Company registration in the UAE: What type of company to choose?
The United Arab Emirates is a country with an attractive investment climate. Its stable political and economic situation, as well as a tax-free regime of doing business makes the UAE one of the most appealing countries for investment. There are many ways for the entrepreneur to be supported when opening a new business here.
As the UAE provides extensive opportunities for opening and running a business, often it becomes the reason that customers have multiple questions. For example, many cannot understand where they should register a company, if they need a local sponsor and what the difference is between an offshore company and a free zone, if there is no tax in the country.
Therefore, for the company that you register to fully meet your requirements, before opening it, you should first answer a few questions – this will help you choose the correct place and form of registration.
Kind of activity. Will the company work with other companies registered in the UAE? If the company does not plan to operate in the UAE and work with other companies registered in the free zones, but only as a shell in the chain, or as an account holder in the bank of the UAE, it makes sense to register an offshore company (in the UAE 3 offshore one in the emirate of Dubai, one in the emirate of Ajman and one in the emirate of Ras Al Khaimah (RAK) If the company still works in the market of the Emirates, it is important to remember that by law the company registered in the free zone has the right to work only in the territory of this free zone. If it comes to, say, the provision of consulting services, this is not a problem
– in theory all consultations are in the territory of the free zone. The same is the case with trade
– the company sells goods from the territory of the free zone local “agent.” However, if, for example, we are talking about the provision of cleaning services, then legally, these services can be provided only in the free zone, which will significantly reduce the number of customers. Also, not all activities are allowed in free zones, therefore, before registering a company, you should familiarize yourself with the list of permitted activities (or clarify the availability of the desired activity in a particular area from the consultant). Often, for activities that require special education and skills (for example, financial consulting), a so-called. NOC
– No Objection Certificate – letter about the absence of objections to the
registration of the company from a special regulatory body in this field. In this case, you need to make sure that the agency issues such a letter to the company, which will be registered in a particular free zone (sometimes the activity is listed, but the regulatory body does not issue NOC). If the company will have to work in the UAE outside the free zone, then it is necessary to register a local company with a pre-eminent “locale”.
What is your preference emirate to register? In each emirate there are free zones; and in 3 of 7 emirates there are offshore zones. Thus, it is necessary to understand whether the emirate is important, or the type of activity in the charter / license is important. If, for example, a company is really engaged in the supply of goods and actively uses the port – you should take a closer look at the free zone JAFZA, which is located directly in the port of Dubai. If you just need a trade license, and the port (its availability and distance) does not play a role, then from the point of view of costs it will be more logical to create a company in Ajman. And vice versa: if a company is needed only in the emirate of Dubai, then one should
proceed from the list of free zones in this emirate. Similarly, with offshore companies: if you just need “offshore in the UAE”, then there is no point in spending on offshore in JAFZA. If “you need an offshore company in Ajman”, then there is no choice – you will have to do it in Ajman.
What are your office requirements? The address of offshore company is the address of its registration agent, ie, even if the company is registered with RAK Offshore in the emirate of RAK, but the agent is in Dubai – the address of the company will be Dubai. If you only need a virtual office, you should pay attention to the zones where it is allowed (DMCC, AFZA, Creative City etc). If you need a real office, you should pay attention to the areas with an office base and a good location (DMCC, JAFZA etc.). By law, a company registered in the free zone is entitled to rent space only within this free zone. At the same time, many business centers that offer the rent of serviced offices in different places rent offices without
regard to the place of registration of the company.
Do I need a resident visa? Offshore companies do not have the right to a resident visa. At the same time, almost all companies in free zones have the right to apply for several resident visas. The number of visas is usually directly proportional to the size of the rented office (often in determining the number of allowed visas, immigration is based on the fact that for a single visa (that is, one employee of the company), 9 m square of the office space is needed). Nevertheless, in some free zones, companies with “virtual” offices are not eligible for visas.
How many shareholders are allowed? Mostly in free zones, up to 5 shareholders are allowed. However, in some free zones, up to 50 shareholders in one company are allowed.
Is auditing necessary? In free zones there is no requirement to file financial statements. However, in many areas there is a requirement for a mandatory annual audit, the conclusion of which should be provided to the registrar. Such auditing has the right to conduct auditors from among those who are accredited in this free zone.
What about share capital? In offshore companies, the share capital is not paid. In some free zones, it is also allowed to declare the authorized capital without compulsory payment. In others, payment of the statutory is a prerequisite for the issuance of a license. Some activities require the declaration and payment of a significant share capital (for example, the General Trading license in DMCC requires payment of the registered capital of AED 1,000,000 (USD 274,000).
This is a preliminary list of questions to ask yourself before registration, so that the company can work in accordance with your plan and within the framework of the law. If you have an understanding of how your company will operate but you’re still not sure how to choose, please contact our consultants who will be happy to help you choose and register your company in the way that is most suitable for you.
We offer incorporation of companies in such free zones:
Ajman Free Zone (AFZA)
Fujairah Creative City Free Zone (CC FZ)
Hamriyah Free Zone (HFZ)
Umm Al Quwain emirate:
Umm Al Quwain Free Trade Zone (UAQ FTZ)
Walton Consultants DMCC