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All companies registered in the UAE can be divided into onshore, those that are allowed to conduct business in the UAE and globally, and offshore, which business activity is restricted to countries outside the UAE.
The most well-known forms of onshore legal entities are as follows:
1) Limited Liability Company (LLC) (is a partnership with a UAE citizen, where a local partner holds majority of shares (51% or more));
2) Free Zone Company (can be 100%-foreign ownership);
3) Sole Proprietorship (company can be registered onshore outside of free zone and UAE resident/expat can be a 100%-shareholder of the company. However, it is important to mention that in this case liability is unlimited.
4) Freelancer License (permits are being issued by various Free Zone Authorities including DMC, FCC and UAQ). Offshore companies, though their activity is limited in the UAE, are still popular with investors and businessmen. Offshore Company (is not allowed to conduct business in the UAE and rent an office space. Such companies serve as holding companies which manage various assets, invest in other businesses and own properties in projects approved by RAKIA.
Following types of licenses are available in various free zones:
• General Trading License (allows to trade with a wide range of goods);
• Trading License (allows to trade only with those goods specified in the license);
• Industrial License;
• Service License.
A whole array of various free zones is presented in Dubai where one can easily count over 20 economic zones. The most well-known of them are the following:
• Jebel Ali Free Zone (JAFZA)
• Dubai Airport Free Zone (DAFZ)
• Dubai Internet City (DIC)
• Dubai Media City (DMC)
• Dubai Health Care City (DHCC)
• Dubai International Financial Centre (DIFC)
• Dubai Multi Commodities Centre (DMCC)
• Dubai Knowledge Village
• Dubai Silicon Oasis Authority (DSOA)
Abu Dhabi has plans to establish a whole row of economic zones. Currently one of the most well-known free zones is Twofour54.
A number of free economic zones are presented in other emirates.
Sharjah
• Sharjah Airport Free Zone (SAIF Zone)
• Hamriyah Free Zone (HFZ)
Ras Al Khaima
• Ras Al Khaimah Free Trade Zone (RAKFTZ)
• Ras Al Khaimah Investment Authority (RAKIA)
Fujairah
• Fujairah Free Zone (FFZ)
• Fujairah Creative City (FCC)
Ajman • Ajman Free Zone (AFZ)
Um Al Quwain
• Umm Al Quwain Free Trade Zone (UAQ FTZ)
Originally, free zones in the UAE meant to cater to the needs of very specialized industries. Dubai Multi Commodities Centre (DMCC) is a good example. Initially, this free zone was established to serve the interests of businessmen engaged in trading activities. Similarly to DMCC, Dubai International Financial Centre (DIFC) was supposed to become a center of finance and investments. As time passed, free zone authorities realized they could attract more businesses if they introduce additional activities to existing lists. So now investors can open a shop, a clinic, a beauty salon and many more in Dubai Multi Commodities Centre (DMCC), a free zone which was previously considered a commodities center. As such, when choosing a base for your business, the name of the free zone shall not be of a paramount importance. Should some free zone be of a particular interest to you, it is always advisable to reach out to free zone’s authority and enquire about available activities. Certain free zones are known for their flexibility when it comes to business activities and constantly update their list adding new activities businessmen show their interest in.
It is important for companies registered in free zones and engaged in trading to follow rules related to purchase, sale and distribution of their products. Trading companies registered in free zones are allowed to conduct their activity within the geographical limits of a free zone where the company is registered. In case a trading company wishes to transact with onshore companies located outside of free zone, an agreement with a local distributor will be required. The latter is a local company registered in the mainland acting as a distributor for a free zone company.
There are no taxes in the UAE. Upon registration of a new company, the only financial obligation of such company is a payment of annual renewal fees determined by every free zone in the UAE independently.
Registered address is a key factor for a company on the way to getting a license. To obtain office address investors have several options to choose from, such as, to lease an office, a serviced office or a flexi-desk. Flexi-desk is a working space in a business center of the free zone which can be used 16 to 20 hours per month. Cost of a flexi-desk is three to six times more affordable than lease of a standard office. It is a suitable option for start-ups that opt to reduce their operating expenses.
An important factor when choosing a free zone is a requirement for annual audit report submission. While it is mandatory for companies registered in Dubai (regardless of their location in Dubai) to submit audit reports, which is associated with certain expenses, a lot of free zones in other emirates, such as Fujairah, Um Al Quwain and Ras Al Khaimah do not have audit requirement or simply waived it to attract more investors to their free zone. Another important factor is a free zone charge for company registration. Sometimes for budgetary reasons it is better to form and register a company in a free zone located in a different emirate as registration fees may be significantly lower there.
The following legal entities can be registered in Dubai and other UAE emirates:
• New company (FZC/FZCO)
• Subsidiary
• Branch
The list of documents for company registration will depend on the following:
• Who will be a shareholder of a company (an individual or a company) and how many shareholders there will be,
• Whether it will be a new company, a subsidiary or a branch.
• In case of a company-shareholder or registration of a subsidiary or a branch, duly legalized corporate documents of a parent company will be required.
Since the United Arab Emirates is not a signatory to the Hague Convention and, therefore, do not recognize apostil, for the documents to be accepted by any governmental authorities in the UAE, they need to be duly legalized. Legalization process includes translation of the document, notarization, its attestation in relevant ministries and in the UAE Embassy in home jurisdiction and final legalization in the UAE Ministry of Foreign Affairs. The fee of the UAE Ministry of Foreign Affairs is AED 2,000 per corporate document unless the fee has been paid in the UAE Embassy.
The time required for company formation varies from emirate to emirate. Registration process in any Dubai free zone takes considerably more time than registration in free zones in other emirates. This can be explained by a higher number of applications for registration in Dubai in general. By way of example, formation of a company in Dubai may take from two (2) weeks to one (1) month. To compare, registration of a company in neighboring emirates may take as little as one (1) to ten (10) days. It is, however, important to mention, in case external approvals are required for certain types of activities (e.g. from Ministry of Health, Ministry of Defense etc.), registration process may take more time than usual.
For the purpose of a company registration it is required that the company forms its share capital. Share capital amount requirement varies from free zone to free zone. However, it is a common practice to have AED 50,000, AED 100,000 or AED 150,000 as declared minimum. In case of a trading or general trading license, this amount may reach as much as AED 500,000 or AED 1,000,000. While some free zones do not request new companies to deposit amount of share capital into bank account and obtain a letter from the bank to confirm availability of funds, some free zones, especially in Dubai, do have this requirement of funds proof. By way of example, RAK FTZ requires that client forms share capital and provides a letter from the bank to proof funds availability. Once the license of the company is issued, copies of corporate documents are provided to the bank to “unfreeze” funds and the shareholder may use share capital funds as deemed necessary.
Upon company formation the shareholder of the company will receive the following documents (we would like to note that depending on a free zone titles of the documents may slightly differ):
• Certificate of Registration / Incorporation;
• License;
• Memorandum and Articles of Association (MOA) / Articles of Incorporation;
• Share certificate.
In case of registration of a branch company, MOA is not issued.
At the moment when the company is registered, the owner or the manager of the company shall apply for Company Establishment Card. The application shall be submitted through the relevant free zone where the company has been registered. As a result, Immigration authority opens a company file and issues the said card. In absence of Establishment card the company will be unable to employ or obtain resident visas for its employees. The card has to be timely renewed on an annual basis, otherwise respective penalties apply. The fee for the card issuance is around AED 460. The same amount shall be paid for its annual renewal. Establishment card is known in some other free zones as Company Immigration Card (CIC).
Generally, to start business in Dubai or any other UAEemirate one of the following types of companies can be used:
1) an offshore company;
2) a company in a free zone (a freezone company);
3) a local company (sometimes a local partner/local agent is required).
Below the detailed description of each company is provided to let you make the right choice.
UAE OFFSHORE COMPANY REGISTRATION is the most cost-effective option of all if you intend to set up business in Dubai (UAE) but to conduct business activity outside UAE only. The registration cost of RAK, Ajman offshore or Dubai company varies from USD 2,500 and USD 5,000, while an annual registration renewal will be between USD 1,950 and USD 2,500.
An offshore company suits well for international trade and transactions.
1. to conduct business activity outside UAE only,
2. to hold bank accounts in UAE banks,
3. to have up to 5 business activities on business license,
4. to be a shareholder in other companies in UAE.
1. to conduct business in UAE,
2. to rent an office space in UAE,
3. to apply for resident visas for company`s employees,
4. to apply for Tax Residency Certificate,
5. to receive funds from UAE companies or to pay to UAE firms.
If your plans to start business in Dubai match the criteria “allowed” and “not allowed” outlined above, then we can assist with RAK or Dubai company registration in offshore zone in UAE.
If you think that an offshore company is not the right fit for your business, we suggest you move on and have a closer look at a free zone and a local company in Dubai and the UAE.
The detailed information on offshore companies in UAE, including costs, clarifications not inclusive of nomunee services, is available below
HERE >>> WHAT YOU SHOULD KNOW ABOUT OFFSHORE COMPANIES IN UAE
A COMPANY IN A FREE TRADE ZONE (a freezone company) is a company which is considered a Dubai/UAE resident and is registered in one of over 40 free zones. Free zone companies in Dubai and other emirates allow 100% foreign ownership. For a better understanding of what a free zone is, it can be compared to a certain geographical area in the city or to a district. By way of example, there are over 40 of such districts in Dubai alone.
The registration cost of a free-zone company varies and depends on the emirate and a free zone where company is incorporated.
1. to carry out business within its free zone and outside of the country,
2. to work with companies from other free zones, as long as services are provided from the registered office only (e.g. consulting, web-sites development, online marketing, branding services and alike),
3. to recruit staff and apply for employees’ resident visas,
4. to rent office space in the free zone where company is registered,
5.to apply for UAE Tax Residency Certificate.
1. to lease an office outside of the free zone where company is registered,
2. to work with and provide services to individuals and companies from other free zones and local companies if business activity requires onsite presence at client’s premises outside of the free zone where company is registered (e.g. fit-out services, engineering services, repairing, installations etc.),
3. to trade and distribute products and goods outside of the free zone where the company is registered (trade is allowed only inside the free zone or outside via a local company-distributor),
4. to take part in governmental tenders.
If this is how you wish to start and conduct a business in Dubai and UAE, then we can assist.
If you, however, see that a free zone company is not the right fit, we can advise on and assist with setup of a local company in Dubai (UAE) or other emirates.
Find more information on UAE and Dubai free zones business setup.
HERE >>> BUSINESS SETUP IN DUBAI FREEZONES AND FREE ZONES IN UAE
UAE LOCAL COMPANY is a company which is a UAE resident and that sometimes requires a partnership with a local sponsor/partner or a local agent. In case of partnership with a local partner, 51% of the company is owned by a UAE citizen or a UAE local company.
A local company registration option is the most expensive of all described on this page. The cost of company incorporation in Dubai varies from USD 12,000 to USD 15,000 for the first year and approximately USD 10,000 for annual renewal.
1. All legal types of business activities are allowed for local companies (shall be in line with the company`s business activity). In addition, local companies can rent an office in any part of the emirate and participate in governmental tenders.
1. There are no limitations of doing business for local companies both in UAE and outside the country if that what you plan to do in the UAE is in line with criteria “allowed” and “not allowed” outline above, then we can assist with registration of a local company in Dubai or any other emirate in the UAE, and advise you on how to start a bussines in Dubai and UAE in general.
We are providing business consulting services in the UAE and we will be delighted to advise you on all matters related to doing business in UAE. We will advise you not only on starting a business in UAE but also how to find right partners, clients and how to market your products and services efficiently. Business in Dubai means not only to take good care of your assets but also to significantly multiply your wealth. This is exactly the reason why most of our clients choose Dubai for their business needs.
Dind more detailed information on local companies in UAE
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