What is the best company type for your business in Dubai? In this article, we will detail the advantages of company incorporation in free trade zones, onshore, and offshore companies, along with the required steps in the UAE.
Company Types in the UAE
Free Zone Businesses
Free Zones, also known as Free Trade Zones, are designated areas with distinct tax, customs, and import regimes that are managed by their own regulatory framework. The Free Zone concept was designed in the UAE to attract new businesses and foreign investment, as well as to diversify the economy away from oil.
There are about 45 Free Zones spread across the seven Emirates, with Dubai having the biggest concentration (encompassing more than half of the total number of Free Zones). Free Zones account for around 20% of total UAE exports and 30% of non-oil foreign commerce. What are the best FZ firms for?
Free Zones allow:
- 100 % ownership for international investors
- 0 % personal and corporate taxation
- Resident visas for investors and staff
- Quick and simple registration and upkeep
Many criteria must be considered when deciding on the best Free Zone for your company, including location, price, business activity, the necessity for actual office space, auditing and bookkeeping, and share capital requirements.
From our office in Dubai, we assist our clients in deciding the best type of business for their needs and assisting with the entire incorporation and post-corporation process.
Contact us at info@gurcanpartners.com
Onshore Companies
Each of the Emirates has its own Economic Department that deals with company registration.
Dubai, as the most populous Emirates, undoubtedly leads the way in terms of registrations and is frequently referred to as the model for all other Emirates in terms of adopting company legislation and changing the way business and registrations are conducted in the UAE.
The “mainland” of Dubai is the complete geographical region granted by the individual emirate’s Department of Economic Development (DED) to all corporate companies to operate freely. In the UAE, mainland firms are the most frequent type of business.
This configuration is best suited for:
Clients who want to conduct business with both private and public sector enterprises in the local “mainland” market, and/or who want to have an official address outside one of the Free Zones.
Mainland Companies Allow:
- pay no personal or corporate tax
- establish offices and conduct business anywhere in the UAE
- There is no limit on the number of visas that can be given (subject to office size)
- Bank account opening is simpler than in Free Zones.
- Numerous commercial activity
- No annual audits are required – More than 1,000 commercial and industrial activities are accessible for 100 percent foreign ownership.
- There is no need to fund share capital.
It is worth mentioning that, in addition to the 1,000 activities that have been designated as “sponsor/agent-free,” it is essential that 51 % of firm shares be held by a UAE native (commonly referred to as the local partner or sponsor); for a predetermined annual fee, the local sponsor will transfer complete management, operational, and financial authority back to the 49% shareholder.
Gurcan Partners is a Foreign Economic Relations Board, AmCham and Association of German Chambers of Industry and Commerce member international law and consultancy firm.
Offshore Companies
Through its offshore registries, the UAE adheres to the classic International Business Company (“IBC”) structure: Ras Al Khaimah International Corporate Centre (RAKICC) and Jebel Ali Free Zone (JAFZA).
Because it is located within a large nation with genuine trade, the UAE is leading the innovation of offshore jurisdictions and is now considered superior to classic jurisdictions such as the BVI or Cayman Islands.
An offshore structure in the UAE is significant asset protection, wealth management, tax planning, and succession planning instrument that is simple to form and administer.
ECONOMIC SUBSTANCE
The Economic Substance Regulation, which was initially released in April 2019 and will be finalized in August 2020, requires UAE onshore, IBC, and free zone enterprises that engage in any of the stated “Relevant Activities” mentioned below to maintain and demonstrate appropriate “economic presence” in the UAE. Because of their inherent lack of “economic substance,” IBC corporations are typically the most harmed.
Entities must demonstrate the following to meet the Economic Substance Test in the UAE:
- Adequate physical assets, expenditures, and workers exist in the UAE.
- Core income-generating activities (CIGA) are carried out in the UAE
- Directed and controlled in the UAE
SERVICES FOR COMPANY ADMINISTRATION
Service is the cornerstone of our business strategy, which is why we provide our clients with everything they need to incorporate and maintain their company and residence. By performing our services in-house whenever possible, we ensure great service and complete peace of mind.
ACCOUNTING AND BOOKKEEPING
Most onshore enterprises in the UAE are required to compile and submit audited financial accounts. Audited financial reports are required for certain Free Zones at the time of firm registration and yearly renewal. Loggerhead Corporate Services offers customized, multi-currency bookkeeping to help businesses optimize their operations and accounting obligations.
MANAGEMENT OF STATUTE REQUIREMENTS
Upon company incorporation, the documentation that must be submitted and kept in the UAE varies substantially among the three jurisdictions (Onshore, Free Zone, and Offshore). We help our clients draft, complete, and maintain all statutory obligations and business documents in accordance with the applicable authority’s standards and regulations.
So far we have assisted over 400 companies. Check out our experiences.
PAYROLL
The UAE government requires that all employee wages be paid through an electronic salary transfer system known as WPS (Wage Protection System), which ensures that agreed-upon wages are paid on time and correctly. Our payroll services ensure that, regardless of jurisdiction, monthly payroll is carried out in accordance with UAE labor law.
ATTESTATION & LEGALIZATION
To get a resident visa in the UAE, all official documents and professional qualifications must be confirmed by the Ministry of Foreign Affairs (MoFA). Additional attestations from government bodies or embassies in the applicant’s native country are frequently required for documents.
Our team is always available to assist you with the appropriate attestation procedures.
LIQUIDATION OF A COMPANY
All business licenses and permissions must be canceled when a firm is liquidated in the UAE. The owners protect themselves and all other stakeholders from potential fines and penalties on their business license by telling the competent authorities or government agencies that a firm has been liquidated. We arrange and facilitate the full liquidation procedure on behalf of our clients after the decision to terminate a business has been made.
VISA MANAGEMENT FOR UAE RESIDENCE
A resident visa obtained by an Onshore or Free Zone enterprise must be renewed every three years. We handle the complete visa process for our clients, from the initial medical exam and first-time issuance to renewal.
Additional issues that may develop during the procedure of company incorporation in UAE. Please contact us for more information or to schedule an initial private consultation.
All rights reserved. All rights of Company Incorporation in the United Arab Emirates article belong to Gurcan Partners. The author has no responsibility for the information in this article. This article is prepared just to inform.
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