Setting Up In Dubai
There are a number of different ways of creating a business establishment in Dubai, depending upon the function to be carried out. A “Limited Liability Company” or LLC, is the most common way of registering in Dubai and is recommended where the purpose of the entity is to make retail sales within the region. It should be noted, however, that 100% foreign ownership of such an entity is not permitted. A “Professional Licence” will enable the provision of professional services, while a “Branch” or “Representative Office” will be suitable where there is no requirement to actually conduct sales or manufacturing, only to provide information and negotiate sales. Specific details on each entity are covered in the rest of this drop down menu.
This type of company allows for a joint venture between UAE national (local) and foreign (expatriate) partners. Foreign partners are permitted to hold shares not exceeding 49% of the capital, with the national partner holding the remaining 51%. This is the most common type of entity for retail business in UAE. In an effort to encourage new business, the UAE law was amended in August 2009 to exempt new companies from the previous “minimum share capital requirement” of AED 300,000 (US$ 81,750). There may be a requirement to have some level of share capital paid up to a local bank, depending on the type of business being set up. This is decided by the Economic Department on a case by case basis, and normally will only apply to those in financial services or insurance. It is standard to have an annual fee payable for the services of the “local partner”. The shares of such companies are not open for subscription by the public. Despite the split in shareholdings, it is common for the local partner not to be involved in the day to day running of the company. The expatriate partner may undertake management of the company. A further detailed information sheet complete with set up fees and guidelines can be emailed upon request.
If a client wants to provide a professional service in the UAE, (and not necessarily supply a product), then it is possible to apply for what is known as a “Professional Licence”. This involves an application to the Dubai Economic Department, and the issuance of a licence in the name of an individual who must hold a relevant professional qualification (originals of which must be notarized and presented to the local authorities). A UAE national must still be appointed as a “Service Agent” whose role is to facilitate visa applications and other administrative issues. The Service Agent is not a shareholder in the company (which differs from their role in an “LLC”), and the shareholding of the entity can be 100% foreign. Normally the local Service Agent will be paid an agreed lump sum which is subject to negotiation but will be a minimum of US$ 7,500 per annum and may be considerably larger depending on the “standing” of the local involved. Again, further detailed information can be provided upon request.
Foreign companies may establish a branch or representative office in the UAE. Branches and representative offices may, subject to obtaining the necessary licences, carry out promotional activities and facilitate contracts only. They cannot sell or manufacture goods locally. As described previously, a UAE national must be appointed as a Service Agent. Please note it is a requirement that the parent company is well established, usually with the ability to present at least 2 years worth of audited accounts.
Dubai now boasts over 30 Free Zones, including Jebel Ali Free Zone (which was the first), Ras Al Khaimah Free Trade Zone, Dubai International Airport Free Zone, Dubai Internet City, Dubai Media City, Sharjah Airport International Free Zone, Ajman Free Zone amongst many others. The main attraction of establishing an entity in one of the free zones is that there is no UAE national shareholding or sponsor requirement.
A Branch of an Offshore Company,
An “FZE” or Free Zone Establishment (one sole shareholder)
An “FZC” or Free Zone Company – having two or more shareholders.
- 100% foreign ownership
- 100% repatriation of capital and profits
- 100% corporate and personal income tax exemption
- No currency restrictions
- Abundant and inexpensive energy
- Modern efficient communications
- Excellent support services from local authorities
Once a company has been accepted into a free zone it will typically operate under one or more of four different licences being a “commercial licence”, “general trading ence”, “industrial licence” and “service licence”. Free zone registrations do not require a local sponsor or any local partner. Companies registered in the free zones have to pay 5% duty and appoint a local service agent if they wish to sell goods or services within the Emirates. Overseas sales are free of any duty.
Free Zone Establishments and Free Zone Companies have differing minimum share capital requirements dependant upon the free zone of incorporation. They will have a requirement to rent office space in the Free Zone, and must also pay annual licence fees. Please note new free zones are being created and some of the existing free zones are reaching capacity. Please contact us for specific Free Zone information.
RAS AL KHAIMAH INTERNATIONAL COMPANY “RAK-IC”
In September 2006, Ras Al Khaimah Government launched an offshore facility, the second in the UAE after Jebel Ali, which is regulated by the Ras Al Khaimah Free Trade Zone Authority International Companies Regulations 2006.
100% foreign ownership is allowed. The International Company can own real estate properties in UAE, shares of local UAE companies, and can also bank in UAE. General trading business in UAE is not permitted, nor can local residence be applied for through these entities. The International Company can also have Bearer Shares without any ownership details being given to the Free Zone.
Incorporation documents can be signed at the offices of our associates without having to visit RAKFTZ, and setup generally takes 48hours.
For more information on RAK Offshore, or Jebel Ali Offshore (a similar set up), please ask for our full info sheet on “RAK Offshore” or “Jebel Ali Offshore”.