United Arab Emirates

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United Arab Emirates

The United Arab Emirates (UAE) is a federal state in southwestern Asia in the eastern part of the Arabian Peninsula. It includes seven emirates - absolute monarchies: Abu Dhabi, Sharjah, Ajman, Dubai, Ras al-Khaimah, Fujairah, Umm al-Quwain.

The UAE is the 8th wonder of the world, a powerful financial center with an actively growing and strong economy. The internal policy of the government of the state is aimed at attracting foreign capital, therefore, the conditions for doing business in the emirates are as favorable as possible. Free economic zones are widely developed in the country.

The jurisdiction offers the formation of both offshore and onshore companies, so sometimes the concept of an offshore of the UAE or offshore of the Arab Emirates is encountered.

ADVANTAGES OF REGISTRATION OF A COMPANY IN THE UAE:

- the UAE has a stable, strong and secure economy, a well-developed online system for obtaining public services;

- it is profitable to open a company (offshore) in Dubai, since a variety of infrastructure is available for rent;

- there are no corporate and income taxes in the country;

- upon registration in the UAE (Dubai) of an offshore or onshore company in the Free Economic Zone (FEZ), 100% of the shares belong to the shareholder;

- there are no restrictions on capital repatriation, i.e. capital and profits placed in the Emirates are subject to 100% return;

- enterprises registered in the UAE are distinguished by a high level of confidentiality. This means that the registers of directors and shareholders are closed and only subject to disclosure by court order;

- it is possible to open a company and a bank account in one country;

- Opening a company in Dubai makes it possible to obtain tax residency.

LEGISLATION

The formation of offshore companies, the opening of firms in the UAE is governed by the regulations provided for in a particular emirate:

- for Ajman - Offshore regulations 2014;

- for Ras al-Khaimah (RAK International Corporate Center, RAKICC) - Business Companies Regulations 2016.

The formation of onshore companies in the FEZ is regulated by special acts in force in each specific Free Economic Zone (FEZ).

REGISTRATION OF COMPANIES IN THE UAE

TYPES OF COMPANY

1. An offshore company can be registered in the following emirates:

Ajman - company limited by shares;

Ras Al Khaimah (RAKICC):

- company limited by shares;

- restricted purpose company;

- unlimited company that is authorized to issue shares.

Offshore companies are not allowed to conduct business in the UAE.

2. An onshore company in a free economic zone (FEZ) can operate both in the UAE and outside, after obtaining the appropriate license.

An onshore company can be registered in the following free economic zones (there are more than 20):

- Ajman;

- Dubai (Dubai Multi Commodities Center, DMCC);

- Al Hamriyah, Sharjah (Hamriyah);

- Jebel Ali (JAFZA);

- Ras al-Khaimah (Rakez);

- Umm al-Quwain (UAQFTZ).

3. An onshore local (local) company is a company in which the maximum share of foreign capital is 49% (the remaining 51% is owned by a UAE citizen). Local companies are allowed to operate in the UAE.

An onshore local company can be registered in the form of:

- a professional company (provides professional services: law firms, consulting and accounting firms, travel agencies, event agencies, universities, schools, IT, etc.);

- limited liability company (LLC) - an analog of a limited liability company.

 

OFFSHORE COMPANY IN AJMAN OR RAKICC:

  • the minimum authorized capital for Ajman is 10,000 AED (2,740 USD), the maximum is 100,000 AED (27,400 USD). A larger amount of capital can be established by a prior agreement with the registrar. To do this, you will need to provide a bank statement to confirm the availability of such funds. The minimum authorized capital for RAKICC is also 10,000 AED (2,740 USD), and the maximum amount must be agreed (you will also need to provide a bank statement to confirm the availability of funds). There is no obligation to contribute capital.
  • only registered shares are used, bearer shares are prohibited. Ajman does not allow different classes of shares (in RAKICC different classes of shares are allowed).
  • a shareholder can be an individual or a legal entity, regardless of residency, the minimum number is one. A shareholder can simultaneously hold all positions in the company, being both a director and a secretary.
  • a director can be an individual or a legal entity, regardless of residency, the minimum number is one.
  • the secretary can be a natural or legal person, regardless of residency, the minimum number is one.
  • the registered address of the company must be in the Emirates (offshore companies are prohibited from having a real office).
  • bookkeeping, filing of financial and audit reports for offshore companies - not required.
  • information about shareholders and directors in such companies is hidden (only the registrar sees it).
  • offshore companies in the UAE are prohibited from doing business in the country, so they do not pay taxes and do not fall under the obligation to register with the tax office (the company cannot import/export goods or services from / to the Emirates). Thus, the corporate tax, VAT for offshore companies is 0%.
  • licenses are not issued offshore, therefore it is also impossible to obtain a resident visa.

 

ONSHORE COMPANIES IN FREE ECONOMIC ZONES (FEZ)

The requirements for registering a company in each FEZ are different, therefore, each zone is considered separately, taking into account the desired type of activity.

 

ONSHORE COMPANY IN FEZ AJMAN:

  • can be registered in the form of FZE (Free Zone Establishment) or FZC (Free Zone Company).
  • minimum authorized capital - 185,000 AED (50,000 USD). This amount is subject to mandatory payment within 6 months from the date of registration, and then can be used (transferred, withdrawn) in full.
  • a shareholder in FZE must be one natural or legal person, in FZC - at least two shareholders, also natural or legal persons.
  • it is possible to use both virtual and rent a real office. A virtual office makes it possible to obtain up to 2 resident visas, a real office - 3 or more visas.
  • the company does not need to keep accounting records, file reports and undergo audit.
  • such firms are not taxed in the Emirates.

Types of licenses in FEZ AJMAN:

-       Business License - a trade license for 1-3 types of trade or general trade;

-       E-commerce License - a license for carrying out electronic commerce;

-       Service License - service license;

-       Industrial License - production license.

 

ONSHORE COMPANY IN FEZ DMCC (DUBAI MULTI COMMODITIES CENTER):

  • can be registered in the form of: Limited Liability Company with one or several shareholders; A subsidiary that is privately owned by a local or foreign company; A branch of a local or foreign company.
  • minimum authorized capital - 50,000 AED (13,700 USD) and 10,000 AED (2,740 USD) per shareholder. For some types of activities, a significantly larger amount is provided, for example, for a general trade license - 1,000,000 AED (274,000 USD). This amount is subject to mandatory payment within 3 weeks from the date of registration of the company to an account with a local bank. Then the amount can be used (transferred, withdrawn) in full.
  • shareholders - up to 50 people, individuals and legal entities, residency is not important.
  • director - at least one (maximum - 6) and only individuals - residents of any country.
  • Mandatory is the position of a manager who can be one of the shareholders or directors, also of any citizenship.
  • information about directors and shareholders is closed.
  • Onshore company in FEZ DMCC can use virtual or real office. A virtual office is prohibited for firms with more than 1 license and with a general trade license. At the same time, a virtual office makes it possible to obtain up to 3 visas, and a real one - 5 or more resident visas.
  • Firms are required to keep records, but are not required to file them. To renew the license, it is necessary to undergo an annual audit and submit an audit report.
  • there is no taxation in this FEZ.

Types of licenses in FEZ DMCC:

-       Service License - service license;

-       Business License - trade license (general trade license is also possible);

-       Industrial License - production license.

 

ONSHORE COMPANY IN FEZ HAMRIYAH:

  • can be registered in the FZE or FZC form.
  • authorized capital - there are no requirements for the minimum amount and payment of capital, confirmation of payment is also not required. The amount of the authorized capital recommended by the regulator to be indicated in the charter is 150,000 AED (41,000 USD).
  • a shareholder in FZE must be one natural or legal person, in FZC - from 2 to 5 shareholders - natural or legal persons.
  • director - at least two directors, one of whom must be a resident of the UAE.
  • the company needs a secretary position. The director can combine the duties of a manager and a secretary, and this must be a resident of the UAE.
  • Companies registered in the Hamriyah FEZ are allowed a virtual office and E-office, and you can also get from 1 to 7 resident visas (for companies with a general trade license - 7 visas).
  • annually, within 3 months after the end of the financial year, the company must submit an audit report.
  • there is no taxation in this FEZ.

Types of licenses in the Hamriyah FEZ:

- Industrial License - production license (when importing raw materials for the production or assembly of products. These products can be sold in the UAE only through local distributors);

- Commercial License - a commercial license (for the import/export/storage/sale of goods within the FEZ Hamriyah. These goods can be sold in the UAE only through local distributors);

- Service License - a service license (for the provision of services in a specific area - IT, marketing, management, business).

 

ONSHORE COMPANY IN FEZ JEBEL ALI (JAFZA):

  • can be registered in the form of FZE, FZC, or a branch of a local or foreign company.
  • a fixed amount of the authorized capital - no (depends on the planned type of activity), confirmation of the capital contribution - no need.
  • a shareholder in FZE must be one natural or legal person, in FZC - from 2 to 25 shareholders, also natural or legal persons.
  • director in FZE - at least one individual, in FZC - at least 2 directors and only individuals - residents of the UAE.
  • secretary - at least one, his functions can be performed by the director. In the FZC, the secretary must be a UAE resident.
  • information about directors and shareholders is confidential.
  • it is not necessary to rent a real office.
  • There is no taxation for companies registered in this FEZ.
  • The onshore company in the Jafza FEZ must maintain sufficient records to show and explain each of its transactions. Also, within 3 months after the end of the financial year, a copy of the financial statement must be provided to the registrar.

Types of licenses in FEZ Jafza:

- Service License - a service license for the provision of services within this FEZ. The license is available only to branches of local companies;

- Logistic License - a logistic license (for sea/land/air cargo transportation, warehousing, packaging and distribution of goods). The license is available only to branches of local companies;

- Business License - trade license (for import, export, warehousing and sale of goods). It is also possible to obtain a general trade license to trade a wide range of products;

- Industrial License - a production license (for the import of raw materials, the production of certain products and the export of finished products);

- National Industrial License - A national industrial license is issued to manufacturing companies in which at least 51% of the shares are owned by the Arabian Gulf Cooperation Council (AGCC). This license gives its holder the same status as local companies or AGCC companies in the UAE.

 

ONSHORE COMPANY IN FEZ RAKEZ:

  • can be registered in the FZE or FZC form.
  • the minimum amount of the authorized capital depends on the type of activity of the company. If a company plans to obtain a general trading license, conduct business in the field of legal services, investment, logistics, etc., the regulator recommends specifying in the charter the minimum amount of capital - 100,000 AED (27,400 USD), which does not need to be confirmed.
  • a shareholder in FZE must be one natural or legal person, in FZC - from 2 to 5 shareholders - natural or legal persons.
  • director - at least one (maximum - 5) and only individuals.
  • Mandatory is the position of a manager, who can be one of the shareholders or directors.
  • the firm must have an office (virtual, standard or real). If you plan to obtain a general trade license, the office cannot be virtual.
  • There is no taxation of companies in the RAKEZ FEZ.
  • maintain, file reports and undergo audit - no need.
  • firms with a virtual office are eligible for 1-2 resident visas, with a real office - for 4 visas.

Types of licenses in FEZ RAKEZ:

- Service License - service license;

- Business License - trade license;

- Commercial License - commercial license;

- Individual and Professional License - individual professional license;

- E-commerce License - a license to carry out electronic commerce.

It is possible to obtain several licenses for one company.

 

ONSHORE COMPANY IN FEZ UAQFTZ:

  • can be registered in the form of FZE, FZC, or a branch of a local or international company.
  • the minimum authorized capital for FZE and FZC is 300,000 AED (82,000 USD), confirmation of contribution is not required.
  • a shareholder in FZE must be one natural or legal person, in FZC - from 2 to 50 shareholders, also natural or legal persons.
  • the firm must have a virtual or real office.
  • There is no company taxation in this FEZ.
  • keeping accounting records and submitting annual reports - not required.
  • FEZ UAQFTZ is suitable for micro-business.

Types of licenses in FEZ UAQFTZ:

- Commercial License - a commercial license (entitles you to obtain 2 resident visas);

- Consulting License - consulting license (2 visas);

- Business License - general trade license (3 visas);

- Micro Business License - a license for microbusiness (0 visas);

- Freelance permit (1 visa);

- Premium Consulting License - premium consulting license (3 visas).

ONSHORE LOCAL COMPANIES

PROFESSIONAL COMPANY:

  • 51% of the company's shares must be owned by a local partner and 49% by a foreign citizen. In this case, the form of the company will be a Limited liability company (LLC), which is similar to our Limited Liability Company.
  • minimum share capital - no requirement.
  • There can be several shareholders (except for citizens of Iran, Iraq, Syria, Israel).
  • the agent of the company must be a citizen of the UAE, who will not have a share in the company, but will receive fixed annual profit.
  • the post of secretary - not needed.
  • information about shareholders and directors is confidential. Only the name of the company can be found in the public domain.
  • it is imperative to rent a real office in the UAE.
  • Firms must file financial statements and be audited annually.
  • to register a professional company, it is necessary to confirm the availability of experience and qualifications in the chosen field.

 

LIMITED LIABILITY COMPANY, LLC:

  • the minimum authorized capital depends on the type of activity of the company. There is no single rule for obligatory payment.
  • shareholders - at least 2 people, maximum - 50 people.
  • 51% of the shares must be owned by a UAE citizen who will receive a fixed annual profit.
  • One of the shareholders may act as a director in the LLC, or a third party may be appointed that does not have a share in the firm.
  • the post of secretary - not needed.
  • information about shareholders and directors is confidential. Only the name of the company can be found in the public domain.
  • it is imperative to rent a real office in the country.
  • Firms must file financial statements and be audited annually.
  • LLC is prohibited from conducting insurance, banking or investment activities with funds of third parties.

TAXATION

There is no income taxation for all companies registered in the UAE.

Value added tax (VAT) has been introduced in the Emirates since January 01, 2018:

- the standard tax rate of 5% is levied on the import and export of goods/services when they are sold on the territory of the UAE to residents of the UAE;

- 0% rate is applied when importing and exporting goods/services on the territory of the UAE FEZ, outside the member countries of the Cooperation Council for the Arab States of the Gulf (Bahrain, Qatar, Oman, UAE, Saudi Arabia, Kuwait), for international transportation and other services, prescribed in the Law;

- tax exemption is provided for certain financial services, life insurance, non-income-generating residential real estate, local passenger transport, etc.

 

Mandatory registration as a VAT payer is required for:

- UAE onshore companies (local and registered in the FEZ) that supply goods or provide services to individuals and legal entities in the Emirates, as well as member countries of the Cooperation Council for the Arab States of the Gulf, or that export and import goods/services to/from the UAE;

- if the annual turnover of the onshore company exceeds 375,000 AED (100,000 USD).

You can also register as a VAT payer on a voluntary basis if the company's annual turnover exceeds 187,500 AED (50,000 USD).

Not required to register as VAT payers:

- non-resident enterprises registered in other jurisdictions and having a tax number there;

- offshore companies in the UAE, since they are prohibited from supplying goods and providing services to residents of the Emirates;

- companies in the UAE FEZ that do not export or import goods/services to/from the UAE. Such firms must documently confirmed that the goods are purchased and sold in other countries.

Firms registered as VAT payers are required to maintain accounting and tax records, submit tax returns. The reporting (tax) period is established by the tax department for each company separately (quarterly or monthly). The deadline for filing declarations and paying VAT is the 28th day of the month following the reporting period.

EXCHANGE CONTROL

Absent.

DOUBLE TAX AGREEMENT

The UAE has signed agreements on the avoidance of double taxation with many countries (over 90 countries), including Ukraine.

If you want to buy a company in the UAE (offshore or onshore) or open an offshore company in the Emirates, particularly in Dubai, please contact our lawyers for advice:

+38 (098) 737-88-88

We will help you register a company in the Emirates or any other jurisdiction of your choice.