The UAE with its strategic position in the Middle East offers an excellent opportunity for foreign companies to setup and tap into the region’s market of approximately 2 billion people. Many successful multinationals have already established themselves here and there is greater potential for development as is witnessed by the recent economic boom in the region. Professing a beneficial zero tax policy, the business culture is multinational and the growth potential is unlike in any other place.
However, to succeed in the UAE market, companies need to carefully consider their initial set up options. As such, in order to setup a physical presence in the UAE, it is necessary that the entity be licensed by, and registered with the appropriate government body.
There are three jurisdictions in the UAE in which an entity may be set up:
(a) Mainland or “onshore”,
(b) One of the over 40 free zones in the UAE, and
(c) An offshore jurisdiction.
The appropriate jurisdiction depends on the nature of the activities of the intended company. As such, the choice of a legal form is an important consideration while setting up in the UAE as each legal form has its limitations and advantages. Depending on the type of business activity envisaged by our clients, we provide thorough advice on the most suitable solution and accompany our clients step by step through the process of company setup in the UAE.
Our corporate department is highly experienced in the establishment of
- Free Zone companies
- Mainland entities
- Offshore companies
Free Zone companies
Free zones are dedicated areas introduced to attract foreign investment. Each free zone has its own regulations and rules for registration and licensing which are administered by the specific free zone’s regulatory authority. In general, most free zones appeal to industry specific investors and only license specific types of activities.
Within the UAE, there are more than 40 Free Zones. Companies settled in Free Zones are not only exempt from taxes but also from most of the general compulsions applicable under UAE Company Law. This means there is no requirement to take a UAE partner partner as 51% shareholder of the business in the free zone set up. A Foreign Investor may therefore own the company 100% either solely by himself or through other shareholders regardless of their nationality. Branch offices in Free Zones are also not required to appoint a local service agent as prescribed by UAE Company Law.
Most of the Free zone offers the following benefits:
- 100% ownership
- 0% corporate tax
- 0% income tax
- 0% custom duty
- Confidentiality of Business
- Low Operating Costs
- Free Capital Transfer
- 100% repatriation of capital and profits
- Can wind up at discretion
Given the number of free zones, it is important, therefore, to obtain accurate legal advice before making a decision about which Free Zone would best suit the purposes of the intended business. At Fichte & Co we have vast experience in setting up companies in many different Free Zones. Our entrenched relationships with most of the UAE based free zone authorities and knowledge of the processes involved in the licensing and registration of new corporate entities enable us to offer our clients advice and assistance when making the decision and application to the chosen Free Zone.
Mainland UAE entities are licensed by the relevant emirate’s department of economic development (DED) and such entities are governed by the UAE Civil Code or the Federal Law No. 2 of 2015 concerning Commercial Companies the latter being the more popular option. The chief advantage of setting up a mainland company is that there are no territorial restrictions on carrying out its business (unlike free zone or offshore companies) and, as such, an office may be set up in any part of the emirate in which the company is registered.
A Mainland or DED registered company in UAE must have 51% shares held by UAE National. Some of the different forms of mainland or DED licensed entities are as under:
- Individual Establishment (Sole Proprietorship)
- Civil Company
- Limited Liability Company
- Private Shareholding Company (Private Joint Stock Co)
- Public Shareholding Company
- Simple Limited Partnership
- Partnership Company
- Branch of Foreign Company
- Branch of a Civil Company
- Branch of Dubai Based Company
- Branch of U.A.E. Based Company
- Branch of GCC Company
- Branch of a Freezone Company
- Intelaq (UAE Nationals Only)
Setting up an offshore company is an attractive option for a foreign investor if the business activities are intended to be carried outside of the UAE. Being a de facto foreign company, a registered office is thus neither needed nor allowed. The registered office of the offshore company will be the registered office of the registered agent, often being a law firm or an accountant’s office, licensed to offer the required services by the offshore registry in question.
The offshore company’s management can be located anywhere in the world, thereby making international business activity the main criterion and minimizing administrational efforts. The low costs of establishing and maintaining an offshore company as well as the high degree of liberality, the possibility of anonymous operating, the absence of the obligation to publish financial statements and the exemption from taxation are the main reasons for its growing popularity.
Offshore companies may be setup for various purposes, be that for international trade, as holding company for shareholding, for the registration of vessels, for safeguarding of capital or acquisition of real estate. Even though an offshore company cannot procure a residence visa in the UAE, it is still possible to set up a business account with a UAE bank.
Offshore companies enjoy a special legal status and comes with numerous benefits, such as zero or low income taxes, operational flexibility, low management cost and guaranteed economic protection.
In UAE there are 3 offshore Juridictions: Ras Al Khaimah International Corporate Centre (RAKICC), Jebel Ali Freezone Authority (JAFZA) & Ajman Freezone.
Fichte & Co. Legal is the registered agent for RAKICC & JAFZA offshore companies.
For more enquiry, email us at email@example.com
Corporate & Commercial News
At Fichte & Co, Managing Partner Jasamin Fichte leads a team that is ‘impeccable, in all areas.’ It handles an array of high-value claims for international clients and government entities.
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