United Arab Emirates (UAE)
The United Arab Emirates, sometimes simply called the UAE, is a federation of seven emirates. The constituent emirates are Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al-Khaimah, Sharjah and Umm Al-Quwain. Most notably, Dubai has risen in the past decade to become a leading resort destination in the world, attracting large worldwide tourism, sporting events, strategic conferences. Dubai is famous for its amazing feeds of engineering construction, including the Palm Jumeirah, Burj Al Arab, the 7 star hotel and Burj Khalifa, the tallest tower in the world. The UAE will set the stage for Expo 2020 and with that, will establish the region as the premier business hub of the future.
For companies and individuals relocating to the UAE, we can assist in making the transition a smooth one. Our ability to provide services in company formation, immigration processes and real estate investments enable us to provide complete solutions for all those settling in the UAE.
The UAE is one of the few countries in the world that provides a unique opportunity for citizens of any country to establish businesses and to start their lives in the UAE. With virtually no restrictions or minimum timelines needed to establish residency, the UAE offers a level of flexibility that is unparalleled.
To attract worldwide businesses to establish themselves in the UAE, the UAE has developed free zones in which foreign business have 100% ownership, as compared to UAE proper, where a UAE National either will have to become a sponsor (National Agent) or a 51% partner to your business. The structures that we provide will ensure that your interests are protected.
How to setup a business in Dubai or the UAE
A company establishing a business presence in Dubai or other Emirates is licensed based on the activities that it will conduct in the UAE. The nature of the activities in the UAE, as well as the nature of the business and customers, affects the form of the company available, whether a local partner is required, and whether and which free zone might be appropriate.
There are three types of licenses
Personally offered high-value services such as management consultancy or public relations.
This license includes any business that trades in goods or services to the public such as retail sales.
This license includes all manufacturing businesses or operations involving processing goods or packaging products for sale.
The legal types of entities that can be incorporated in the UAE are:
Limited Liability Company
Private Shareholding Company (Private Joint Stock Co)
Public Shareholding Company
Simple Limited Partnership
General Partnership Company
Branch of Foreign Company
Branch of a Civil Company
Branch of Dubai Based Company
Branch of U.A.E. Based Company
Branch of GCC Company
Branch of a Freezone Company
Intelaq (UAE Nationals Only)
The most common legal entities which are incorporated on a daily basis in UAE proper are:
- Sole establishment
- Civil company/ Partnership Company
- Branch of a foreign company
- Limited Liability company
A sole establishment, also called a sole proprietorship, has one individual shareholder and does not have limited liability. If the sole proprietor owes a debt that the entity's assets cannot cover, he will be liable from his own personal property for such debts. If the company is not owned by a U.A.E. National, it is considered a foreign company and thus requires a National Agent. The National Agent does not participate in the management of the sole proprietorship, does not have a right to its assets or revenues, and does not bear financial liability or obligations in respect of the business or the activities of the sole proprietorship. A National Agent typically only provides certain limited governmental and administrative services for the sole proprietorship as more specifically agreed in the National Agent Agreement between the parties.
If a company wishes to obtain a professional license, it can establish a sole establishment.
A professional-type sole proprietorship can be owned by an individual of any nationality.
A sole proprietorship that is industrial or commercial can be owned only by UAE Nationals or GCC Nationals.
Civil company/ Partnership Company
A Civil company or Partnership Company is a partnership between individuals. A Civil company can only conduct professional activities such as doctors, lawyers, engineers and accountants. A Partnership Company can conduct other activities as well apart from trading activities. Civil companies and Partnership Companies are not subject to requirements such as those of minimum share capital as stipulated under the Commercial Companies Law. However, civil companies and Partnership Companies do not have limited liability. If the company owes a debt that the company's assets cannot cover, its partners will be liable from their own personal property for such debts, in proportion to their shareholding.
Branch of a foreign company
A foreign company may establish a branch office in Dubai to conduct the same activities as the foreign company. Since a branch is a part of a foreign company, it is required to have a National Agent. Further, a branch of a foreign company must obtain a bank guarantee for the Ministry of Economy. A branch office can not conduct trading activities.
Limited liability company (LLC)
An LLC has to be established with at least two shareholders of which at least one is a UAE National, or a U.A.E. company wholly owned by U.A.E. Nationals, which must own at least 51% of the shares. The 51% shareholder can participate in the management of the LLC if he would want to, has a right to its assets or revenues, and does bear financial liability or obligations in respect of the business or the activities of the LLC. An LLC cannot conduct any consultancy activities.
If an onshore company is formed in the UAE we can also assist you to find office space (which is a requirement to incorporate a company), apply for authorities for visas and labor permits, bank accounts, and telecommunications and other utilities.
The fees to establish a company in the UAE depend on a lot of variables. Depending on the activities and legal type of the company, additional costs such as governmental approvals, bank guarantees, National Agent fees and share capital could be required.
UAE Free Zones
The UAE has over 30 free zones in which a company can be formed, and each has its own rules and requirements for formation and regulation of such companies. The most important rule is that a free zone company can only do business in the free zone or outside of the UAE.
The most popular free zones are Ras Al Khaimah Free Zone Authority (RAK), Creative City in Fujairah, Dubai Technology, Electronic Commerce and Media Free Zone (TECOM), Dubai International Financial Centre (DIFC), Jebel Ali Free Zone Authorities (JAFZA), Dubai Airport Free Zone Authority (DAFZA), Dubai Silicon Oasis (DSO), Dubai World Central (DWC)
We would provide the advice for a representative free zone based on the company's business and products or services, what it intends to do in the UAE, what its objectives and concerns are with respect to its UAE presence, whether it wants or can afford an office in the UAE, whether it intends to have staff, its home country tax exposure, and other such issues.
The most common legal entities which are incorporated on a daily basis in UAE free zones are:
- Free zone establishment (FZE)
- Free zone company (FZC or FZCO)
- Free zone limited liability company (FZ-LLC)
- Branch of a foreign company
- Branch of a UAE proper company
- Offshore company
Free zone establishment (FZE)
An FZE has to be established with one shareholder, either individual or corporate. The shareholder is liable for the total amount of shares that he owns.
Free zone company (FZC or FZCO)
An FZCO has to be established with at least two or more shareholders, either individual or corporate. Each shareholder is liable for the total amount of shares that he owns.
Free zone limited liability company (FZ-LLC)
An FZ-LLC can be established with one or more shareholders, either individual or corporate. Each shareholder is liable for the total amount of shares that he owns.
A subsidiary can be established with one shareholder, either individual or corporate. The shareholder is liable for the total amount of shares that he owns.
Branch of a foreign company
A foreign company may establish a branch office in a free zone to conduct the same activities as the foreign company.
Branch of a UAE proper company
A UAE proper company may establish a branch office in a free zone to conduct the same activities as the local company.
There are three free zones that can license offshore companies, Jebel Ali Free Zone, Ajman and Ras Al Khaimah Free Zone. Offshore companies do not have an office and cannot provide visas. An offshore company is also not allowed to do business in the UAE.
Legal tax ramifications
Some European countries now have tax policies in place, which do not allow for offshore invoices as legitimate expenses to reduce the company’s tax burden. Opening a free zone establishment (commercial company) will allow you to maintain the cost effectiveness of the offshore company structure, while retaining the benefits of the valid tax deduction from an onshore company.
Creative City offers the perfect solution for this with its commercial license. A commercial license does not provide for visas, but does allow the structure of the onshore entity and the company bank account without the added expense of physical space and other related office expenses.
If a free zone company is formed in the UAE we can also assist you to find office space (which is a requirement for onshore free zone companies), apply for authorities for visas and labor permits, bank accounts, and telecommunications and other utilities.
The fees to establish a company in one of the UAE free zones depend on a lot of variables. Depending on the legal type of the company, additional costs such as share capital could be required.