Opening a business in the UAE requires careful preparation and selection of the most profitable region of the country for the development of a particular business. The UAE has more than 70 double taxation treaties with many of the world’s most important jurisdictions,
and there are 50 free economic zones (FEZs) for foreign companies.
Advantages of Investment and Business Immigration in the UAE
Free Economic Zones are geographical areas of the UAE where 100% foreign ownership is allowed. Companies in such Free zones operate under licenses. The regulator’s policy is aimed at attracting foreign investors, so licensing procedures are as transparent as possible, quick and easy.
- A foreigner has the right to register a business with a 100% ownership without the need for joint ownership with a resident.
- Free zones have their own rules and offer “tax vacations” or zero income tax for companies for a period from 15 to 50 years with the possibility of extension.
- The right to carry out 100% repatriation of capital (transfer of profits and other assets to the country of citizenship) without any withholding tax.
- A treaty between the UAE and Ukraine on avoidance of double taxation has been in effect since February 2021.
- Ownership in OAE gives a right residency in UAE and work permit.
- There are no restrictions on currency transactions.
- There are no trade quotas or barriers.
- The right to officially employ expatriates (individuals who live temporarily or permanently in a country other than their country of citizenship).
- Favorable geographical location for efficient logistics.
- Modern business infrastructure and digital support for companies.
How to open a company in the UAE
The top FEZs with comfortable conditions for foreign businesses include Dubai Multi Commodities Centre (DMCC), UAQ TRADE FREE ZONE, Ajman Free Zone, Ras Al Khaimah and others. Each free zone has its own governing body headed by a director. The regulator establishes customized rules for doing business within the FEZ, a list of acceptable types of business, license fees, and directly issues permits for company registration.
In the free zone you can get one of two types of licenses:
- general commercial (trade): gives the right to engage in trading activities;
- service (consulting): allows you to provide services, advice.
The establishment of a company in a free zone with any of the permitted types of activity needs 8 steps:
What should to be done
1. Select the type of license appropriate to the type of activity
Each FEZ has different rules and classification of activities. Some related activities can be combined under one license. For example, the DMCC allows up to six related activities under one license
2. Decide on the FEZ
The management of free zones establishes a list of available services, visa quotas, requirements for the founders of companies, the amount of authorized capital. Some FEZs are more favorably located for the organization of international shipments, while others are more designated for e-commerce.
At this stage, it is already worth seeking professional advice from the lawyers of SOWA Consulting to choose the best zone for your business
3. Choose your corporate structure
· new company with one or several shareholders, individuals or corporate;
· subsidiary with a corporate shareholder;
· joint venture: both individual and corporate shareholders;
· branch of a local or foreign company.
Some business activities are only allowed for subsidiaries. Check it when choosing the FEZ
4. Book a commercial name for legal entity and collect the documents
The founder is advised to propose 3 to 5 options of the name of the company. A specific list of documents is established by each FEZ, the general list is described below
5. Apply for initial approval
At this stage, the regulator approves the company name, type of activity and structure.
6. Face-to-face or virtual meeting with the regulator
FEZ representative schedules an in-person meeting or video call with the founder. Instead of the latter, by prior arrangement, the presence of a representative by proxy is allowed. In this case, the documents must be signed or notarized.
At this stage, verification of the passports of shareholders, founders, the correctness and authenticity of the articles of association, the resolution of the board, samples of signatures of management is carried out.
7. Find office for doing business (flexi desk, office in a business center, physical office, warehouse, retail shop etc.)
The office Must be located in the selected FEZ. The rental agreement is executed for at least one year and is filed to EJARI, the UAE Real Estate Regulatory Authority’s (RERA) online registration system.
Documents are submitted to the regulator
8. Get your license
The business permit is issued in the package with other corporate documents after the payment of the license fee, signing the registration documents and approval
If all requirements are met, the procedure takes 1-2 weeks depending on the free zone internal process time. The business license is valid for one year from the date of issuance. Then it must be renewed.
SOWA Consulting lawyers will help you with all registration procedures whole the way long.
How to register a company in DMCC Free Zone
DMCC Free Zone (Dubai Multi Commodities Centre) is the most popular free economic zone among foreign investors in Dubai. There is a 50-year tax free regim, residency visa eligibility, and full ownership of real estate.
The zone was founded in 2002. By 2021, more than 20,000 companies had been registered there. These include brokers, banks, commodity exchanges, business support firms, restaurant chains, cafes, hotels, retail outlets, health care providers and others.
According to the official portal of Dubai on Twitter, in 2020 was broken a 5-year record for the number of successful registrations in DMCC – 2,025 foreign LLCs.
Establishing an LLC in the DMCC zone in the UAE has a number of advantages:
- classification of types of activities for companies includes more than 900 options;
- corporate tax and dividend payment tax at 0% rate for 50 years;
- 0% income tax on individuals for 50 years;
- 100% repatriation of profits without any tax;
- there are no restrictions on the use of currency;
- right to open a bank account;
- right to own real estate in Dubai;
- basis for employees and shareholders to obtain residence visa and work permit;
- Companies registered in DMCC are well trusted by the banks;
- large-scale and progressive support of business by the state (infrastructure, educational programs, safe business environment).
The listed privileges are available to companies that have obtained one of the four types of licenses:
- General trade license – DMCC Free Zone General Trading License.
- Trade in certain groups of goods – Trading License.
- Production of goods – Industrial Licence.
- Counseling and services – Consultancy/Service Licence.
How to register a foreign company in the Arab Emirates in DMCC
In addition to the standard procedure for applying for a license, the applicant must go through several standard steps to obtain a license:
Authorized capital should be paid up within 2-3 months after bank account is opened . The amount is determined by the type of licensed activity. Minimum amount $13,500
At least one shareholder, 1-7 directors, no nationality or residency restrictions
The company is required to prepare and submit audited financial statements at the end of the financial year
The company should be registered at the address within the DMCC area
Territory of operation
Restricted to provide offline services or trade with individuals in UAE (for this mainland company should be used), outside the UAE the company can trade freely
Turnover for the year
Should be registered as a Vat payer when turnover is more than 100K USD
Company registration in Ajman Media City
AMC (Ajman Media City) is an important center of international travel and trade. It was founded in 1988. It differs from the previous one in its strategic location. Foreign business owners get access to smart office packages, preferential tax treatment, and licensing takes up to 10 business days on average.
The key advantages of starting a business in the UAE and registering it in the Ajman Free Economic Zone:
- The FEZ is located 12 km from Dubai and Sharjah, close to two international airports and four major seaports.
- A foreigner has the right to solely own a business in the FEZ, open an account in a local bank, and transfer all profits to the country of citizenship (100% repatriation).
- There are no export/import duties.
- Low operating costs: the government offers affordable rates for space use, electricity and rent.
- A wide range of licensed commercial activities from industry to e-commerce.
- Staff and managerial staff have the basis for obtaining visas to work and reside.
- There is no requirement for a business owner to be physically present to register a company.
- Full digitalization of business, customer support, and other services for foreign company owners.
- There is no requirement for payment of share capital.
- There is no requirement for an annual audit and report filing.
FEZs use technological innovations, digital services for the business segment and investment activities at a high level. In January 2021, eight of Ajman’s digital services were rated “5 stars” by the government’s Digital Services Project program.
Registration of a local company with 100% foreign ownership
According to the UAE law on commercial companies (No.2 of 2015), foreigners had the right to own no more than 49% of local companies in the form of LLC (Limited Liability Company, the equivalent of TOV under Ukrainian law), which are located outside the FEZ. The remaining 51% was to be owned by a UAE citizen. Since June 1, 2021 the government amended the law, which gave the right to a foreign investor to own 100% of the local company, which has the right to provide services within the FEZ and the entire territory of the UAE.
The Department of Economic Development in Dubai has limited the effect of the amendment and identified about 1,000 economic activities with which a company can be 100% owned by a foreigner. These included commercial and industrial activities.
- activities that are subject to licensing as the provision of services (business consulting, IT consulting, marketing consulting, real estate, financial auditing, etc.);
- strategically significant economic activities, including banking, finance, insurance, fintech, and the military.
The mainland company starting from July 2023 is subject to income tax of 9%. The same is true for free zone companies that generate their income from operations on the internal market. The tax is due if the income amount exceeds 375 000 AED (aprox. 100000 USD) within the financial year. The business whose financial year starts in January should not pay tax from income received before January 2024. Multinational companies, whose income is 750 mil EUR and more are taxable at 15% tax rate.
Documents required to open a local company:
- completed application form;
- passports of the founder and director;
- proof of residence for the last three months (Utility bill);
- photo format documents of the shareholders and the director;
- business plan.
Depending on the type of license, the list may expand.
Bank requirements to open an account
- 80% of the company’s management staff should have resident visas;
- Proof of registration address of the account holder’s residence in the UAE confirmed by a rental agreement or documents on the payment of utility bills;
- normal office in the UAE (ejary should be provided), flexi –desk rent agreement is supported by a few banks for limited number of business activities;
- deposit the amount set by the bank (on average, from $40K to $2-3 mil depending on a bank and business risks);
- CV of the company owners;
- Personal bank statements for last 6 months;
- Bank statements for last 6 months from the related or another business of the company owner;
- Contracts with suppliers and clients.
- Personal meeting in a bank is required.
Resident visas for remote workers in the UAE
An important element of opening a business in the UAE is the official employment of workers. In free trade zones, companies can hire foreign employees without restriction, only if they have a visa.
Until 2021, a standard work visa was issued for the duration of the employment contract. In March, 2021 a new format was approved – a resident visa for a remote worker. It is issued for 1 year. The holder of this permit has the right to live and work in the UAE, regardless of whether the employing company is inside or outside the country. In October 2020, this visa format was launched in Dubai.
The document is valid in all emirates.
In order to obtain a remote worker visa, the UAE Immigration Service must be provided:
- Passport valid for at least 6 months after the visa.
- Certificate of health insurance in the UAE.
- Employment contract/other proof of employment, valid for at least 1 year from the date of visa application.
- Proof of salary of $5,000/month.
- Statements of payment for the previous month.
- Bank statements for the past 3 months.
A foreign company owner in the UAE can also apply for a residency visa remotely. To do so, it is necessary to additionally provide:
- document on the ownership of the business for the last year;
- proof of a monthly income of $5,000;
- bank statements for three months.
Opening a business in the UAE with SOWA Consulting
The team of SOWA Consulting provides comprehensive business services in Ukraine and abroad. The company’s specialists select the most favorable jurisdiction for business registration, advise on taxation, develop a business plan, and conduct an audit of the client’s activities.
We accompany the company at the stage of foundation and obtaining a license. Next, we conduct a financial analysis and select a bank to open an account. The team includes specialists in controlled foreign company (CFC) reporting, tax planning and business risk analysis.
The agency strictly adheres to a policy of confidentiality, provides a comprehensive approach to service and, at the request of the client, accompanies the activities of the company after registration.
Submit a request for an initial consultation on SOWA Consulting’s website. A manager will contact you as soon as possible and provide you with the most comfortable package to help you quickly reach your goal without excessive costs.