Setting up a company in Dubai
Dubai has always been the preferred gateway to establish and grow businesses in the GCC and neighboring countries. But now with recent revisions to the rules and laws, the UAE has further opened up the economy to entice more foreign investment and it has become even easier to incorporate a business and get the ball rolling.
UAE’s updated economic diversification policy allows for the establishment of Free Zone Companies and International Business Companies (IBC) among other investor-friendly policies. Due to these unparalleled benefits, the UAE has become the ideal place for entrepreneurs and investors to headquarter their businesses, structure their wealth, and avail favorable foreign investor incentives.
The Right Business Setup for You
To start a business in the UAE you first have to familiarize yourself with the concepts of “Mainland”, “Free Zone” and “Offshore” businesses. These investor-friendly options have been set up keeping in mind the different needs of different businesses and how they operate. Let’s take a look at these options:
Mainland Company with 100% ownership
These types of businesses are also known as onshore companies and are licensed by the Department of Economic Development (DED) of the related emirate. In November of 2020, new guidelines were announced by the UAE government that allows 100% foreign national ownership of businesses, eliminating the need for companies to have Emirati shareholders. This amends the clause that capped foreign national ownership of a business at 49% outside of Free Zones. The UAE now provides a stable, favorable legislative environment for the establishment of businesses.
Free Zone Company
These are companies that are set up in designated Free Zones and they are only allowed to operate within the Free Zone or outside the UAE. Foreign investors can retain complete ownership of the company, utilize the world-class infrastructure and enjoy significant tax exemptions. Setting up a company in a Free Zone is easy and quick with minimal documentation required. Popular Free Zones include DMCC, JAFZA, Dubai International Financial Centre, Dubai Internet City, Dubai Knowledge Village, Dubai Media City.
The taxation system is the most attractive reason for establishing a company in a Free Zone. With 0% corporate and personal tax and VAT exemption currently at 5%, operating in a Free Zone would make much more sense for investors. Besides these benefits, Free Zone companies have no currency restrictions and also get an exemption on import and export taxes. Most Free Zones also grant visas for shareholders, staff, and dependants.
Offshore companies provide the ideal gateway for international market expansion but are not permitted to have a physical presence, such as a branch office, in the UAE. They provide access to a stable, business-friendly legal system and tax neutrality on international earnings such as personal or company income, capital gains, and inheritance taxes. They are also a great way to separate or protect assets, such as Intellectual Property from the parent company. Offshore companies also have better access to global funding and can conduct business activities outside of the jurisdiction of the country it is incorporated. Residency visas are not offered as there is no requirement for office space. The cost of setting up an offshore company is low and it also takes very little time to incorporate. They also do not have to disclose the identities of their owners, shareholders, and directors to the public and have no minimum capital requirement to start.
Why is this the right time to start your business in the UAE?
The USD 7 billion Dubai World Expo 2020 finally opened its doors to the world after a one-year delay caused by the Covid-19 pandemic on 1st October 2021. This once-in-a-lifetime event has heads of state and prominent businesses showcasing life-changing innovations and experiences.
And what better time to get your business off the ground than now when all eyes are on Dubai. You will be able to tap into the growing market demand all the while making full use of UAE’s 0% income tax scheme. You will also be able to send 100% of your profits and capital back to your home country while also enjoying exemption from customs duties on both imports and exports. With minimal paperwork and auditing required depending on where you set up your business, the UAE also makes it easier to access new markets in the Middle East, Europe, Asia, and Africa. Your business will also benefit from the Double Taxation Agreements with over 120 countries globally.
As a businessman who has a valid UAE residence visa, you will be able to sponsor your family members to come and live with you, open a personal bank account, get a valid driver’s license, and rent properties.
How can TWS help you set up your Business in the UAE?
TWS Legal Consultants has over ten years of experience in providing corporate legal advice to UAE nationals and foreign investors who are looking to set up various businesses and corporations in the UAE. Our vast experience in cross-jurisdictional and local company formations lets us deliver commercial legal advice that is practical and accurate quickly.