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How to choose correct company type for business in UAE:

Page content

  1. How to choose correct company type for business in Dubai, the UAE
  2. Brief description of Dubai
  3. How to start business in Dubai?
  4. Licensing requirements and limitations on activities
  5. General documents requirements to open any type of company in the UAE
  6. DBA Agreements – which UAE companies qualify for it
  7. Open LLC company

How to choose correct company type for business in Dubai, the UAE

Dubai is a real haven for doing business. The advantages of this city and Emirate for starting a business are widely known:

  • Tax-free business environment;
  • Easy and simple procedure for incorporation of companies;
  • Fast developing economy;
  • Political stability;
  • Developed infrastructure;
  • Low costs of labor and energy resources;
  • Official policy aimed at business development;
  • Favorable geographical location, convenient for trading and other business;
  • Safety and comfort for work and life.

Brief description of Dubai

Dubai is one of seven Emirates of the UAE, which is home for 1.5 million people, 82 % of the population are the immigrants. It is the largest business hub/center in the Middle East with developed infrastructure and favorable business conditions.

There are more than 35 Free Trade Zones in Dubai. Due to the availability of large seaports and airports, Dubai is deemed ideal place for doing international trade and other types of business. Companies incorporated in the UAE are entitled to operate in Free Trade Zones and are exempt from taxes due to the special status of such companies.

How to start business in Dubai?

It is relatively easy to start a business in Dubai. Company formation in Dubai, the UAE, as a rule, is completed within a short period. In case the activities of the company are not subject to additional approvals, incorporation procedure is completed within a few business days.

Having decided to start a business in the UAE, it is necessary to determine the type of registered company. Currently, there are three main types of companies in Dubai:

  • Limited Liability Company.

    If you plan to provide services, engage in the restaurant business, trading and other activities designated for retail customers on the mainland of the United Arab Emirates, then the best option for you is the LLC company.

    Advantages of such company are access to local market and possibility of participation in public tenders. However, to incorporate a local company in Dubai, your partner shall be the national of the UAE. Subject to the laws of the Emirates, a foreign investor may own shares of such company not exceeding 49 % of the authorized capital, whereas the remaining shares shall be owned by a local partner. However, in practice, in addition to the main agreement, side agreement is signed, which constitutes a waiver of national of the Emirates with regard to ownership, management and profits of the company. Local partner usually receives some certain fixed remuneration once a year.

    This type of companies is licensed, in the case of Dubai, over the Department of Economic Development of Dubai (DED). This authority controls and issues all guidelines and regulatory framework for various licensing types. It is important to note that some certain business activities and the respective licenses can be obtained by LLC companies registered over DED only.

    The division of the DED which controls special areas of licenses is the Dubai Business Registration Licensing unit (BRL). When applying for specially regulated licenses, for example, all types of medical services, education, tourism, etc. – there would also be additional approvals required by the respective government regulatory bodies – Ministry of Education, Ministry of Health or other authorities.

    In the event of company formation in Dubai with the general license, there would be special applicable regulation as well. These regulations would include certain share capital requirements as well as detailed description of business. The licensing costs of the LLC Company with the General Trading license would also be noticeably higher that the regular trading license.

    10 main steps to do to open this type of company:

    • Define the company name and the exact company activities type;
    • Check the licensing requirements;
    • Find local Partner / Sponsor;
    • If regular requirements – go ahead with the procedure of companies registration and all the necessary payments to be done;
    • If special regulations on licensing – do all necessary steps to get all the approvals and then proceed with the registration;
    • Rent office space;
    • Open Bank account;
    • Finalize company registration;
    • Set up all necessary utilities and connections;
    • Get your residency visa and, if necessary, visa for your employees.

    To make all the above easy for you have the option to contact us and we deliver the entire support on all the steps.

    We need to make a note that getting approval for a company name for legal entities of this type is a much more complicated process than getting approvals for companies registered in the free zones. The requirements for company names for these companies have a number of limitations including the absence of resemblance with the name to any other company in the similar business activity somewhere else in the world.

    The costs of such company type greatly vary depending on its activity. The total costs of this company type consist of registration and licensing costs which can be from AED 20.000,- to multiple of this amount - if special approvals are required

    Local sponsor/agent – professional agents who deliver quality service charges AED 15.000,- to AED 25.000,- per annum whereby, for certain activities this, the charge can be higher.

    Costs on the office rent – depending on the minimum requirements which vary from the license type as well as requirements of the business itself. Regular small office of around 30 sq.m. in a descent location would start from AED 45.000,- per annum.

  • The onshore company in Free Trade Zone.

    If you intend to start a business in Dubai to perform business in the UAE and abroad, then the best solution for you is to register an onshore company in FTZ. The advantage of such option include tax-free status, the possibility of 100% ownership by foreign national, residence visa for shareholders and personnel, simple and fast application and incorporation process.

    This type of the companies is one of the mostly used for foreign business persons to open a business in Dubai or another emirate of the UAE. These companies provide larger flexibility when compared to the LLC companies and are easier for starting the business. They are also can be 100% foreign owned which is not the case for the LLC companies with commercial activities.

    The licensing requirements are quite similar to the LLC companies. The standard licenses are issued quite fast whereby special activities can have additional prerequisites to be fulfilled. It is also essential to note that the manager/director of companies of this type must have higher education.

    On getting the name approvals for these companies – it is comparably easier than for LLC companies. Regularly the name approval goes very fast with very rare complications faced on this matter.

    10 main steps to do which apply to the majority of the UAE Free Zone Companies:

    • Decide on the company name and its activities;
    • Choose the optimal free trade zone best fit to your requirements;
    • Verify with the free zone authority if the licensing prerequisites are standard or not;
    • If regular – prepare all the forms and documents and proceed with registration of your company via the free zone legal department along with the payments;
    • Check the obligatory requirements on the office space and sign the respective rent contract;
    • Open PO Box;
    • Check the share capital requirement, open bank account, pay share capital, and get share capital payment confirmation;
    • Get to the final stage of the company registration;
    • Apply and get the company establishment card, immigration card and other documents;
    • Proceed with your residency visa along with the visa for your family and, if required, for employees.

    As an alternative to all the steps above on company formation in Dubai, you can get in touch with us, and we provide the entire support on all the steps and handle the entire procedure for you.

    The costs of such companyregistration in the UAE depend on the free zone you choose, necessary license, share capital requirements, commercial space requirements, etc. The costs can start from the expenses on the entire package including company, license, rent, visa, etc. of USD 12.000,-to multiple of this amount. For example, on the other end, you may need a special license or a general trading license, In the case of General Trading license, only the license costs can be USD 14.000,- or more.

  • Offshore company.

    Incorporation of offshore is the best solution if the business is performed abroad (outside of UAE). 100% of a company may be owned by a foreign person. Also, companies are exempt from taxes. Such company may be the holder of shares of other companies in the UAE and abroad and may open a bank account in the UAE.

    This type of companies is quite different from the other types outlined above. These companies can do business outside of the UAE only.

    7 steps to do to open offshore companies in Dubai and Ras Al Khaimah, UAE:

    • Choose the registered agent;
    • Make your decision on the possible company name. Normally you are suggested to provide up to 3 different names;
    • Provide these company names to your agent along with other documents;
    • Once the name is approved – agent provides you all the incorporation documents which are to be signed by you and then forwarded back to the agent;
    • Pay the agent for the incorporation procedure;
    • Receive back from the agent all your incorporation documents;
    • Open bank account – yourself or with the help of your agent – depending on the service package you have chosen by your agent.

    In the case registration of other types of companies you have the choice of execution the entire procedure of company registration yourself or over some company such as, for example, our company. In the case of offshore companies in the UAE, you do not have such option to choose as all legal entities in the UAE of this type have to be registered with a registered agent. Our company has the necessary status of being such agent.

Licensing requirements and limitations on activities.

For these companies there are no real licensing requirements as a number of various activities can be included in the memorandum and articles. The only activities which are not permitted are related to insurance and financial services / banking.

Names on these companies – the regulations for it are the most flexible when compared with the two types of companies. Names are checked and approved within couple of hours and the reason of name being rejected can only be if you include some term into the name which is not permitted or the company’s proposed name is very similar to the one which is already in the registry of the UAE offshore companies.

The costs of such company are much less compared to the previous companies’ types. There are no real cost differences depending on the activities either. The only major price difference is the fees different agent charge. Such fees, if you make a comparison, can be very different whereby we suggest to choose the average pricing with the best quality of services delivered by the agent.

Our company’s pricing policy follows exactly the approach of reasonable costs in combination with quality services means you can open your UAE offshore company and get the comprehensive support on it over us in a fast and efficient way.

General documents requirements to open any type of company in the UAE

To open a company an individual who is to become the company shareholder has to be in his full legal age and possess the passport which is not from the list of countries under sanctions. Moreover such person shall not have negative records on him in various compliance-checking systems. On top of the above there would be the bank reference required along with the description of the previous person’s business experience. For the ones who are appointed as companies directors – for onshore companies- diploma on higher education would be required as well. For offshore companies this is not a case.

DBA Agreements – which UAE companies qualify for it

To add the last point on the onshore companies in UAE and the reasons to open such companies to start and effectively operate your business we to need mention the important fact that Dubai has signed a number of agreements on Double Tax Treaties. These agreements provide favorable conditions in terms of taxation of income in other countries. To be able to qualify for such DBA the company must fulfill certain requirements which include its onshore status and the residency visa of its director.

In order to incorporate a company in the UAE quickly, without troubles and at affordable price, please contact us. We will provide you the comprehensive assistance in registering business in Dubai or any other city in the United Arab Emirates. By incorporating a company in the UAE through Dubai-freezone, you save your time and relieve yourself from paperwork formalities. Besides, by choosing our company, you may be assured of high quality legal support. Our company offers the very reasonable prices for business incorporation in Dubai.

Contact us, and you will get free advice regarding company incorporation in UAE. Take a step towards stability and high profits and start your business in Dubai!

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