DOING BUSINESS IN DUBAI
|Company registration||LLC||Free zone||Branch||Rep office|
|Time to incorporate||5 weeks||3 weeks||6 weeks||6 weeks|
|Cost to setup||US$20,000||US$24,950||US$44,450||US$23,250|
|Minimum capital||US$50,000||At least US$50,000||Bond of US$16,500||N/A|
|Physical office required||Yes||Yes||Yes||Yes|
|Is doing business in Dubai permitted?||Yes||Yes||Yes||No|
|Allowed to sign sales contracts with local clients?||Yes||Yes||Yes||No|
|Can apply for visa?||Yes||Yes||Yes||Yes|
|Public register of shareholders and directors?||No||Yes||No||No|
|Required appointments||LLC||Free zone||Branch||Rep office|
|Local shareholder required?||Yes||No||No||No|
|Key facts||LLC||Free zone||Branch||Rep office|
|Dubai corporate tax rate||0%||0%||0%||0%|
|Client is required to travel||No||No||No||No|
Benefits and problems of registering a company in Dubai
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Benefits and problems(Back to Top)
Benefits of Dubai company registration
Dubai is the most successful and the most cosmopolitan city in the Middle East as it combines elements of both East and West. Therefore, registering a company in Dubai has several advantages which are mentioned below:
- Company registration in Dubai allows foreign entrepreneurs to legally enhance their profits by minimizing their tax liabilities in a highly reputable jurisdiction. A Dubai company faces no company tax, personal tax, withholding taxes, VAT, import/export taxes and capital gains tax;
- Resident businesses also benefit from the city’s 66 international double tax treaties which help reduce the withholding tax on foreign remittances.
- Dubai is the undisputed financial capital of the MEA. The city’s financial centre (DIFC) is used by several bank and non bank financial institutions, insurance firms and asset management firms;
- Lastly, if you start a Dubai business, you can get easy access to local currency as there are no exchange controls in the country.
Problems with Dubai company registration
Before investing in Dubai, foreign entrepreneurs should be aware of the following challenges:
- Registering a business in Dubai can be expensive due to i) multiple government fees and ii) compulsory office rentals;
- To start a Dubai business, a foreign entrepreneur must legally appoint a UAE national as a shareholder or as an agent. 51% shareholding of all Dubai companies must belong to a UAE citizen;
- A business in Dubai will suffer as the city is uniquely susceptible to a terrorist attack. A terrorist attack would have a devastating impact i) on the property prices ii) on the economy iii) on foreign investment iv) on the personal safety enjoyed by residents and tourists and v) business confidence;
- The majority of company visas and licenses are sponsored by UAE nationals, giving the latter indirect control over the Dubai business;
- The city’s business practices and laws still favor UAE nationals over foreigners in business disputes. As a result, disputes with UAE shareholders and agents can make business in Dubai difficult;
- Over the past few years, the government tenders have favored i) UAE nationals and ii) Dubai company with UAE nationals;
- If creditors petition winding up of a Dubai company and the court auditors find incomplete accounting records explaining insolvency, then shareholders and directors will personally pay outstanding company liabilities;
- Upon his death, the shareholding of the UAE partner in a Dubai company will be transferred to his family;
- During company registration and corporate bank account opening, the Dubai Government frequently requests documents to be attested by the Dubai Embassy in the country of origin of our Client. This is both a costly and time consuming exercise and complicates the company registration process. Examples of documents include: i) parent company certificate of registration and M&AA; ii) parent company share certificate or certificate of incumbency; iii) parent company certificate of good standing; iv) Board Resolution issued by the parent company; and v) power of attorney issued by the parent company.
Best uses for a Dubai company(Back to Top)
Gateway to the Middle East and Africa
- Dubai is the historic trading hub in the Middle East and Africa (MEA). Due to its strategic location and well developed shipping sector, the city currently hosts several international trading companies and freight and shipping companies;
- Dubai boasts highly developed logistics and transportation infrastructure, making the city a perfect choice for product distribution. Furthermore, the city allows duty free exports to 17 Middle Eastern countries which encourages foreign investors to opt for offshore company formation in Dubai;
- Dubai is the most business-friendly city in the MEA with simple import/export policies and no trade barriers. Several international banking firms and non bank financial institutions operate here, making the city an excellent source for trade finance facilities.
- Most cities in the MEA region do not view foreign companies positively. By contrast, a company registered in Dubai will benefit from the most liberal business laws in the region, while giving it access to Middle East, African and Asian markets;
- Offshore business solutions in Dubai are available to foreign entrepreneurs which allow them to register a legally tax exempt company to extract funds in the form of dividends, management fees, and royalties from regional subsidiaries;
- Besides, being business friendly, Dubai is also the most livable city in the MEA due to well-developed infrastructure for both residential accommodation, studies, work, entertainment and tourism.
- Registering a business is Dubai allows access to several other international entrepreneurs as 80% of the city’s population is foreigners. This forms the perfect ingredients for creativity and exchange of skills across industries and cultures, stoked by the free market environment. The East and West blend quite happily in the city;
- The city is a paradise for high net worth foreign entrepreneurs due to its location in the heart of one of the world’s richest nations. Also, Dubai life is highly luxurious as the city houses many of the world’s biggest brands.
Similar low tax jurisdictions(Back to Top)
Healy Consultants’ video on registering a business in Dubai
Frequently asked questions
What are the main differences between an onshore and offshore company in Dubai?
- Appointment of local partner/shareholder An onshore company needs to appoint a local partner/shareholder, whereas an offshore company can be wholly foreign owned;
- Local physical officeAn onshore company needs to have a local physical office for its operations, while an offshore company does not require one;
- Residence visaForeign business owners of an onshore company are eligible to apply for residence visas once the company has been incorporated. However, all foreign business owners of an offshore company are not eligible to apply for residence visas;
- Direct business dealings within UAEOnshore companies can conduct businesses directly within UAE whereas offshore companies are not allowed to do so.
What is the main difference between an offshore company and a free zone company? What are their pros and cons?While offshore and free zone companies in Dubai can both be wholly foreign owned and, both licensed and registered by UAE’s Free Zone Authorities, there are some stark differences between the two as below:
- Offshore firm’s details on its operations and finance can be kept confidential;
- Business owners commonly set up an offshore firm in Dubai as a holding company for their businesses. They are not allowed to conduct any direct business within UAE;
- While an offshore company is not able to have direct business dealings within UAE, however the firm enjoys zero taxes, low set up cost and there is no need for a physical office.
Free zone Company
- A free zone company is liable to produce documents pertaining to its operations and finance if requested by the authorities;
- Most business owners set up a free zone company due to benefits of tax exemptions and custom duties exemptions;
- Free zone companies in Dubai enjoy tax-free and customs-duty free status however, a few main drawbacks are that a free zone company is not allowed to conduct their business beyond their zone boundaries and every free zone have their own permitted type of business activities.
Where is the best free zone for a general trading company in Dubai?Dubai Multi Commodities Centre (DMCC) is recommended as a choice for a general trading company. The DMCC is one of the most established and largest free trade zones in Dubai, offering excellent infrastructure and support services. DMCC is also the only free zone in UAE that offers freehold commercial and residential properties for purchase.
Is it necessary to obtain an employment/residence visa after incorporating a company in Dubai? Should I obtain a Dubai or a UAE visa in this case?Yes, for our Clients who are relocating to Dubai after their company incorporation, it is necessary that they obtain an employment and residence visa. A UAE visa is applicable in this case. Do take note that visa applications are not valid for an offshore company in Dubai.
What are the main challenges faced by a non-Arab starting his business in Dubai?
- Emiratization is the main priority of the UAE government where nationals are favoured in terms of job opportunities compared to foreigners. As such, a LLC firm is required to appoint a local shareholder with at least 51% of shareholdings, or a national agent;
- Company incorporation process for foreign firms tend to be tedious and time consuming due to high levels of security checks. A typical LLC company and free zone company registration takes 4 months and 3 months respectively;
- All banks in Dubai will need applicants of corporate bank accounts to travel for a one-hour interview before the accounts can be opened.
I am starting a new business in Dubai. Can you tell me how many directors will be required?Only 1 director will be required, when registering a new company in Dubai.
What are the least number of shareholders mandated for successful business registration in Dubai?If you register a business in Dubai, you will only be required to appoint 1 shareholder.
Is it mandatory to have a resident director or shareholder for Company Registration in Dubai?A resident director is not required but at least 51% of a company’s shares must be held by a UAE national.
How to register a business in Dubai?For opening a Dubai company, our Client will be required to i) reserve the company name ii) supply the office lease agreement iii) sign the company setup forms iv) register for tax and social security and v) obtain a business license.
Healy Consultants’ experts are Dubai business registration specialists and will assist our Clients at every step of the engagement.
Useful links for Dubai
Government and public authority websites:
- Dubai Company Registrar
- Dubai Central Bank
- Dubai Stock Exchange
- Dubai Chamber of Commerce
- Dubai airports
- Visiting Dubai
- Dubai Business survey Q1 2013
- Dubai FDI – Why Dubai?
- Dubai Strategic Plan 2015
- PWC – Doing business in the UAE
- UAE KPMG – Investment in the United Arab Emirates
- PwC – Islamic Finance Creating Value
- Dubai Strategic Plan 2015
- Dubai Export Monitor
- Dubai Business survey Q1 2013
- Dubai FDI – Why Dubai?
- UAE Economic report
- Deloitte – The banking industry in the UAE
- UAE Visa Application
- Starting A Business in Dubai
- Business in Dubai – Discover Dubai
- British Ex-Pats Doing Business in Dubai
- Company formation, doing business in Dubai
- Opening an offshore company in Dubai, UAE
- Offshore company formation in Dubai – Q&A
- Dubai means business
- 10 tips on Arab culture for successful business in the Middle East
- The luxury life of Dubai: Piers Morgan
- Dubai: The city’s changing economy
- Dubai Economy – Business focus
- Opportunities for International Business in the UAE