Holding company creation is one of the most common reasons for registering a company in the United Arab Emirates. That is due to the fact that the UAE offers a variety of advantages for holding companies: exemption from taxation (providing availability of a tax residence status), reliable protection of international assets and possibility of entering local exchanges.

The purpose of creating a holding company in the UAE may vary depending on the abovementioned advantages:

• optimization and minimization of taxation;
• protection of assets from possible encroaches;
• ensuring owner’s anonymity;
• overcoming of currency and antimonopoly restrictions;
• streamlining the management of related companies, etc.

Principle of operation of a holding structure – an example

A holding company is a set of businesses or companies that have the same management structure or are related legally. The main feature and advantage of holding companies is the maximum protection from economic volatility, possible takeovering and other challenges of the external environment. Besides, holding companies give an opportunity to fully control the available assets and distribute monetary resources effectively.

Let us consider as an example, the following scheme of creating a holding company.

The first step is registration of a company and opening a bank account in the United Arab Emirates. The task of the company is the ownership of shares (it does not carry out any economic activity). The holding company owns one or multiple companies simultaneously.

The profits generated by the subsidiaries in the process of carrying out further business activities may be transferred to the account of the holding company in the form of dividends. In addition, the holding company may also control distribution of monetary resources between the group companies, and resolve strategic management issues.

However, a holding scheme provides advantages not only in terms of taxation but also in other spheres. For example, amalgamation of companies allows centralization and optimization of various business processes of a holding company.

And last, but not least is that the holding company guarantees asset protection, as the group companies are owned not by individuals but by the holding company itself. If the holding company is located abroad, it gives an additional level of reliability.

• Checked / Updated: 07.25.2022
• Published on: 06.11.2017
• Author: Elvira Savir