Setting-Up In Incredible Dubai!
03 June, 2015
The UAE comprises of a federation of seven emirates - namely, Dubai, Abu Dhabi, Sharjah, Fujairah, Ras Al Khaimah, Umm Al Quwain and Ajman - which have their own rules and regulations.
The UAE has a vibrant free economy with a significant proportion of its revenues arising from exports of oil and gas. Successful efforts have been made to diversify away from dependence on hydrocarbons and a solid industrial base has been created, together with a strong services sector.
The UAE is an attractive hub for investors to locate their business interests for the following reasons:
- no corporate and income taxes, no exchange control restrictions and possible to have unrestricted repatriation of income and capital
- amongst the most liberal trade regimes in the Gulf region and attracts strong capital flows from across the region
- focused on economic diversification in trade, logistics, banking, tourism, real estate and manufacturing and provides opportunities in various industries
- has a well established infrastructure, strong banking system and a stable political system
- provides a favourable tax environment for most industries
- a high number of expatriate workers at all levels of the economy such that expatriates account for over 80 percent of the work force
- culture is driven by Islamic traditions, however, with over 150 nationalities, expatriates are able to practice their own cultures, and
- provides a safe and secure family environment with one of the lowest crime rates in the world
Under UAE federal law, foreign businesses have three main entities to choose from in order to conduct business in the UAE: a local limited liability company ("LLC"), a free zone entity ("FZE"), and an international business company ("IBC").
Companies can also operate by setting up a branch of a foreign company, a representative office of a foreign company, a private or public joint stock company, a general or simple limited liability partnership, a joint venture or providing services as a professional or a consultant through a civil company.
Limited Liability Companies (LLCs)
A LLC can be formed with a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company's capital. Companies with expatriate partners typically opt for this form of company. The voting rights in the company may not exceed 49 percent profit and loss distribution, and the share in allocation of liquidation proceeds can be mutually agreed upon. LLCs can sell directly to the local market.
Free Zones Entities (FZEs)
If there is no need to sell goods directly to the local market, but office space and local staff are required, then setting up in a free zone is often more attractive than using a local company. Free zone companies also meet the growing necessity in international tax planning of having necessary substance. This is often impossible to deliver from the traditional offshore jurisdictions since they typically only offer an IBC regime.
The main advantages of setting up in one of the free zones in the UAE are as follows:
- 100 percent foreign ownership is allowed
- guarantee for 15-50 years against the future imposition of corporation tax
- import of goods duty free, provided the goods are not supplied to the local market
- streamlined procedures: all formalities are typically dealt with through the free zone authorities
- no restrictions on hiring expatriates
International Business Companies (IBCs)
Dubai, through its Jebel Ali Free Zone, and Ras al Khaimah, through the RAKIA Free Zone and the RAK Free Trade Zone, offer an International Business Company (IBC) regime. These companies are ideal for any type of business that does not require a local office. This includes any passive investment activity eg holding shares in local or free zone companies, holding UAE real estate, or trading activities outside the UAE. IBCs cannot rent office space nor can they apply for staff visas and they are not allowed to trade with parties inside the UAE.
RAK IBCs have the following attractive features:
- not necessary for the owner or manager to visit the UAE in person
- no requirement to deposit capital in a bank account
- the only data on public record is the name of the company and date of incorporation
- no requirement to submit financial statements
As with local and free zone companies, offshore companies can benefit from some of the tax treaties concluded by the UAE, by setting up a free zone branch.
Foreign companies can establish a branch office in the UAE. A branch office may not carry out any commercial activity in its own name, it may only negotiate and enter into contracts on behalf of the parent company, and if goods and services are required to fulfill that contract, they have to come directly from the parent. Support activities by the branch are allowed.
What Can Dubai Offer?
- Pro business government regulations
- Secrecy, asset protection and no international exchange of information agreements
- Global headquarters centre
- Distinguished and unique lifestyle
- Best retail hub and experience
- Talented and diverse labour pool
- World class logistics and IT infrastructure
- Strategic location on the trade routes of East and West
- Excellent network of Double Tax Treaties with over 60 countries and growing
- Tax free environment
- NO income tax
- NO corporate tax
- NO limit on repatriation of profit
Oneworld MidEast operates in UAE since 2013 and we are located in own offices in Business Bay, a prime business location in Dubai. We are a boutique firm providing niche and customized services to clients which include corporate and trust, global compliance, tax and legal, business advisory, financial advisory and family office.
Please feel free to contact our regional director Mr Costas Ioannou at CIoannou@oneworldmideast.net, to discuss tailored solutions based on your requirements.
« Go Back to Blogs