If you have ever considered setting up a business abroad, you must have noticed that company registration in the UAE is one of the best options. The United Arab Emirates made it their priority to diversify the economy a long time ago, and now it is a rapidly growing economy with its business environment being attractive to foreign investors.
The UAE laws are constantly improving to save you time and money when registering a UAE company and running your business. It would take a separate article to describe all the benefits for businesses provided by this generous country, so we are going to point out only the most obvious advantages.
The type of your future company depends on the type of business activity you are going to carry out in the UAE.
If your business is located abroad and all the transactions and payments are carried out through contractors registered outside the UAE, your best option will be an offshore company.
This legal entity will allow you to minimise your expenditure because you are unlikely to need a brick-and-mortar office and employees in the UAE. At the same time, you will be able to accumulate your income generated overseas on your corporate accounts in UAE banks.
If you are going to accept payments for your products or services from local contractors or make payments to legal entities registered in the UAE, an offshore company is not for you. In this case, it is better to register your company in one of the many free-trade zones or set up a local business.
The key advantage of this legal entity is an opportunity to register a UAE company with 100% foreign ownership. The authorities want free-trade zones not only to attract foreign investors but also to put together efforts of various companies working in the same field and thus establish a professional community.
Apart from full business ownership, free-trade zones are attractive to foreign investors thanks to nearly zero tax burden. As a rule, companies registered in a free-trade zone do not have to pay corporation tax and customs duties.
Such a business must only operate within a free-trade zone. Its office must also be located on the territory where it was registered. It is worth explaining what a free-trade zone is. Usually, it is a district with defined borders inside a city – a group of office buildings with everything necessary for successful business activity.
That is why a company registered in a UAE free-trade zone is the best solution for those investors who are going to need an office. In other words, a free-trade zone is convenient for service providers who need to have a physical presence.
For example, you can offer an online trading platform on your website to various producers. You won’t be selling a product; you will be selling an opportunity to buy or sell products via your website. However, if you begin dispatching goods, you will need a local intermediary outside the free-trade zone.
So registering a company in a UAE free-trade zone is a good solution if your business operates in the field of:
If you are going to sell your products to retail shops or end users across the country, you will not be able to ship the goods off on your own. As we have already mentioned, you will need to find or register a local company that will act as a distributor.
Until recently, the UAE corporate law required 51% of the share capital of a local company to be owned by an Emirati citizen. As a result, a foreign investor can hire a nominee owner to establish a mainland company (the UAE mainland is the entire territory of the country except for free-trade zones).
Currently, this applies to some high-margin types of commercial activity and all types of your business activity in the UAE if you are running a limited liability company.
On the other hand, if you are prepared to assume the responsibility in full and be liable for the commercial activity with your personal assets, you can register a sole establishment.
Local companies offer you three advantages:
According to Imperial & Legal’s experts, the most promising businesses for foreign entrepreneurs in the United Arab Emirates are the following:
Launching a successful business in the UAE attracts considerable costs at least at the very beginning. Corporate earnings and individual income and dividends are not taxable, but to run a business in the UAE you will need to get an annual licence (for a $4,000 fee in Dubai), rent an office, get a visa, medical insurance for your employees, etc.
If you set up a local company with 51% of the authorised capital owned by a UAE resident, you will also have to pay the Emirati co-owner (they may be a legal entity or a settled nominee).
If you are going to operate in the field of education or healthcare, you will need a few permissions apart from licences. You must apply for them to respective ministries while registering your UAE company.
To minimise the costs of running a business in the UAE, you should carefully consider every step of the registration process. You will have to pay for every restructuring of your business, changes in the shareholding structure, and changes in the incorporation documents. If a foreign investor has no experience of running a business in the UAE, they should get in touch with a reputable law firm.
If you want to run a business in the United Arab Emirates, you need a licence. A licence must be extended annually. Unlicensed businesses are subject to heavy fines.
The licence fee depends on the type of your business and the emirate where your company is registered. You will have to pay $685 to $5,480.
There are three types of licences which are self-explanatory:
If you are going to be engaged in several types of business activities, you may need two or three licences and, consequently, you will have to pay more. For example, this will be the case if you produce and sell equipment and provide maintenance in the UAE.
It takes a couple of days or even hours to set up a business in Russia, Europe or the US. Anyone who is used to this practice may be caught by surprise that it takes four to five weeks to register a company in a free-trade zone in the Emirate of Dubai or the Emirate of Abu Dhabi.
If you are going to rent or buy an office, renovate or obtain permissions from respective administrative bodies, it may take you three to six months to register a company in the UAE. Please note that we are talking about company registration in the emirates that are the most popular among foreign investors.
If it is not crucial for you to register a company in a free-trade zone of Dubai, for example, if you develop mobile apps and the majority of your employees are located outside of the incorporation jurisdiction, you can register a company in one of the northern emirates, where it takes only a couple of days. However, to run the company, you will need a bank account in the United Arab Emirates.
If you have registered a mainland business, a company in a free-trade zone or an offshore company in the UAE, you are highly likely to need a bank account at a local bank to make payments.
UAE financial institutions are known to be reliable and take their clients’ confidentiality very seriously. You can open an account with a local bank or a branch of an international bank, Barclays, Citibank, HSBC etc., but please note that banking standards in the UAE differ from what you are used to:
Conclusion: your UAE company, especially if it is a small or medium enterprise, needs a bank account. However, you will need to be extremely patient or, even better, to get in touch with qualified advisors who are well-connected in the banking industry.
Our clients run businesses all over the world, so it has been a long time since Imperial & Legal’s experts extended their services beyond the UK boundaries.
We will help you choose the right type of your future company in the United Arab Emirates and the correct place of registration. It does not matter whether you are going to get a visa for your employees or obtain a licence and open a corporate bank account, we will make sure your issue is resolved quickly and efficiently.
There are only two models of running a business in the UAE:
There are approximately 45 free-trade zones including ones that are not yet operational, with at least 20 of them located in the business hub of the country, the Emirate of Dubai.
A licence is valid for a year. Once it has expired, you have a month to extend it. If you fail to meet the deadline, your business will be liable for penalties. Our experts recommend that you apply to extend a licence four weeks before its expiration date.
To extend your licence, you will have to pay the same amount you paid when you first applied for the licence. It is an annual contribution to the treasury of the emirate for company registration in a jurisdiction with no corporation tax, capital gains tax or dividend tax.
We will work with you to find a customised solution for your immigration, second citizenship, business, tax and other needs.
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