a niche for everyone. However, keep in mind that the type of goods you wish to trade will have a bearing on your customs costs. To ensure you’re armed with the right information, it’s a good idea to discuss your plans with UAE customs to get an idea of the duty requirements and to better understand the local import-export laws.

Provided you go in with your eyes open, there’s no reason why you shouldn’t soon see the fruits of your labour pay off. When it comes to import-export, there really is no better place to be than the UAE.

Setting up your own business has never been easier. Virtuzone takes care of it all so you can focus on what matters – building your business. For more information about company formation in the UAE mainland or free zones, please call us on +971 4 457 8200, send an email to info@vz.ae, or click here.

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About the author: Olga Melnyk, Head of Business Development, Virtuzone.
About the author: Olga Melnyk, Head of Business Development, Virtuzone.

Having spent the past seven years working in the field of legal company incorporation, Olga now works closely with entrepreneurs both locally and internationally in assisting them with their UAE company setup requirements. This includes both free zone and onshore in Dubai and other emirates across the UAE. Olga always advises each of her clients on the best legal setup for their particular needs, and in so doing she supports across the entire range of company setup, from legal translation to document certification to management of the entire communication and legalities with the local UAE company setup authorities. Olga was born and raised in the Ukraine and has a degree in Business Administration and International Law.