Company registration in the UAE
- What are the advantages of registering a company in the UAE?
- What types of organizational and legal forms of legal entities exist in the UAE?
- What is the procedure for opening a company in the UAE?
- What documents are required to register a company in the UAE?
- What are the taxes in the UAE?
- Is there an annual fee to be paid in the UAE?
- How can our company help?
The UAE (United Arab Emirates) is attracting more and more foreign citizens every year to open their own businesses. This is primarily due to the fact that the UAE is one of the most progressive countries in the Middle East with a developed economy, a stable political situation and a large number of tourists. In practice, this allows you to open a business in the field of investment, international trade, IT services and much more. Therefore, in this article we will talk about the features of registering a company in the UAE.
Company registration in the UAE
What are the advantages of registering a company in the UAE?
- Absence of mass manifestations of corruption in all government bodies. In 2023, the UAE ranked 27th among other countries in the world in the international corruption perception ranking, which undoubtedly affects the full picture of starting a business;
- Fairly favorable attitude towards foreign investors. The UAE government is constantly trying to encourage foreign investment into the country through lower tax rates and grant funding for startups;
- In the UAE, if a foreigner registers a business, then he has the right to own it 100% without necessarily having residency in the country;
- In the UAE, English is widely used in business communication, which makes it possible to do without knowledge of Arabic when communicating with company partners;
- A developed and independent banking sector, the presence of infrastructural advantages (maritime connections, a large number of road carriers) and low taxes in the UAE - all this attracts foreign investors to do business;
- Access to international and eastern markets, as well as possible company activity in large local markets.
What types of organizational and legal forms of legal entities exist in the UAE?
First of all, it should be noted that the UAE consists of 7 large emirates, namely: Abu Dhabi, Dubai, Sharjah, Ajman, Ras al-Khaimah, Fujairah, Umm al-Quwain.
In each of them you can open a mainland company, a company in a free economic zone and an offshore company. At the same time, they have their own characteristics.
A mainland company is a UAE firm licensed by the Department of Economic Development of the relevant emirate. Essentially , a mainland company allows a company to conduct its business activities on two levels: within the relevant emirate (local level) and outside the emirate where the company is registered (international level). The most popular types of legal entity are: limited liability companies, private and public joint stock companies, joint ventures, general partnerships, and limited partnerships.
Free trade zones are territories in the UAE with special tax, import, and customs regimes and are governed by their own laws (the only exception being legal provisions relating to criminal law in the UAE). The activities of companies in the UAE free trade zones are regulated by a single authority— the Free Zone Authority —where they are established. Additionally, depending on the selected free trade zone, other governing bodies may also be present. In total, there are more than 45 free trade zones in the UAE, which offer significant advantages to foreign nationals planning to open a business in the UAE (for example, exemption from corporate income tax and customs duties, the ability to repatriate capital and profits, etc.). The most popular types of legal entity are single-member companies, multi-member firms, and representative offices of foreign companies.
Offshore companies in the UAE can only operate outside the seven United Emirates. There are three offshore jurisdictions in the UAE: Dubai (Jebel Ali offshore company), Ras Al Khaimah, and Ajman. Companies of this type are free to register without renting premises, can quickly obtain a residence visa, open accounts in UAE banks, and enjoy low tax rates to optimize company finances. However, companies registered in offshore zones cannot take advantage of double taxation treaties.
What is the procedure for opening a company in the UAE?
- Select the organizational and legal form of a legal entity for doing business;
- Prepare a unique name for the future company (there can be 3-4 of them in total);
- Develop the constituent documents and charter of the company (if necessary, carry out notarization of these documents);
- Open a bank account in the UAE, into which you must deposit the full amount of the authorized capital (in practice, the amount of the authorized capital is at least 50 dirhams, but it may be more depending on the type of legal entity chosen);
- Register the legal address of the company;
- Register with the social and tax authorities;
- Obtain a domestic VAT fiscal number and an international one (if necessary);
- Obtain licenses if carrying out business activities without them is impossible.
What documents are required to register a company in the UAE?
- copies of the national and foreign passports of the company founders must be notarized;
- providing a description of what types of activities the legal entity will engage in;
- documents confirming the residence address of the company’s founders (about payment of utility bills);
- documents indicating who the ultimate beneficiary of the company is (that is, who will actually own it);
- a power of attorney, which must be notarized and have an apostille;
- additional information about the founders of the company if necessary (for example, no criminal record).
What are the taxes in the UAE?
Individuals operating in the UAE do not pay any taxes. Thus, there is no personal income tax in the UAE today.
Income tax in the UAE was introduced on July 1, 2023. Thus, the following tax rates began to apply, namely: 0% tax - for companies with an annual net profit of up to 375 UAE dirhams; 000% tax for companies with profits exceeding AED 9; 375% tax - paid by branches of foreign banks; tax 000% - paid by foreign companies engaged in oil and gas production.
There is no UAE corporate tax on dividends received and capital gains.
There is no tax on dividends, interest and royalties in the UAE.
The standard VAT rate in the UAE is 5%. It is required to be paid by companies with an annual profit of over 375 dirhams. To pay tax, a company must register on the FTA website as a VAT payer. If the company has a profit of more than 000 dirhams, but does not exceed the threshold of 187 dirhams, then registration is voluntary. VAT is paid quarterly within 500 days after the end of the tax period.
Social contributions are paid only in respect of citizens of the UAE and other countries that are members of the Gulf Cooperation Council (GCC). The social tax rate is 17,5% (of which 12,5% is paid by the employer and 5% is withheld from the employee's salary)
Thus, the UAE with low taxes is what makes this country attractive for registering a business.
Is there an annual fee to be paid in the UAE?
In the UAE, registered legal entities pay AED 2000 annually to the tax authority. The fee is payable at the end of each year of registration of the company.
Company registration in the UAE
Since the UAE has 7 united emirates, opening a company in each of them has its own characteristics. In addition, the division of organizational and legal forms of legal entities that can be opened in the UAE also adds to the difficulties when registering a company. Therefore, in order not to make mistakes on your own when implementing this issue, the best option would be to contact trusted specialists of the consulting company Jurisprudential. Our lawyers have the appropriate qualifications and understand the current legislation of the UAE, which allows them to know in practice all the legal nuances when opening a company in this jurisdiction.
To clarify the cost of registering a company in the UAE, please contact our company for a free consultation, since each situation in practice is individual, and therefore prices for services depend on many factors.