This is a country with almost no crime, a stable dollar exchange rate and favourable conditions for business. About 80% of the population in the UAE are expats, i.e. people who came from other countries. The UAE consists of seven emirates. Most often, businesses are registered in Dubai where the largest number of free economic zones are located.
Best suited. The UAE is a popular place for international trading companies, including those working in the natural resources markets, and for companies doing business online. These are IT technologies, consulting, sales of goods around the world.
Tax legislation
- Income tax — 0%. But this does not apply to oil and gas and insurance companies, branches of foreign banks. For them, the tax is from 20% to 55%.
- Taxes on dividends, interest and capital gains — 0%.
- VAT — 0 or 5% if the company operates within the UAE.
- Customs duty — 0% for a free economic zone and up to 5% for local companies.
- Tax on the sale of real estate — 4%.
Company registration options
Practically, there are two working options for registering a business: a local company and free zone establishment. They have different licenses and registration conditions.
Local companies are registered primarily for B2C business within the UAE. For example, shops, hairdressers, gyms, law offices. Any type of activities is allowed, but there is a detail: it is necessary to have a leased office.
A free zone establishment may conduct business only on the territory of this zone. This is a convenient option for any B2B and B2C companies outside the UAE: there are no restrictions, and license options are diverse. Each free economic zone has its own conditions; there are even zones where English law applies, so the location should be chosen based on the characteristics of the company and its planned business. There are many zones in the UAE. Only in Dubai, there are more than twenty of them, and the rest of the emirates have about two dozen more.
Requirements for registration
Everything depends on a particular free economic zone, but in general, at the initial stage in the UAE, there is no need in the beneficiary’s substance, it is possible to apply and send documents online. The registrar/agent sends the set of documents by e-mail. Later, personal presence will be required to open accounts with local banks, certify signatures on the constituent documents and obtain a visa in a passport, if this was one of the company’s objectives.
Main stages of registration
- Approval of the company name.
- Selection and approval of a license if you register a free economic establishment. Certain licenses require the company’s management/owner to meet the requirements of the regulator overseeing such activities. For example, in order to obtain the license for investment activities in the interests of third parties, it may be required to show experience in trading financial instruments or prove specialized knowledge. Requirements may vary between free zones even for identical licenses.
- Preparation of the set of registration documents and its submission to state authorities.
- Obtaining a license.
- Obtaining a legal address.
- Opening a bank account. There is a myth that it is difficult. In fact, you need to prove to the bank the transparency of your business and the fact of having money.
In free economic zones, registration may take little time – in a single window mode. For local companies the process is a little more complicated: documents need to be submitted to different authorities.
Reporting and audit
Almost all free zone establishments require mandatory audit, while for local companies it is optional, e.g. to take a loan from a bank.
All companies submit their reports once a year in accordance with IFRS – International Financial Reporting Standards.
Residency and residence permit
There is no concept of a residence permit in the UAE; instead, there is a resident visa. It allows you to enjoy privileges similar to those given by other countries as part of a residence permit, e.g. to send children to public schools, to buy real estate, to open personal accounts with banks, to take loans, to participate in the retirement savings programs. Most often, a resident visa is valid for 2 – 3 years, but sometimes for 10 years. For example, large investors or highly-skilled professionals: doctors, engineers, scientists. Visa may be extended for life.
Another option is to buy real estate. The more expensive it is, the longer the visa shall be valid. The maximum period is ten years with an investment of more than 10 million dirhams (about $3 million). At the same time, it is not necessary to live permanently in the UAE, but you need to visit the country every six months. The break between visits should not be more than 180 days. Otherwise, the visa will be canceled and you will have to spend money and time on its extension.
Book a call with YouReg Manager now and ask all your questions about company registration in UAE during a free consultation!
