Free zones are dedicated areas introduced to attract foreign investment. Each free zone has its own regulations and rules for registration and licensing of companies, which are administered by the specific free zone’s regulatory authority. In general, each free zone appeals to different industries,  startups or investors, and only license specific types of activities. Within the UAE, there are more than 40 Free Zones for company setup across Dubai, Abu Dhabi, Sharjah, Fujairah, Ajman, Ras al Khaimah and Um Al Qwain. Companies registered 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 as 51% shareholder of the business. A Foreign Investor may therefore own the company either 100% by himself (sole proprietorship /sole trader), 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, enabling entrepreneurs to realize the simplest corporate structure, when compared to other types of company setup in UAE.

Most of the Regulatory Authorities offer 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

Type of Licenses Issued by Authorities:

UAE Free Zone companies can only operate within the free zone boundaries and are generally limited to performing solely those activities listed in their license(s). Normally all free zones issue following Licenses:

• Commercial License
• Service License
• General Trading License
• Industrial License

It is mandatory for every company registered in the Free Zone to lease minimum office space within that particular Free Zone. A  registered company can obtain UAE residence visas for the directors, shareholders and employees of the company. 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, as this can affect the company operation of banks accounts and residency visas. At Fichte & Co we have vast experience in setting up companies. 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.

The UAE is fast emerging as a hub for fintech company setup.  In the bid to becoming an international financial powerhouse, the UAE government has pushed for initiatives in the financial technology sector by establishing accelerators and sandboxes to create a supporting environment for innovation to flourish and develope successful fintech companies.  Particularly in the country’s renowned financial jurisdictions. Namely: the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Markets (ADGM). This marks the beginning of an exciting chapter in the UAE, as these companies will bring new fintech apps, products and services to the UAE market.

Set out below are the top jurisdictions for building your fintech company in the UAE:

1. DIFC Fintech Hive

Without doubt, the DIFC Fintech Hive is the place to be for budding fintech companies.  Fintech companies incorporated in the DIFC will be regulated by the Dubai Financial Services Authority (DFSA) and not the mainland financial regulator, i.e., the Securities and Commodities Authority (SCA).  You can read more about the financial regulatory landscape in the UAE here.

The advantage of the DFSA is that all communications can be in English (compared to Arabic in the case of the SCA) and there are already various forward-looking regulations (including the game-changing crowdfunding regulations) in place for fintech companies in the DIFC. What’s more, the license fees in Fintech Hive are reasonable for DIFC standards, and it has a nice co-working space which makes for a great overall environment.

It’s no surprise that the Fintech Hive boasts housing some of the up-and-coming names in the fintech space such as Sarwa (an online investment platform to invest in global markets), Eureeca (an equity crowdfunding platform), SmartCrowd (a real estate crowdfunding platform), and Beehive (a peer-to-peer lending platform.)

2. ADGM Fintech RegLab

If the DIFC is out of reach for you, it may be worth considering the ADGM Fintech RegLab which is a close contender to the DIFC.  The ADGM can be more flexible than the DIFC and allows for innovative corporate structures to be worked out from this jurisdiction.

Again, fintech companies in the ADGM will be regulated by the Financial Services Regulatory Authority (FSRA) and not the SCA, which is an advantage.  Like the DFSA, the FSRA is progressive and caters to today’s times – for example, the ADGM now has a regulatory framework for crypto assets, which is telling.

As an example of the popularity of the ADGM in the fintech space, BitOasis (the first cryptocurrency exchange in the Middle East) is now seeking to obtain an ADGM license, perhaps because of facing regulatory hurdles while operating onshore.

3. ADGM Tech License under its Entrepreneurship

Support Programme

The ADGM recently introduced the Tech Start-up license which only costs USD 750 a year.  The license allows you to have four visas without the requirement of physical office space.  That said, you would have to take a virtual office for a nominal annual fee from a law firm (such as ours) or a corporate service provider.

Although this is not a fintech license, this option may make sense for those start-ups who are still in the development phase of their business.  Once developed, the start-up could then seek to be regulated by the FSRA and obtain a regular ADGM license.

4. Dubai Silicon Oasis’s Dubai Technology Entrepreneur Campus (Dtec)

Dtec is a good option if you want to be based onshore and in Dubai.  It has an accelerator, a co-working space, and a venture capital unit, which is an attractive proposition.

One aspect that you will have to consider if you are setting up onshore is that the SCA would regulate your fintech start-up. This is not a drawback, but you will have to bear in mind that there could be delays or uncertainty regarding how your start-up’s activities will be regulated.

5. AstroLabs, Dubai(Dtec)

Astrolabs is another great onshore option for tech companies looking for a launchpad in Dubai, considering its cost-effectiveness, strategic location in the heart of Dubai, and well-received start-up academy and programs. Astrolabs has a fantastic co-working space and have partnered with Dubai Multi Commodity Centre (DMCC) to allow entrepreneurs to get a DMCC license at reduced costs.

It’s not the first choice for a fintech start-up, but if the DIFC or the ADGM do not work out for you, and you are at the initial development phase of your start-up, Astrolabs is an attractive option and a competitor to the Dtec.

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. With an offshore company setup for a de facto foreign company, a registered office is neither needed nor allowed. Fichte & Co can assist at every step of the offshore company incorporation process. The offshore company’s management can be located anywhere in the world, thereby making international business activity the main criterion and minimizing administrative efforts. The low costs of establishing and maintaining an offshore company as well as the high degree of liberality, the possibility of anonymous operation, 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. One potential difficulty to consider with regards to an offshore company is that directors and employees cannot procure a residence visa in the UAE through the company, however it is still possible to set up a business account with a UAE bank. If you require residency visas with similar benefits to offshore company setup, you should consider a free zone company setup

Offshore Company Setup Benefits:

Offshore companies enjoy a special legal status and comes with numerous benefits such as:

• No Corporate tax
• 100% foreign ownership
• Limited Liability Company
• No Tax Information Exchange Agreements
• Absolute Privacy and Confidentiality
• Ability to maintain multi-currency Bank accounts in the UAE
• Virtual office facilities available in the UAE.

Suitable Businesses:

Offshore companies are the most suitable form for following business:

• International trading
• Brokerage
• Property holding
• On-line advertising
• Consultancies
• Ship registration
• Stock-market trading

Restricted Businesses:

It is important to note that there are some restricted business which are not permitted:

• Financial activities
• Insurance and re-insurance
• Any activity related to media
• Any activity related to aviation
• Any business with UAE “onshore” companies
• Establishing a branch in the UAE

In UAE there are 3 offshore Jurisdictions: Ras Al Khaimah International Corporate Centre (RAKICC), Jebel Ali Freezone Authority (JAFZA) & Ajman Freezone.

Fichte & Co. Legal is the registered agent for Ras Al Khaimah International Corporate Centre (RAKICC) & Jebel Ali Freezone Authority (JAFZA) offshore companies.

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 chief advantage of mainland company setup is that there are no territorial restrictions on carrying out its business activities (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. The presence of a UAE National is mandatory in all mainland licenses either as a Local Partner or a Local Service Agent. Local Partner/service agent is responsible for signing all government applications, while the expat partner can be solely in control for business operations with no input from the Local Partner/Service Agent unless agreed. There are some business activities which are regulated, and therefore require prior approvals by the respective governmental authorities. These include; RERA (Real Estate Regulatory Authority) for all Real Estate and Developers related licenses, KHDA (Knowledge and Human Development Authority) for all Education related licenses, DHA (Dubai Health Authority) for all Hospitals, Clinics and other medical related licenses, etc. Types of Licenses:

• Commercial License – this license allows a company to trade in all legally tradable goods.
• Industrial License – this license allows a company to engage in manufacturing activity or other types of industrial activities.
• Professional License – this license allows the individuals or groups that would like to offer their expertise as services to the general public.

Types of companies: Some of the different forms of mainland or DED licensed entities are as follows: Company Formation in Dubai Mainland can be a very challenging and time-consuming task. Fichte & Co. Legal offers specialist expert advice and services for mainland company setup and incorporation across all emirates of the UAE.