Setting up a company in the UAE can be a complex process. To begin operating, companies need to organize their business structure, obtain trade licences, secure office space, hire employees, and find clients. One of the most critical steps is opening a business bank account. The Emirati government requires all companies that operate within the UAE to have a business bank account in the country. This account must be separate from a business bank account held by a separate business entity. Opening a business bank account can be fairly simple as long as you gather the appropriate documentation and follow the correct process.
Choosing the Right Bank for Your Business
There are many options when it comes to selecting a bank in the UAE for your business. First, you should decide if you want to work with a local or international bank. For start-ups and SMEs (Small and Mid-Size Enterprises) that only operate in the UAE, a local Emirati bank will likely be the easier and better option. However, major international banks with branches in the UAE are also available such as HSBC and Citibank. International banks may be helpful for companies that have multiple branches or entities around the world.
Other factors to consider when selecting a bank include minimum balance requirements, annual fees, the ability to transact in multiple currencies, and the convenient location of branches and ATMs.
As of 2019, employers in the UAE are required to pay their employees through a WPS (Wage Protection Service). This system was designed to transmit data and wages through approved financial institutions and keep a detailed and transparent record of wages that are paid to employees. This helps protect employees and ensure that the government and regulatory agencies can identify businesses that don’t pay their employees according to their employment contracts. It’s important to confirm the bank has this capability if you plan to hire employees.
How to Set Up a Business Bank Account
Because all banks in the UAE are regulated by the Central Bank of the United Arab Emirates, they will have similar procedures for opening a new bank account. However, some banks may have a compliance department or company-specific policies that require additional steps or documentation. It’s important to carefully review your bank’s specific procedures and requirements before starting the process.
Depending on the type and location of your business (offshore, mainland, or free zone), the rules may vary slightly. In some cases, you will be required to open a bank account as a part of the incorporation process. In other cases, a bank account is only required before conducting any official business activities.
- Step 1: Gather Necessary Documentation – This is the most important step of the process. Failure to provide all of the required documentation can result in significant delays (sometimes months). In most cases, businesses will need to present their trade licence, memorandum of association, office lease agreement, and the identification (visa, passports, or EID) of directors and shareholders. Some banks may also require documents like a business plan, prior bank statements, or a list of clients or suppliers.
- Step 2: Schedule an Appointment with a Bank Representative – You will need to meet with a bank representative in person to apply for the business bank account. Be sure to take all of the required documents with you. The visit will take between one to five hours depending on the complexity of your application.
- Step 3: Wait for Approval – Once the application has been submitted, the bank will let you know when the account has been opened and is available for use. This normally takes approximately two to four weeks.
Most banks don’t charge any fees for opening a business bank account. However, some will charge an annual fee for their services. Many banks require no minimum balance, but you may find that some require a minimum balance that can range from 5,000 AED to 150,000 AED (approximately $1,500 to $40,000 USD). Some banks that require a minimum balance may provide additional perks or better interest rates, so each option should be evaluated thoroughly to determine the best bank for your business.
It’s important to note that some freelancers may not be required to open a business bank account if they don’t earn a substantial amount of income. In many cases, most banks won’t grant a freelancer a business account unless they earn a minimum of 5,000 AED (about $1,500) per month. Individual freelancers should find out the rules for their specific business.
Navigating the Complex Process of Opening a UAE Business Bank Account
The banking industry in the UAE is notorious for being slow and bureaucratic. It can take a lot of effort to research and understand the requirements of each specific bank. Unfortunately, mistakes along the way can cause significant delays that can last for months. To avoid any frustrations, it’s extremely important to always consult with an expert to help you navigate the process of opening your business bank account.
How can Global Link help?
Global Link has over 16 years’ experience working with local and global business, providing bespoke consultancy services for company incorporation in Dubai and the wider UAE.
We can help you through the process of opening a business bank account, liaise with all relevant and prepare all the required documentation on your behalf.
If you need advice on opening a business bank account in the UAE or for any other company incorporation, visa or PRO service, please get in touch with us on +971 4 553 9901 or email us at [email protected] and we will be happy to assist you.