The United Arab Emirates is considered one of the most prosperous countries in the world at this moment, as well as a promising state in terms of doing business. At a time when the majority of the world’s economic giants have been directly affected the economic crisis, business activities are actively growing in the Arab Emirates, and economic resources in the country are only multiplying. Based on business activities, the UAE is almost as attractive location on the global scale as any other world’s financial capital, and such economic stability has always been the State government’s priority of development practically in all niches of human activities. The local currency is now safely kept afloat, the products and services sales market is dynamically expanding day by day, and the high purchasing power of the local population provides firm ground under the feet of most start-up entrepreneurs.
- 1 Attractive aspects of opening a business in the UAE
Attractive aspects of opening a business in the UAE
In connection with the unconditional stability of the country’s economy, and the fact that taxes are not at all the primary sources of replenishment of the state budget, functioning enterprises and business organizations are not yet subject to VAT, profit and income taxes, which are conventional for the majority of citizens of other countries.
The main source of revenue in the UAE state treasury is the production and sale of oil and gas. Namely due to its significant existing reserves of the energy resources, the United Arab Emirates has received a significant push in the economy growth over the past 30 years, which, in its turn, has influenced an active development in many other financial fields. Currently it is considered that opening a business in the UAE is not only a pledge of profitable entrepreneurial activity, but also a fertile ground for further development and expansion. Today, in addition to the unofficial status of the world oil and gas giant, other business niches are actively growing in the territory of the Emirates. The state is the world’s largest center of export and re-export, a pioneer in the field of the latest technological developments, as well as an international leader in financial and investment operations. Consequently, a business in the UAE, which can be opened not only by citizens of the state, but also by foreign entrepreneurs, is destined to show growth and development «by leaps and bounds», while the authorities only help to attract capital from other countries, providing all the necessary positive “business climate” conditions.
Today the majority of ambitious entrepreneurs from all around the world are in the process of thinking or already planning to open their business in the UAE. It is extremely necessary to recognize the fact that the popularity of the UAE based on its financial activity is quite natural. Dozens of Free Economic Zones operate in the territory of this country, where foreign companies’ owners are given an absolute freedom to manage personal business. They have the opportunity of 100% company’s ownership, and are not limited in the context of the capital movement, legitimate foreign exchange operations and the export of profits.
Having registered a business in the UAE’s Free Economic Zones brings a number of undeniable advantages to foreign shareholders and enterprises:
- 100% foreign ownership when registered in the FEZ;
- No taxation on imports and exports of manufactured products or services;
- Full repatriation of capital and profits guaranteed by the State Authorities;
- No corporate tax for a period of up to 15 years;
- No personal income taxes on the company’s employees;
- Flexibility of legal entities’ registration procedure
and much more…
These all are factors that make it is possible to establish a business in the Emirates in a relatively short time, and with the qualified specialists’ support, everyone can significantly simplify and speed up this procedure.
Opening a business in the United Arab Emirates is a rather popular request from all kinds of entrepreneurs, including those from the CIS countries. Dovira is ready to provide qualified assistance on exceptionally comfortable terms to everyone who requires them.
Individual approach to a client by a dedicated personal account manager, as well as strict adherence to the confidentiality policy and prompt document processing, will not only ensure a quick and smooth launch of your business operations in the Emirates, but also make it as transparent and easy as possible.
We will help you to save the most underrated resource for every successful entrepreneur – your precious time by completely removing you from all the worries associated with the document opening and its subsequent processing by the competent authorities. Dovira will also provide a full range of necessary consultancy and administrative support, if necessary, familiarizing you with all the stages and procedures.
Many years of Dovira’s consultants experience in personal business support provides a chance for a businessman starting personal economic activities in the Arab state to rationally plan each stage of the process, while avoiding all subsequent «paperwork» hassle. A personal consultant will help to determine an organizational and legal form of licensing of entrepreneurial activities that are optimal for the set tasks, to issue resident visas and open personal or corporate accounts in the leading banking institutions of the state in a timely manner.
Business registration in the UAE
The UAE’s investment attractiveness and the country’s rapid popularity spike have brought the status of a key business and economic center of Eurasia. These significant conditions ensured at the State level are very effective for the foreign business prosperity in the UAE.
It should be emphasized that due to the attractive business conditions in the UAE along with the comprehensive support of medium and small businesses by the State authorities, the country’s domestic market is developing quite rapidly, which in its turn have caused the emergence of a significant number of Free Economic Zones and various privileges for foreign investors.
How to register a private company in the United Arab Emirates?
Nowadays, foreign participation in the domestic market of the Arab Emirates is being present in two ways, namely:
- Company’s registration in the Emirates (domestic market).
- Company’s opening within a particular Free Economic Zone (FEZ).
In the first case, the company is given the right to operate unhindered throughout the country, while firms in the FEZ assume functioning exclusively within the selected Zone. In addition, both options have a number of advantages and disadvantages that every contemporary entrepreneur, aimed at conquering the UAE business market, should be aware of beforehand.
In order to register a company within the borders of the United Arab Emirates, the future owner must provide the prescribed minimum list of documents. It is worth emphasizing that the company’s registration in the UAE and the cost of a license to perform business activities in the country does not become an unpleasant surprise for foreign businessmen. The procedure of new companies’ registration is performed in a timely manner, while the state has created the most convenient mechanism for documents’ execution and processing. In most cases, in order to register a company, it is necessary to provide the competent registration authority with copies of the passports of potential owners, as well as a signed lease contract for the office, and in the case of selecting a specific niche for its activities (e.g. construction, medicine, financial services, etc.) a number of other documents, including an official confirmation of the availability of appropriate education, permission to perform a particular activity by the authorized state agencies.
Company’s registration in the domestic market
The first thing to note is that the local or mainland companies in the United Arab Emirates cannot be fully owned by a foreign citizen. According to the local legislation, an organization can be opened exclusively with the involvement of a local resident, who must in fact own at least 51% of shares, or with the help of a service agent, who is not a co-owner of the company’s shares in the future, but he undertakes to represent the interests of the company in competent government authorities and institutions. Such organizations can work in the domestic market, and also have the right to conduct activities outside the country.
You have to rent a physical office to get a license. Company’s registration with a so called virtual office is prohibited. In case when the verification finds that the company is not located at the address stated in the license, the municipality has the right to collect a fine of AED20,000 (approximately USD5,500).
Local or mainland companies have the right to issue resident visas for their employees. The number of visas is determined by the Ministry of Human Resources and Emiratization (ex-Ministry of Labor). Usually based on the office space: it is considered that a visa is issued for every 10 square meters of the premises’ area.
A personal owners’ presence in the UAE and copies of passports will be required for a company’s registration process in the UAE’s domestic market. An additional agreement with a local partner is signed only by the parties and witnesses (1-2 persons). It cannot be notarized, since there is no law regulating the conclusion of such agreements. However, since the legal system is based on the Sharia Law, such a treaty can be used as an evidence in court (the Muslim’s confirmation of the word).
The approximate cost of a company’s registration in the Arab Emirates starts at USD6,000 and can vary depending on the type of license granted, the number of activities, the name of the organization and the office rent amount. The license fee includes 5% of the annual cost of an office rent. In addition to that the price of registration can vary if there is a need for a professional license (for medical companies, companies involved in construction, financial operations and others).
Company’s registration in the UAE’s domestic market, the price of which may vary depending on the region where the activity will be performed and the chosen professional direction, is usually performed within 7-10 working days, provided all relevant documentation is available (signed office lease contract and other documents, depending on the requirements of the registration authority).
Companies registration in FEZ
Free Economic Zones, also called FEZ, are specific separate regions in the state, which have a special legal status and have attractive economic conditions for both local and foreign companies.
The first FEZ in the Emirates was opened in 1985 in Dubai, which attracted huge flows of foreign capital to the territory of the Emirates. Since then, the popularity of the Free Economic Zones has increased significantly, and today there are several dozens of them in the territory of the state. The majority of free zones are oriented more towards enterprises and organizations with a certain activity, therefore choosing a region to register a personal business requires making a decision on what exactly the company plans to do.
The organization registered in the Free Economic Zone or FEZ is a popular category of international enterprises operating in the Arab Emirates. This type of company is noteworthy due to the fact that 100% foreign ownership is possible. Currently, more than three dozen Free Economic Zones are functioning in the territory of the Emirates and located practically throughout the country. It is also worth mentioning that the company’s registration in the UAE FEZ and corresponding expenses depend on the specific direction of a specific Free Economic Zone. Each FEZ has its own designation and focuses on the development of certain niches of economic activities: automotive, medical, financial, technological and others. Therefore, before selecting a suitable place of registration, it is necessary to determine the direction of its activity from the very beginning.
So, the companies in the UAE free zones:
- have the right to conduct business in the territory of the UAE (within a specific free zone);
- can work with both the real and the virtual office depending on the place of registration;
- have the right to issue resident visas for their employees;
- can obtain a certificate of residency (subject to certain requirements and the provision of the necessary documents).
Several organizational, legal forms and types of licenses are provided for companies in the UAE’s Free Economic Zones. You can open both a new independent company and a branch of an existing one and choose one of three licenses (commercial, service, production), depending on the activity you are planning to do business in.
The cost of a company’s registration, the term of registration, as well as the requirements for documents that must be provided for the registration of a company, all depend on the place of registration. Each FEZ has its own conditions and requirements.
The choice of the place of registration depends on the following criteria:
– type of activity (if trade, what kinds of goods, if services – which ones)
– who will act as a founder (individual or legal entity)
– what kind of premises (warehouse, office, virtual office) will be required
– how many UAE resident visas are required.
Please note that for some specific activities (for example, selling spare parts for airplanes and helicopters, jewelry, precious metals and stones trading), additional permits will be required from the government supervisory bodies. Obtaining such permits will also take some time and add a certain amount to the cost of registration.
A shareholder’s visit for documents’ signing in the presence of the registrar’s representative will be required for companies’ registration in the other free zones. A shareholder can come only for 1 day for documents’ signing and issue a power of attorney to Dovira’s employee to complete all formalities.
A branch/representative office registration
A branch of a foreign corporation registration in the UAE is also a popular option for implementing business activities within the country, which provides an opportunity to function both in the domestic market of the country and within the FEZ.
Opening a branch of a foreign company implies the possibility of performing a similar activity as a parent company. When you plan to register a foreign company’s branch in the Arab Emirates you would be required to provide the competent authorities with a certain list of documents. Almost the same list will be required for opening a corporate account in the local banks.
- Company charter, deed of incorporation;
- Document proving the enterprise’s registration;
- Decisions on changes and appointments in the membership of directors and shareholders;
- State license or certificate of legal capacity of the organization;
- A document certified by the founder of the parent company or the board of directors about the company’s branch opening, as well as the decision to establish a bank account in the territory of the UAE.
- Power of attorney for a potential manager.
It is worth emphasizing that all documentation should be legalized by the state structures of the United Arab Emirates. To do this, each document must be translated into Arabic or English, notarized, as well as confirmed in the Ministry of Foreign Affairs of the country of registration, the diplomatic mission and the Ministry of Foreign Affairs of the UAE.
Unlike other forms of enterprises registered in the UAE, the requirements for authorized capital do not apply to companies’ branches and representative offices. In addition, there is no need for the audit reports that are necessary only for companies operating within the FEZ. While opening a branch of a company, potential employees can apply for resident visas, however, in case of representative office registration, their number is limited.
Business activities in Dubai
Opening a business in Dubai is the aim pursued by most businessmen, who decide to start their business in the Emirates. Obviously, Dubai is the key region of the country, where a huge percentage of the UAE’s largest business is concentrated. In order to establish a business in Dubai it is worthwhile to get acquainted with the procedure that a first-time entrepreneur needs to undergo in detail, as despite the existence of the federal legislation, each separate emirate has its own legislative and regulatory framework and, therefore, has certain local requirements for opening a business.
First of all, it is necessary to clearly define what type of company is planned to open in the emirate of Dubai. Currently, the most popular are such varieties as onshore and offshore enterprises, which imply certain requirements in the context of doing business.
Free Economic Zones. There are several dozens of them in Dubai, therefore it is necessary to determine in which niche the enterprise will operate at the initial stage and based on the requirements given for a particular type, perform further procedures.
Choosing a bank to open an account with an onshore or offshore company can also become a very laborious procedure. Local banks may require a number of additional documents, and may further restrict the range of financial and transactional operations.
The procedure for private business opening in Dubai is quite complicated, because of the certain “pitfalls” probability. However, using the services of highly qualified business consultants who, in addition to information services, are ready to provide professional assistance at every stage of a business start-up process, you can significantly reduce the expenditure of time and effort, as well as pass the entire process easily and as quickly as possible.