Setup your business in Dubai, the United Arab Emirates as it is one of the best business destinations. Get free consultation on company formation regardless of company type or legal structure.. Here you will find detailed info on various types of companies that can be formed in the UAE.
The UAE Business Destination
The Business environment
The UAE offers incoming businesses all the advantages of a highly developed economy. The infrastructure and services match the highest international standards, facilitating efficiency, quality and service. Among the benefits are :
Companies registered in Free Trade Zones, the United Arab Emirates
The United Arab Emirates have in total more than 30 Free Trade Zones (see list), where a free zone company of almost any type and matching any requirement can be incorporated. At the same time each of the Free Trade Zones has its specifics, for example, Dubai Media City is the best suitable for media companies whereby the companies acting in the area gold and
Main advantages of the UAE Free Trade Zones:
- 100% companies’ ownership by foreigners
- Absence of tax for import and export of goods and services.
- Absence of VAT.
- Absence of any restrictions related to capital and profits repatriation.
- Absence of income tax.
- Cheap energy resources.
- Stable legislation.
- Stable political and economic situation.
The unique characteristics of the free zone companies registered in the Free Trade Zones are that the companies, taxed at 0%, have the possibility to have real office and be managed from the territory of the country of its incorporation.
Companies in Free Trade Zones are more expensive in terms of incorporation and administration in comparison with classic offshore companies. However the absence of tax, stability and acceptance of this jurisdiction, effective banking services and availability of wide range of Double Tax Treaties noticeably prevail over the costs difference factor.
In fact a free zone company, registered in Free Trade Zone of the UAE is not an offshore company, but a full residential company, not a subject to taxation (with exception of taxes on some industries like oil industry and tourism).
Companies in the UAE FTZ (Free Trade Zones of the United Arab Emirates) can be registered as either independent companies or as a branch establishments or representative offices of local and international companies.
The required share capital of companies depends on the chosen Free Trade Zone, the type of the company’s activity and the number of partners in the company. The share capital starts from AED 50,000 for trading or consulting companies up to AED 1 mill for GT companies. Once the company is incorporated there are no requirements for the share capital reservation. Thus it can be freely used for the company operations.
Based on the Law No. 13 of 2011 each free zone company is able to set up the branch office of
free zone companies in the UAE mainland. The branch will be wholly owned by the free zone entity and it will have the same trade name as of its parent, but a UAE local service agent will need to be appointed. However, it is good to know that there are restrictions on some activities.
Offshore Company (IBC) formation in the UAE
Offshore Company formation in Dubai & the UAE
UAE is one of the well- known jurisdictions in the world for incorporating offshore companies as “tax-free” business territory Especially because one can avoid the complex process of having the off shore corporate documents attested by various embassies and Ministries of Foreign Affairs. UAE offshore incorporation helps to run the business or asset ownership in the Middle East. 100% foreign ownership is permitted
- Complete foreign ownership is permitted
- Own real estate properties on approved areas by the Authority
- Hold multi-currency bank accounts
- Exempted from all corporate and income taxes
- No foreign currency restrictions
- 100% repatriation of the profits and capital
- Low setting-up costs
- Minimum capital is required to set-up offshore company.
- Minimum of 1 Director / Shareholder.
- UAE has Double Taxation Avoidance Agreement (DTAA) with several countries.
Restriction for a UAE offshore company
- No offshore company which is incorporated in UAE under the respective authorities shall:
- Carry on business with persons resident in UAE
- Own an interest in real property situated in UAE, other than a lease referred to by or as approved by authority.
- Carry on banking business
- Carry on business as an insurance or reinsurance company, insurance agent or insurance broker or
- Carry on any other business which may, by regulation made by the authority, be prohibited by the Authority
- An offshore company shall not be treated as carrying on business with persons resident in UAE by reason only that:
- It makes or maintains professional contact with legal consultants, accountants, management companies or other similar persons carrying on business with the UAE,
- It prepares and maintains books and records within UAE
- It holds within the UAE meetings of its directors or members
- It hold a lease of property or owns real property as approved by the concerned authority
- It holds an account in a bank in UAE
- If an offshore company wishes to conduct trade or other business in the Zone or else where in the UAE, it must obtain the appropriate license to conduct the trade or other business activity from the relevant authorities.
The Offshore Company can be used for:
There are a number of business activities which are suited to be operated through an Offshore Company, these include:
- General Trading
- Consulting and Advisory Services
- Holding Company (buy/hold/sell stakes of companies, inclusive of holding free zone company)
- Investments and Joint Investments Company
- Property Owning
- International services
- Professional Services
- Commission Agents Company
Four primary Free Zone Authorities in UAE for offshore formations
LLC Company Setup Dubai Mainland
The Department of Economic Development (DED) was established in March 1992, with the objective to organize, regulate and boost trade and industry within the Emirate of Dubai.
In October 2008, HH Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Vice-President, and Ruler of Dubai, issued Decree no. 25 giving full responsibility to DED to plan and regulate the overall economic performance of Dubai, supervise its functions and support the economic development to ensure the objectives of the Dubai Strategic Plan are achieved. The new mandate brought about a new leadership with a new vision for the DED.
DED is still responsible for its traditional activities of business registration, licensing and commercial protection in Dubai however with four new agencies now under the umbrella of DED, the mandate has extended to include export development, retail development, entrepreneurship development and foreign investment.
Law No. 13 of 2011 states that the Department of Economic Development will be the body responsible for the regulation of economic activity for all businesses outside the free zones. DED’s responsibilities include licensing, classification of economic activity permitted within Dubai, issuing trade permits for marketing activities and setting business work hours.
Opening a branch with the DED through a free zone entity
Most of the free zones in Dubai, if not all, do not permit a company registered with such free zone to do business outside the free zone in the mainland of Dubai unless such company obtains appropriate license from the local authority i.e. the DED. Anyone who violates the provisions of this law can be fined up to AED 100,000.
The common legal forms for free zone entities to conduct business in Dubai are civil work company, Limited Liability Company or branch.
The civil work company can be established to carry on professional activities and it can be owned 100% by non UAE individuals or foreign corporate bodies including entities registered in the free zones provided that the activities of the corporate bodies matches with the activities of the civil work company. A UAE local service agent will need to be appointed in the civil work company.
In the case of a limited liability company an UAE national (or a company owned 100% by UAE nationals) must legally hold at least 51% of that limited liability company. While in the case of a branch, the branch will be wholly owned by the free zone entity and it will have the same trade name as of its parent company. An UAE local service agent will need to be appointed however, the branch will be exempted appointing a local service agent if the free zone entity is owned 51% or more by UAE nationals.
The local service agent does not have any civil responsibility or financial obligations related to the business of the branch. The local service agent’s obligation is to ensure the branch is able to continue its business in Dubai but he shall not have any legal interest in the management, business, profits or assets of the branch.
Activities that can be conducted by a free zone entity’s branch
For the purposes of registering a branch office of a free zone company both DED and the Ministry of Economy are involved.
Even it is allowed by the Law to set up branch office of free zone companies in the UAE mainland, there are restrictions in context of the activities that such branches can conduct in the UAE, for example, activities such as trading, commercial agencies, labour supply services and restaurants cannot be conducted by branch office (in the UAE mainland) of a free zone company.