UAE Company Formation

If properly structured, UAE company formation is an excellent way to legitimately book international profits without paying local corporation tax. In addition, there are no capital gains or personal income taxes in the UAE.

UAE company formation allows 100% foreign ownership, if the investor opts to set up in a UAE Free Zone. For example, a Jebel Ali Free Zone company is a convenient, cost efficient entity through which international business can be conducted. A minimum of one shareholder and one director is required to comply with company formation regulations in UAE Free Trade Zones. There is no restriction on the maximum number of shareholders, and corporate shareholders are allowed.

UAE company incorporation is not perceived as an offshore company in a tax haven. For example, Dubai company formation is a reputable, regulated, international trading solution. A Dubai Offshore Company is an ideal vehicle to use as a holding or investment company, and is an excellent, long term alternative to an offshore company in other jurisdictions such as the Cayman Islands and British Virgin Islands (BVI).

The value of Sharjah's economy reached AED71 billion (US$19.3 billion) in 2008, a significant increase from AED41 billion (US$11.2 billion) in 2005. Sharjah Company Formation is an increasingly attractive solution for entrepreneurs looking for a cost-effective alternative to neighbouring Dubai.

Abu Dhabi plans to spend a reported US$175 billion on tourism, industry, energy, infrastructure and other projects by 2012. An Abu Dhabi company is an excellent vehicle for international investors planning to access this local market.

The UAE is ranked the world's 27th most competitive country in World Economic Forum's Global Competitiveness Report 2011-2012. The survey takes into account factors such as infrastructure, macroeconomic stability, health and education, labour market efficiency, technological readiness and innovation.

Through a UAE offshore company, it is possible to have a UAE entity and business address, without the legal requirement to rent a physical office and employ staff. Healy Consultants offers a full UAE virtual office service, including telephone answering and mail forwarding services.

Healy Consultants can open global corporate bank accounts to support UAE company formation. Healy Consultants works with internationally recognised banks such as HSBC, Standard Chartered and Citibank to provide corporate bank account services.

There are no standardized minimum capital requirements to set up a UAE company. Minimum share capital requirements were abolished in August 2009 and required share capital is decided on a case basis, dependent on industry, business size and business goals.

Forbes Tax Misery Index 2009 rated UAE as having the 2nd lowest tax misery in the world. The index takes into account corporate income, employer social security, personal income, employee social security, wealth tax and VAT/sales. Forbes suggests the index can be used as a proxy to evaluate whether a country’s policy attracts or repels capital and talent.

UAE company formation can be hampered by: i) high government fees; ii) inconsistent and complex Dubai company law; and iii) inefficient bureaucracy. For example, a UAE limited liability company (LLC) requires a minimum 51% shareholding by UAE citizens and a minimum of two shareholders. If the 49% shareholder in the LLC is a foreign corporate entity, the corporate documents of the foreign company (e g Certificate of Incorporation, Memorandum and Articles of Association, Board Resolution resolving to participate in a UAE LLC and Power of Attorney in favour of the UAE LLC manager) must be notarised and legalised in the country of incorporation of the parent company. In addition, these documents must then be legalised at the Ministry of Foreign Affairs in the UAE and then translated into Arabic. These requirements contribute to the complexity and costs of UAE company formation.

Share capital is payable before being able to incorporate a company in the UAE. Healy Consultants will arrange for the share capital to be lodged into a UAE bank, which will issue a certificate confirming the same. This certificate is presented as part of the UAE company formation process. However, the share capital can be withdrawn once the company is incorporated.

To further highlight the high costs of UAE company formation, in addition to the government fees incorporate an LLC, investors must pay to the government 5% of the annual lease rent of the office premises (and at the time of annual renewal an additional 5% of the annual lease rent for the manager’s residence also becomes payable).

After UAE company formation, most entities are required to submit annual audited accounts to the UAE authorities. Healy Consultants will assist our clients efficiently and effectively to complete this annual statutory obligation.

For investors considering UAE company formation, the country is perceived as the 28th least corrupt country in the world, according to the 2011 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians.

Usual UAE company formation engagement fees range from US$50,000 to US$60,000 for a limited liability company, but does depend on the corporate structure and the range of professional services required.