uae citizenship

Setting Up a Company in the UAE: Guide By Experts for 2024

The United Arab Emirates (UAE) has become one of the world’s leading destinations for global business and investment. With an open economy, excellent infrastructure, and business-friendly policies, the UAE offers significant advantages for entrepreneurs and investors looking to expand their operations.

This comprehensive guide covers everything you need to know about setting up a company in the UAE in 2023, including a country overview, company formation options, registration steps, visa and banking requirements, taxation rules and key benefits.

UAE Country Overview

The UAE is a federation of seven emirates on the Arabian Peninsula. The two largest and most prominent emirates are Abu Dhabi and Dubai. Key facts about the UAE:

  • Population of 9.26 million by 2023, with expatriates accounting for over 80%.
  • Strategic geographic location linking East and West. Major logistics and transportation hub.
  • An open and tolerant society that welcomes foreign investment and talent.
  • The UAE dirham (AED) is the official currency, pegged to the US dollar.
  • GDP of $421.142 billion (2021). The UAE has the most diversified economy in the region.
  • Ranked 16th in the world in the World Bank’s 2020 Ease of Doing Business Index.
  • No corporate tax, personal income tax or value-added tax (from 2023). The UAE offers a competitive tax environment.

With world-class infrastructure, connectivity, economic stability and security, the UAE provides an attractive base for global business operations. The business landscape continues to evolve with new laws and incentives to further encourage foreign investment.

Company formation options in the UAE

There are three main options for establishing a company in the UAE – Mainland, Free Zones and Offshore:

Mainland Company

A mainland (onshore) company is for businesses that wish to trade primarily in the UAE domestic market. The company is regulated by the Department of Economic Development (DED) of the relevant emirate. Key Features:

  • Requires 51% local UAE partner or sponsor. 49% foreign ownership allowed.
  • Can conduct business activities throughout the UAE after obtaining necessary licenses.
  • No corporate tax but subject to VAT and applicable duties.
  • Company names must be in Arabic, with an English name permitted.
  • Residence Visas available for those owning or working in the company.

Free Zone Company

For foreign investors targeting regional or global markets, a Free Zone Company offers full foreign ownership and tax exemptions. Each free zone focuses on specific industries. Key benefits:

  • 100% foreign ownership allowed without the need for a local sponsor.
  • Exempt from corporate income tax and VAT when operating exclusively within the free zone.

– Wide range of free zone locations across the UAE such as Dubai Airport Free Zone (DAFZA), Dubai Multi Commodities Center (DMCC), Sharjah Airport International Free Zone (SAIF Zone), Ras Al Khaimah Economic Zone (RAKEZ) etc.

– Companies can employ both UAE nationals and expatriates.

Offshore Company

Offshore company formation in the UAE is governed by offshore jurisdictions such as RAK ICC, Ajman Offshore, Fujairah Creative City and JAFZA Offshore. Key advantages:

  • Allows 100% foreign ownership. No local sponsor or partner required.
  • Exempt from all UAE taxes provided that operations remain outside the UAE.
  • Asset protection and confidentiality clauses.
  • Minimal reporting and management requirements.
  • Cannot conduct business in the UAE or obtain visas. Designed for international business.

Steps to register a company in the UAE

The exact procedures vary slightly depending on which option you choose to incorporate your company. Here is an outline of the typical process:

  1. Determine Business Activity – Determine the activities your company will undertake as this will affect the licensing requirements.
  2. Select the legal structure – Common options include Limited Liability Company (LLC), Branch Office, Representative Office, Civil Company, etc. Consultancy can advise on the optimal structure.
  3. Choose a unique company name – There are specific rules that must be followed to ensure the name isn’t already registered and meets regulatory guidelines.
  4. Obtain initial approvals – Relevant economic department provides initial go-ahead for company formation application.
  5. Submit formation documents – Documents such as Articles of Association or Local Service Agent Agreement.
  6. Secure office address – on the mainland or within a free zone. Virtual office options available for some types of businesses.
  7. Obtain operating licenses – From the Department of Economic Development (DED) and other government agencies depending on business activities.
  8. Visa application – For company shareholders and employees requiring UAE residency.
  9. Open a company bank account – To complete the incorporation of the company and to facilitate operations in the UAE.

The Company Registrar will issue the final business license and release the necessary permits once all approvals are in place. The process takes an average of 2-6 weeks depending on the jurisdiction.

Visa and Bank Account Requirements

To fully establish the business, the most important next steps after incorporation are securing visas and opening corporate bank accounts.

Investor Visa Process

Shareholders and directors require UAE residency visas to open bank accounts, sign documents, and conduct other activities. Key visa requirements:

  • Entry Permit and Medical Fitness Test.
  • Biometric fingerprints and Emirates ID application.
  • Minimum 14 days stay in UAE for processing.
  • Valid for 1-3 years depending on the country.

Opening a corporate bank account

A UAE bank account is mandatory for financial transactions and payment collection. Typical requirements:

  • Copy of trade license.
  • Memorandum of Association.
  • Passport copies of shareholders/directors.
  • Proof of UAE Residence Visa or Entry Permit.
  • No minimum deposit required. Account maintenance fees may apply.
  • Approval time approximately 4-6 weeks depending on bank.

UAE Tax System

One of the main attractions of the UAE is its competitive tax regime for companies and individuals:

  • No personal income tax
  • Zero corporate tax (except for hydrocarbon companies)
  • Zero VAT on most transactions (introduced in 2018)
  • No withholding taxes on dividends/interest/royalties

However, from June 2023, a new 9% corporate tax will apply to mainland UAE companies with profits over AED 375,000 that do business with UAE entities or derive income from real estate.

Zero tax will continue to apply to companies that operate exclusively in UAE free zones and have no local operations. Offshore companies also remain exempt. As regulations evolve, advisory services will ensure optimal structuring.

Key benefits of incorporating in the UAE

There are numerous advantages to establishing a business in the UAE, including:

Strategic location

Located at the crossroads of Europe, Asia and Africa, the UAE offers easy access to 2 billion customers across these regions. Major airports and seaports provide multi-modal connectivity.

Business Friendly Environment

Ranked among the world’s top countries for ease of doing business, the UAE offers fast company registration, full foreign ownership and world-class infrastructure.

Tax-Free Havens

No personal or corporate income tax, coupled with zero value-added tax on most transactions, allows businesses and individuals to benefit from huge tax savings.

Globally connected cities

Dubai and Abu Dhabi offer a luxurious, modern lifestyle that attracts foreign expertise and investment. Advanced facilities, infrastructure and safety/security attract multinational corporations.

Asset Protection

Robust regulations and confidentiality rules in free zones and offshore jurisdictions help protect assets from foreign judgments.

Access to funding

Banks and investors in the UAE are eager to fund promising business proposals. Effective startup ecosystems increase the availability of venture capital.

Lifestyle Appeal

The UAE’s high standard of living, luxurious amenities, diversity and melting pot of cultures create an appealing environment ideal for entrepreneurs.

In summary, the UAE offers a highly attractive destination for establishing and operating global businesses in 2023 and beyond. With proper planning and legal structuring, companies can take advantage of the UAE’s many strengths while minimizing tax and regulatory burdens. Expert advice is key to navigating the laws and streamlining the process of setting up a business. By following the appropriate processes, documentation and timelines outlined in this guide, investors can easily establish a new company or branch in one of the world’s most dynamic business hubs.

Frequently Asked Questions

Here are answers to some common questions about setting up a business in the UAE:

What are the main differences between a mainland company and a free zone company?

Mainland companies require 51% local ownership while Free Zone companies allow 100% foreign ownership. Mainland companies can operate throughout the UAE, while Free Zone companies are limited to their designated zone.

What are the steps to register a Free Zone Company?

Select activity and name, apply for initial approval, submit documents, secure office space, obtain trade license and visas – takes approximately 4-6 weeks.

What are the visa requirements to incorporate a company?

Shareholders require UAE residency visas to open bank accounts, so need to get medical test, fingerprints, Emirates ID and stay minimum 14 days.

What is the time frame for the opening of a corporate bank account?

Approximately 4-6 weeks depending on the bank. Need copy of license, MoA, shareholder details, visas etc. No minimum deposit required.

What taxes do Free Zone companies pay?

Zero corporate tax and VAT if business is conducted only within the Free Zone. No personal taxes for owners/employees.

What are the advantages of an offshore company?

Tax exemptions, asset protection, 100% foreign ownership and confidentiality for international companies not operating in the UAE.

Can I get UAE citizenship by incorporating a company?

No, the UAE does not currently offer a direct citizenship route, only residency visas. However, strong business ties can potentially support longer term PR and citizenship applications.

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