What is the difference between an offshore company in Dubai and a company registered in a Free Zone?
An offshore company has no rights to conduct commercial activities in the country of registration (in this case, the United Arab Emirates) and, accordingly, is not a resident of the United Arab Emirates. Opening an offshore company also does not give the right to obtain a residence visa of the UAE. A company registered in a Free Zone in Dubai has resident status in the United Arab Emirates and is permitted to apply for visas for their employees.
Why register a company with a local partner
Certain activities can only be conducted by the companies registered in the UAE (outside Free Zones), which requires mandatory participation of a citizen of the UAE. Such activities include retail trade in the UAE, car rental, restaurant and hotel business, health and beauty services, and a few others.
Is it safe to register a company in Dubai, UAE with a local partner?
According to the memorandum of association of a company registered in the United Arab Emirates (outside Free Zones), 51% of the company shares must be owned by a UAE citizen. However, as a rule, a supplementary agreement is signed in parallel with the memorandum of association. By signing such agreement, the local partner (also referred to as “Sponsor”) waives his rights to the company’s capital and profits. It should be noted that supplementary agreements do not have legal basis and, therefore, can be used in court only as circumstantial evidence. In practice, the sponsors in Dubai who regularly receive their annual remuneration never raise any disputes.
Is it possible to open a company in Dubai the UAE (outside Free Zone) without the participation of a local partner?
A company in the UAE (outside Free Zones) can only be opened with the participation of a local citizen, who will act as a partner and own at least 51% of shares, or a service agent, who is not a shareholder in the company, but can represent the Dubai company in government authorities.
What is the difference between a commercial and professional license?
A professional license allows the Dubai company to provide professional services (medical, consultancy, engineering and others) in the UAE. Such companies are allowed to have 100% of foreign capital. Companies in Dubai with commercial licenses may only carry out commercial activities (trading, construction, leasing) and the share of foreign capital in these companies is limited to 49 %.
Is it possible to register a company without renting an office?
It is possible. Today the companies can be registered in many Free Zones of the UAE with so-called “virtual offices”.
What is the cost of registering a company in the UAE?
The registration fee depends on several factors:
- Do you require any premises in Dubai (office, warehouse)? If yes, what is the area of required premises?
- What kind of activities will the company be involved in?
- How many founders will be there and whether they are legal entities or private individuals?
- How many resident visas will you need?
Having had these questions answered, we will be able to prepare an offer tailor made for you.
How long does it take to register a company in the UAE?
Depending on your choice of the legal form of ownership and place of incorporation of the company, it can take from a week to a month and a half.
Is it possible to register a company in the UAE without physical presence of the owner?
Physical presence of the owner of the company at the time of registration is mandatory. It is necessary for signing of the memorandum of association of the company or for the attestation of Power of Attorney for the consultancy company, who will take care of the process of registration of the company.
How many days the owner must stay in Dubai, the UAE in order to register a company and open a bank account?
With the assistance of a consultancy firm, the owner’s stay in the UAE can be reduced to 2-3 working days for signing of the corporate and banking documents or for attestation of Power of Attorney (depending on the jurisdiction of the opened company).
Is the owner’s presence necessary for license renewal?
The presence of the owner is not necessary. All formalities can be completed by a consultancy company.
Do I have to pay share capital at the time of registration?
Most of the Free Zones require payment of the share capital. It is transferred to the bank account that is opened in the process of registration process, and frozen until the license is obtained. When registering a company in the UAE (outside Free Zones) payment of share capital is not required.
What taxes and duties are applied in Dubai, the UAE?
Companies registered both in the UAE (outside Free Zones) and within Free Zones are completely exempt from tax. Taxes are imposed only on the oil and gas industry, banking, hospitality and catering. However, all companies are required to pay duty when importing goods into the UAE domestic market, which is 5% of the declared value of goods.
What are the requirements for UAE company audit reports?
Companies registered in Free Zones in the UAE are required to submit annual activity report, compiled by auditors, to the authorities at the place of registration. The auditors must be licensed by the Ministry of Finance of the UAE and certified by the authorities of the same Free Zone. However, given almost complete absence of taxation in the United Arab Emirates, the audit is very simplified. Audit is not required for companies incorporated in the United Arab Emirates (outside Free Zones).
Are there any restrictions on banking transactions?
Banks of the United Arab Emirates do not control the outflow of funds from the accounts of their customers, but, in some cases, require to present copies of the contracts for incoming transactions.
Who can be the founder of the Dubai company?
The founder of a company in the UAE can be either a legal entity or a private individual of at least 18 years of age. In case the founder is a legal entity, the complete set of establishment documents must be attested by the Ministry of Foreign Affairs of the country of registration, the Embassy of the UAE in the country of registration and the Ministry of Foreign Affairs of the UAE.
What documents are required for registration?
In case the founder is a private individual, usually it is sufficient to present a passport copy. However, some of the Free Zones require additional documents:
- Letter from the bank confirming the applicant has a personal account with the same bank,
- Information about education and work experience,
- Proof of current residence (for example, payment of utility bills, taxes, etc.).
If case the founder of the company in Dubai, UAE is a legal entity, you will need the following documents, attested by the Ministry of Foreign Affairs of the country of registration, in the Embassy of the UAE in the country of registration and the Ministry of Foreign Affairs of the UAE:
- Article of association,
- Registration certificate,
- Resolution on all appointments and changes of directors and founders,
- License or certificate with information on the legal status of the company (certificate of good standing),
- Resolution of the Board of Directors to open a branch or subsidiary in the UAE, including the power of attorney to the manager,
- Resolution of the Board of Directors to open a bank account with transfer of authority to the manager.
Can a company be engaged in various activities?
In some cases, one company may receive a license entitling it to carry out various activities.
Is it possible to open a bank account in the United Arab Emirates without a residence visa?
Opening of bank accounts by non-residents of the UAE is only possible if certain requirements are met. This can be checked with our consultants.
What is the cost of obtaining a residence visa and how long does it take?
The cost of a residence visa depends on its type. The application process takes from 2 weeks to a month, depending on the place of registration.
How many resident visas can a company apply for in the UAE?
The number of residence visas that can be obtained depends on the place of incorporation of the company in the UAE and the size of the leased premises.
Is it possible to open a UAE residence visa with an offshore company?
An offshore company in the UAE does not qualify for residence visa.
Is it possible to conduct business activities in the UAE domestic market under a Free Zone license?
Companies registered in Free Zones can only conduct wholesale trade activities in the UAE. Conducting retail trade outside the Free Zones is prohibited.
Can an offshore company registered in the UAE operate in the UAE?
An offshore company can not conduct business activities in the UAE. It can only have a bank account and own property.
Does the Free Zone license allow renting an office outside the Free Zone?
The current commercial legislation does not allow the companies registered in Free Zones to rent offices outside Free Zones.
Are nominal services provided in the UAE?
Provision of nominal services is not legally applicable in the UAE.
Is it possible to open a company in the UAE without resorting to the services of agents and consultancy firms?
You are free to register an onshore company in the UAE on your own. However, you should understand the difference between offshore and resident companies, know the country specifics, understand types of licenses and immigration rules. A legal form and organization chosen improperly may result in closing of the new company and full re-registration. By going to a consultancy company you will not only avoid unnecessary errors, but will also save your time.