Initially entering the world market as the largest exporter of oil and gas, the United Arab Emirates has gradually managed to become the most significant business hub in the Middle East. If tourists in the country are attracted by the Burj Khalifa, the Parus Hotel, luxurious malls and boutiques of gold jewelry, then businessmen are extremely favorable conditions for the development of various commercial projects.
Company registration in the UAE is an effective step to protect and increase your assets, enter new international markets, and ensure high authority in the business environment. Entrepreneurs can count on excellent living conditions in the country and the comfort of managing a business remotely.
If you have the desire and opportunity to develop your business in the Emirates, the only obstacle to this may be the complexity and specificity of the paperwork. There are a number of nuances that distinguish the procedure for establishing a company in the UAE from similar procedures in other jurisdictions. Fortunately, Lawrange lawyers are ready to take on the solution of these complex issues. And at this time, you can think about ways to increase your capital!
UAE as a jurisdiction for business
Note! The United Arab Emirates is one of the youngest states in the Middle East. The population of 10 million is heterogeneous, as up to 70% are migrant workers from South and Southeast Asia. The special geopolitical position of the country creates conditions for building business ties not only in the Arab market, but in the European and Asian regions as well.
The Emirates have been heading towards diversification of their economy for a long time. And today it is an influential center of international trade and finance, which welcomes entrepreneurial initiatives from foreign citizens.
Important! Starting a business in the UAE with the support of Lawyers Association Lawrange includes: a) resolving specific issues that arise only in this jurisdiction; b) the correct tone of communication with representatives of state bodies; c) the passage of visa and immigration procedures without complications; d) ensuring the launch of the project in the optimal organizational and legal form and with the lowest possible tax burden.
Note! Let us single out several specific concepts that are typical for this jurisdiction:
- Immigration system E-Channel (in Arabic – Tahaluf). It should be connected to all new and existing enterprises (through a personal account on the website of the Ministry of Internal Affairs of the country). Establishment Card is a confirmation of such connection for the company.
- Visa (certificate) of a tax resident – a document confirming the payment of taxes in the UAE, and ensuring the avoidance of double taxation (if there is an appropriate agreement with the person’s country of origin). The right to obtain resident visas is granted to both shareholders and employees of foreign companies. Obtaining a document involves going through a series of procedures, including a medical examination, fingerprinting and a retinal scan.
- Tenancy contract – a housing lease agreement drawn up for an individual. This document is used when opening a bank account as confirmation that the client actually lives in the UAE. Tenancy is always required in the first year after the registration of the company, then banks require it only individually.
How much does it cost to set up a company in the UAE?
The basic package of services for the preparation of all necessary documents for the launch and full development of a business includes:
- registration of a company in the UAE – 7900 USD;
- connection and use of E-Channel – 980 USD;
- UAE tax resident visa for 3 years for one participant – 3000 USD, for two – 6000 USD;
- Tenancy contract (real estate lease agreement for a year) – 4500 USD;
- opening a bank account – 2500 USD.
***Note 1: The cost of obtaining a tax resident visa is indicated based on the processing time – 10-14 business days. The cost of express pickup (for 5-7 business days) is $5,000 per participant.
Note 2: Visa price includes: Establishment card, Entry permit, Security approval, Typing, Medical (x-ray, blood test), Fingerprint, Eye scanning, Support on medical, Emirates ID, Visa stamping, Driver.
Extension for the second year of operation:
- extension of the company – 7550 USD;
- use of E-Channel – 980 USD;
- Tenancy contract – optional, if required by the bank;
- the tax resident visa is renewed only after three years.
If you are interested in company registration in the UAE, the cost may include additional expenses:
- office rent – from $3650 to $19200 (depending on the area, comfort, number of jobs, and so on);
- Utility bill (confirmation of address of residence) for the last month – $800;
- professional manager for a year – $3400;
- registration of VAT number – $900;
- TRC (tax residency certificate) for a company – $4,500.
Features of registering a company in the UAE
Note! UAE law establishes a limitation on the part of foreign ownership of companies in the country. As a general rule, the maximum share of a foreign investor in the authorized capital cannot exceed 49%. This rule creates certain difficulties, both at the stage of creating a business, and in the course of its development. There are two ways out of the situation (each has its pros and cons):
- Involvement of a nominal owner (a citizen of the country) to fulfill the condition of a local partner, and registration of a waiver of rights in court. The cost of the services of such a person is paid in the form of remuneration on a regular basis.
- Business registration in the UAE in one of the free economic zones, that is, the creation of the so-called FreeZone Company.
***Note: Organizations that obtain professional licenses (for example, law firms and medical centers) are not subject to the requirement for mandatory ownership of 51% in the authorized capital by a local partner.
Important! The most popular legal form of doing business in the Emirates is Limited Liability Company, LLC. This form is suitable for the vast majority of business activities. Among the features of this legal form in this jurisdiction: a) mandatory office space rental; b) registration of a license for the relevant type of activity; c) the holder’s right to obtain a resident visa.
To set up a company in the UAE, you can choose another legal form:
- Professional (SE) company is suitable for providing services;
- as in most jurisdictions, Public Joint Stock Company, PJSC (Open Joint Stock Company) and Private Joint Stock Company, PJSC (Closed Joint Stock Company) are available.
Note! Firms in free economic zones (Free Zone Company, FZC / Free Zone Establishment, FZE) can be established in all of the above legal forms. In three free zones of the country (Jebel Ali Free Zone – JAFZA, Ajman Free Zone – AFZ and Ras Al Khaimah Free Zone – RAK) it is possible to register international business companies – IBC.
Free economic zones (FEZ) are territories allocated within the city. Among their main advantages are the right of the FZC / FZE holder to obtain a resident visa, the opportunity to register a company in the UAE with 100% foreign participation, various tax and customs benefits, conducting trade and commercial activities without excessive control by government agencies. Among the restrictions is the lack of the right to work with consumers in the local UAE market under a free economic zone license. You can work only within the zone itself or on the international market.
Each enterprise in the territory of the free zone must: a) have a physical office; b) obtain a license for the current line of business. The types of activities permitted and subject to licensing differ in each free zone. The choice of the FEZ in the Emirates must be coordinated with this circumstance.
Note! Business licensing in the UAE is both an instrument of state control over business and a hidden form of taxation. Attempts by a foreign entrepreneur to carry out one activity under the guise of another entail imposing fines. Such activity is equated to work without a license at all.
Taxation in the UAE
A big plus of the Emirates as a jurisdiction for business is the 0% income tax rate and the 0% capital repatriation tax rate. At the same time, since 2018, the UAE has introduced a value-added tax (VAT) in the amount of 5% – it is applied to transactions within the country. The issue of VAT must be addressed, both in the context of paperwork when creating a company and in bookkeeping.
Important! The requirement to register as a VAT payer does not apply to all legal entities. The following limits are set:
- it is mandatory to register as a VAT payer if the annual income of the enterprise exceeds 375,000 dirhams (102,093 USD);
- if the income for the year exceeds 187,500 dirhams (51,046 USD), voluntary registration is allowed.
In order to avoid sanctions from the state, VAT payers (in case of exceeding the specified limits) must: a) monitor the correctness and accuracy of invoices; b) conduct an annual audit.
***Note: Although the UAE has a fairly loyal tax system, one should not forget about the need for each company to regularly pay for the renewal of a license for a selected type of activity.
The rules for filing financial statements in the Emirates are quite simple:
- the financial year coincides with the calendar year (from January to December):
- reporting is submitted together with the auditor’s report;
- for preparation is provided from 3 to 6 months from the end of the reporting period;
- newly formed companies submit reports for the period from the date of registration to the end of the year;
- if the company operates in a free economic zone, reporting is submitted to the administration of the corresponding zone;
- for VAT, special reports (declarations) are submitted;
- the deadline for filing such a VAT report is the 28th day of the month following the end of the tax period.
Business registration procedure in Dubai or another emirate
Since we are talking about a federal state, the regulation of business in each of the emirates has its own characteristics. You need to analyze such features to start a business in Dubai or another emirate. The solution of this task is ready to be undertaken by the specialists of LA Lawrange, who will present you as a result of a brief excerpt of the most important and necessary information.
The basic algorithm for registering a legal entity in the Emirates consists of the following steps:
- Preparation of documents – standard forms for company registration are filled out and copies of personal documents are prepared.
- Company registration – takes only one day, as a result, the client receives the main corporate documents: the Certificate of Incorporation, the Memorandum of Establishment and the Articles of Association.
- Obtaining a license – a permit document for conducting certain types of activities, is issued for a period of one year with a subsequent renewal annually.
- Obtaining an Establishment Card (Company Immigration Card) – registering a company with the migration service through the E-Channel system, which entitles company owners and employees to apply for a tax resident visa (the card must be renewed annually, otherwise fines will follow).
- Obtaining a tax resident visa – issuing a company immigration card makes it possible to obtain an entry permit in order to take the last step in registering a business in the Emirates – to become a tax resident.
***Note: The term for issuing the Establishment Card is from 1 to 2 weeks depending on the emirate.
Obtaining a tax resident visa
Thanks to the well-established work of Lawrange experts with partners in the Emirates, a client’s visit to the country to obtain a tax resident visa is as short and efficient as possible. We do not take unnecessary steps and know how not to make mistakes!
Step by step visit to the UAE is as follows:
1. Preparing for a visit.
When the company registration in Dubai is completed, the client needs to visit the country: firstly, to obtain a tax resident visa; secondly, for signing bank forms and issuing an account. You should count on staying in the Emirates for two weeks – preferably arrive on Sunday.
Prior to the visit, the client must provide:
- your WhatsApp contact number;
- information about the date and time of arrival;
- information about hotel accommodation in Dubai;
- all necessary documents for opening a bank account (the list is sent to the client in advance).
2. Arrival in the country.
The client arrives in the Emirates on an entry permit. On entry into the territory of the country, the competent authorities make a mark – the UID (Unified Identification Number) is affixed, a unique number that is assigned to everyone who crosses the border.
The received UID number should be immediately sent to us along with a high-quality scan of a full-page passport with a fresh entry stamp (such a copy can be made either at the airport or at the hotel). Next comes rest. The following is planned for the client: a) medical examination; b) meeting with a representative of a banking institution.
***Note: Information about the date and exact time of the medical examination, as well as meetings with bankers, is communicated to the client the day before these events.
3. Medical checkup.
In the current situation with COVID-19, the medical examination takes two days. The driver takes the client for a medical examination in the morning, and then takes him back to the hotel. Please wear trousers and bring your passport. As part of the medical examination, x-rays are taken, blood tests are taken, and so on.
4. Insertion of a visa into the passport.
After the medical examination, the client leaves the passport for a resident visa. The passport with a pasted visa is returned to the client (delivered by the driver) 2-3 days after the medical examination.
***Note: To prevent future revocation of your resident visa, you must enter the UAE at least once every six months.
5. Meetings with bankers.
The meeting point is chosen based on the preferences of the bankers. It could be:
- lobby of the client’s hotel;
- bank office;
- office of our partners.
Note 1: A driver-translator takes the client to meetings with representatives of banking institutions.
Note 2: The meeting with Mashreq bank representatives takes place at the bank branch in the Deira area.
Note 3: Bank representatives can request a second meeting – directly with the manager. Please: in order to respond quickly to the situation, you should concentrate as much as possible on business, and not on tourist recreation and entertainment in Dubai. The situation when a client needs to meet with a banker, and he has an excursion planned for this time, is not allowed!
Often meetings are held with representatives of two or three banks to ensure that the desired result is achieved (the list of banks is discussed in advance). The bank is selected based on the following criteria:
- a) size of the first transaction – indicated in the company profile;
- b) jurisdictions with which it is planned to cooperate;
- c) the presence of Tenancy contract.
At the meeting with bankers, you can limit yourself to signing the form. All issues will be resolved in accordance with a predetermined plan by the representative of the client. If the banker asks questions, the client can simply read the answers from a pre-prepared company profile.
But if you wish, you can discuss with the banker:
- a) account activation mechanism;
- b) receiving a debit card from a personal account (as an option – with transfer to the host country);
- c) getting a token.
Notes for the client:
- When communicating with bankers, you should be as frank as possible. Initially, such representatives of banking institutions are on the client side. Their task is to correctly submit a client’s case for the bank in order to successfully open an account in the future and establish comfortable work with it.
- Document flow with banks and transfer of information is carried out not directly by the client, but through us. In this way, the risk of errors is minimized.
- The ID-card will be ready in 3-4 weeks after the visa is pasted into the passport. Since delivery services do not accept, and customs does not allow such documents to pass, the transfer to the client’s country of residence is carried out by an authorized person (those who fly from the UAE).
- For setting up and stable operation of online banking, the client should purchase a local SIM card. For example, a convenient option is Virgin Mobile. The SIM card of this mobile operator can be purchased without an ID card (the client will receive this document later, as agreed above).
What do you need to register a business in the UAE?
Note! There is no federal procedure for registering a legal entity, which means a single list of documents and requirements for all 7 emirates. Therefore, the list of documents is discussed orally with the client during the consultation.
Approximately, to set up a company in the Emirates, you will need:
- Scan of the passport in good quality (first page with photo).
- Color biometric photo 3×4 on a white background.
- CV – short resume in English.
- Three options for the company name of at least 2 words.
- Filling out the form according to the company’s profile in English, with questions:
– Company’s activities – direction of the company’s activities;
– Countries of work – states with which it is planned to cooperate;
– Required currencies;
– Key customers;
– Key suppliers;
– First transaction amount;
– Maximum turnover for the first year.
Important! Since business registration in Dubai or in another selected emirate takes place without the personal presence of the client (the client arrives in the country later, at the stage of obtaining a resident visa), a power of attorney is issued to our representative to perform the necessary actions.
Benefits of Jurisdiction
There are quite a lot of reasons and justifications for company registration in the Emirates, even despite the more complicated procedure for completing the necessary documents than in a number of other countries.
We highlight the main attractive characteristics of the jurisdiction:
- the best place to protect assets today, according to many experts (regardless of the investor’s country of origin);
- the possibility of 100% foreign ownership of the business;
- no income tax and capital repatriation;
- widespread practice of using English in business communication (the ability to do without knowing Arabic when communicating with local partners);
- the presence of a powerful and independent banking sector + the availability of registration of a legal entity and a bank account in one jurisdiction;
- creation of a good platform for entering cross-border international markets;
- the presence of infrastructural advantages – the availability of both maritime communication and air flights.
In the current difficult political situation, the United Arab Emirates can be seen as one of the most comfortable havens for securing assets. Business registration in the Emirates opens the way to the smooth development of almost any type of international commercial activity. At the same time, the scale of this activity can be whatever the owner wants.
The services of LA Lawrange specialists provide an opportunity to avoid any complications during the necessary documentation. Our support is based on the fact that the client in the shortest possible time gets the desired result without active participation in the procedure. So, we talked about the main thing. We invite you to a consultation to discuss the details!
The cost of company registration in the UAE
If you take a separate service for registering a company in the UAE, then its cost is $ 7900. But in order to fully launch a business in this jurisdiction, a number of additional steps will be required, which entail additional costs.
What do you need to register a company in the UAE?
At the start, you will need to provide us with a copy of your passport, photo, resume of the owner, three options for the name of the future company and a power of attorney for our representative.
Advantages and disadvantages of jurisdiction
The main advantages of jurisdiction are prestige, the status of one of the best places on the planet to ensure the safety of assets. A certain drawback is the complexity of the procedure for registering a legal entity and obtaining tax residency. But if you use the help of LA Lawrange specialists, then this drawback can be ignored.