Business Setup in Sharjah: How to Choose the Right License for Your Company
Sharjah, one of the UAE's most prominent emirates, offers a great environment for businesses looking to establish themselves in the region. As a major hub for trade, industry, and culture, Sharjah provides significant opportunities for entrepreneurs and investors. Because of its strategic location to its diversified economy, this emirate is fast becoming a preferred destination for startups and established businesses alike. However, one of the critical decisions you’ll face while setting up your business in Sharjah is selecting the right license for your company.
The process of choosing the right business license can seem overwhelming, given the number of options available. Here, we will guide you through understanding the different licenses and help you make an informed decision that aligns with your business goals.
Why Set Up a Business in Sharjah?
Before going into the specifics of selecting a business license, let’s first explore why Sharjah is a popular location for business:
- Strategic Location: Sharjah’s proximity to Dubai and its access to Gulf and Indian Ocean coasts make it an ideal location for trade. The emirate has a well-connected transportation network, including airports and seaports.
- Diverse Economy: Sharjah has a balanced economy with sectors such as manufacturing, trading, tourism, and education contributing significantly to its growth. This creates a wealth of opportunities for entrepreneurs across various industries.
- Competitive Business Setup Cost: Compared to Dubai and other UAE emirates, business setup cost in Sharjah is often more affordable, especially for SMEs. The lower overhead costs make it a prime choice for startups and small businesses looking to enter the UAE market.
- Business-Friendly Laws: Sharjah has favourable regulations for businesses, including simplified processes for acquiring licenses, as well as competitive tax structures in free zones and mainland areas.
With these benefits in mind, entrepreneurs need to focus on choosing the right business license to ensure they can operate legally and efficiently.
Types of Business Licenses in Sharjah
Business licenses in Sharjah fall under three main categories: Mainland, Free Zone, and Offshore. Each has its own set of rules, benefits, and obligations. Depending on your business activity, target market, and business goals, one of these options will likely suit your needs better than the others.
Mainland License
A Mainland business license allows companies to operate throughout Sharjah region and the broader UAE market. This is ideal for businesses planning to trade directly with the local market or provide services within the UAE.
Features:- Market Access: Mainland companies can operate both within the UAE and internationally, offering flexibility in terms of market reach.
- No Restrictions: You have the freedom to select your business location, whether in a commercial area or industrial zone, allowing you to find the most cost-effective space for your business operations.
- Work with Government Entities: Mainland businesses can engage well with government entities, which can be lucrative for some sectors like construction, technology, and consultancy.
- Local Sponsor: One main aspect of a mainland license is that foreign business owners may need to partner with a local sponsor who owns 51% of the business. There are some businesses which qualify for 100% foreign ownership under specific UAE legal provisions.
Free Zone License
Sharjah has many free zones, including the Sharjah Airport International Free Zone (SAIF Zone), Hamriyah Free Zone, and Sharjah Media City Free Zone (Shams). A free zone license provides numerous benefits, especially for foreign investors.
Features:- 100% Foreign Ownership: Free zone companies can enjoy full foreign ownership. You don’t need to assign a local sponsor.
- Tax Benefits: Companies in free zones are generally exempt from personal income tax and can benefit from tax exemptions.
- Simplified Setup: Free zone authorities offer simplified business setup procedures, often bundling services such as trade licenses, visa services, and office space into convenient packages.
- Export-Driven: Free zones are suitable for businesses involved in international trade, import/export, logistics, or other activities that don’t depend heavily on the local UAE market.
- Restrictions: Free zone companies cannot trade directly with the UAE mainland. To do so, you’ll need a local distributor or open a branch office in the mainland region.
If your business focuses on international trade, technology, media, or logistics, a free zone license is a perfect fit.
Offshore License
An offshore license allows businesses to operate internationally while benefiting from tax efficiencies and asset protection.
Features:- Confidentiality: Offshore companies provide privacy for shareholders and directors and are designed to protect assets from external liabilities.
- Zero Corporate Tax: Offshore companies are usually exempt from paying corporate tax, making them suitable for holding assets, intellectual property, or conducting international trade.
- No Physical Space Needed: Offshore companies do not need a physical office in the UAE, significantly reducing setup and operational costs.
- Limited Operations: Offshore companies cannot conduct any commercial activities within the UAE. Their purpose is mainly focused on global business, holding assets, or serving as a subsidiary to a larger corporate structure.
Offshore licenses are best suited for entrepreneurs or businesses looking to manage international assets, conduct global trade, or optimize their tax strategies without a physical presence.
How to Choose the Right License?
Given the different options available, how select the right business license for your business setup in Sharjah? Here are the steps you should follow:
1. Define Your Business ActivityThe type of business activity you aim to conduct will largely determine the license you need. For instance, if you’re offering services like consulting or media, a professional license in a free zone may be perfect. On the other hand, a mainland commercial license is more suitable for a trading business.
2. Consider Your Target MarketDo you plan to trade primarily within the UAE, or are you focused on global markets? If you are planning to serve local customers, a mainland license is essential. If your focus is on exports or working with global business entities, a free zone or offshore license could be a better fit.
3. Evaluate CostsThe business setup cost in Sharjah can vary depending on the type of license, location, and specific business needs. Free zones often offer package deals that include office space, visas, and trade licenses. Mainland businesses have more flexibility but may incur higher costs for office space and local sponsorship.
4. Plan a Long-Term StrategyPlan your long-term business goals. If you are looking to expand into other parts of the UAE or work with government entities, a mainland license might offer the flexibility you need. Alternatively, if you’re planning to establish a tax-efficient, globally focused enterprise, an offshore license could be more beneficial.
Costs for Sharjah Business Setup
Sharjah business setup is more cost-effective than other emirates, making it an attractive option for startups and SMEs. Depending on the type of business license and the business structure you choose, you can expect setup costs to range between AED 10,000 to AED 30,000 for free zone companies. Mainland setups will cost more due to additional fees for office space and sponsorship.
ConclusionChoosing the right license is an important step in your business setup in Sharjah. By understanding the different license types—mainland, free zone, and offshore—and comparing them against your business goals, target market, and costs, you can make an informed decision that sets your company on the path to growth.
Working with a business setup consultancy like Bizvise can help streamline this process, offering you with expert guidance and tailored solutions for your business needs. Whether you’re a local entrepreneur or a foreign investor, Sharjah offers a gamut of opportunities for growth and success in the UAE's vibrant economy.