The popularity of the United Arab Emirates with foreign entrepreneurs registering companies in the country is growing at an exponential rate. One of the reasons for that is the opportunity to engage in various sorts of business activities via a UAE-based company.
Some other attractive qualities that the UAE offers include the following ones:
- Zero or low tax rates.
- The confidentiality of the company owners’ personal information is efficiently protected in the country.
- Favorable reporting requirements: for example, there are Free Zones in the UAE that require no reporting at all. In some other Zones, however, annual audits are obligatory. This means that you should carefully study the requirements that are applicable in the particular UAE Free Zone that you are considering for opening a company there. The reporting requirements will have a direct bearing on the company maintenance costs;
- A foreign national who registers a company in the UAE is eligible for a legal residence permit. Moreover, he or she can acquire residence permits for the members of his/ her family too.
- In some Free Zones, companies can be registered almost in an instant: in certain cases, the company registration process can take only two or three weeks.
- The cost of company registration is low in the UAE.
- Office space for your company is readily available in the country. At the same time, in some instances your company can have a virtual office or no office at all (this opportunity is available in some Free Zones).
- You can use multiple treaties of double taxation avoidance that the Emirates have signed to your advantage (the UAE has more than 80 such treaties).
- No customs duties are payable if your company is registered inside a Free Zone and it does no business with the ‘mainland’ UAE.
These opportunities look attractive indeed, do they not? It may sound too good to be true but you can register a company in a reputable jurisdiction that has an efficient banking sector and charges zero taxes. A chance not to be missed.
Let us briefly discuss the business areas that your UAE-registered company can successfully work in. We would like to show that a UAE-based company will suit many different types of business activities. Trade, asset management, international investments, IT business, manufacturing – a company working in almost any business sphere will find perfect conditions in the UAE.
A UAE-based company for international trade
If you set up a company in one of the UAE Free Zones (and their number exceeds 40), you will be exempt from customs duties. The exemption applies to both import and export operations. You have to bear in mind, however, that you will have to forsake the opportunity to trade with partners domiciled in the mainland UAE (outside Free Zones). The taxes are going to be rather high if you do and you would be better off registering a ‘local’ company (see below) if you want to do business with partners in the UAE. If you trade with foreign partners, the customs duties are not payable and neither are any other taxes. Besides, your company will have the status of a resident company in the UAE, which means that you can use all the double taxation avoidance treaties. What is more, a resident company will make you and your family member qualified for residence permits. A fantastic way of immigrating to the UAE!
A UAE-based company for holding assets and investing internationally
A UAE-based company will also suit asset protection purposes very well. In addition, it is good for making international investments too. Your UAE-registered company can be the owner of real property, for example, in all parts of the world.
We would like to put special emphasis on the possibility of registering an asset management company, a fund, or an insurance company in one of the Free Zones called Dubai Financial Center. A company domiciled in this Zone can also acquire a banking license.
A UAE-based IT company
Many UAE Free Zones offer attractive opportunities for IT companies in particular. Some Zones have comfortable offices while some others allow IT companies to have virtual offices. In any case, you can sell your IT products all over the world without having to pay any taxes in the UAE. Please bear in mind, however, that if you sell your software to buyers in the UAE, taxes are payable. In particular, the VAT is going to be 5% in this case.
A UAE-based company for manufacturing
There are several Free Zones in the UAE that offer special advantages to manufacturers of all kinds. The Zones are located close to large seaports and/ or international airports. They have warehouses, logistic centers, and modern loading/ unloading facilities as well. If you manufacture goods in such a Free Zone, the taxes are going to be zero percent. The same goes for customs duties unless you export goods from the Free Zone to the mainland UAE. Your company is going to be a resident company, thus you can use the advantages of the double taxation avoidance treaties.
A UAE-based company for trading with UAE partners
If you would like to engage in trade with companies domiciled in the UAE and outside the Free Zones, you should consider opening a ‘local’ company in the country. You can register an LLC in Dubai, for example, or in any other Arab Emirate. Local companies are taxed in the UAE but the tax rates are low for a well-developed country. In particular, the corporate tax rate is only 9%. Until recently, it was possible to register a local company only in partnership with a local person or legal entity. Moreover, the local partner had to own more than half of the company shares. Now this restriction has been abolished and a foreign resident can own 100% of the local company in the UAE.
To conclude, you should definitely consider the opportunity of registering your company in the UAE no matter what business area you prefer. Please mind, however, that some professional advice is required if you would like to establish a company in the United Arab Emirates.