COMPANY FORMATION IN DUBAI
Dubai is located on the Eastern coast of the Arabian Peninsula, in the south west corner of the Arabian Gulf. It is extremely well known for its warm hospitality and rich cultural heritage, and the Emirates people are welcoming and generous in their approach to visitors.
From the timeless tranquillity of the desert to the lively bustle of the souk, Dubai offers a kaleidoscope of attractions for visitors. The emirate embraces a wide variety of scenery in a very small area.
Since 1833 the reigning Al Maktoum family have ruled Dubai. Under their wise and progressive leadership Dubai has prospered and it is now the business and tourism hub for a region.
Dubai, with an area of 3,885 square kilometres, is the second largest emirate in the UAE. Situated on the banks of the Dubai Creek, a natural inlet from the Gulf which divides the city into the Deira district to its north and Bur Dubai on its south.
Some 800 members of the Bani Yas tribe, led by the Maktoum Family, settled at the mouth of the creek in 1833. The creek was a natural harbour and Dubai soon became a centre for the fishing, pearling and sea trade.
Dubai has changed dramatically over the last three decades, becoming a major business centre with a more dynamic and diversified economy. Dubai enjoys a strategic location and serves as the biggest re-exporting centre in the Middle East.
HERITAGE AND CULTURE
Dubai’s culture is rooted in Islam, providing a strength and inspiration that touches all aspects of everyday life. Virtually every neighbourhood has its own mosque, where the faithful congregate for prayer five times everyday.
DUBAI COMPANY INCORPORATION
Dubai Company incorporation is considered by many investors who hope to gain a presence in the Middle East and Asia as an excellent corporate solution through which to conduct business. A bustling and thriving market, Dubai is the world's third-largest export and re-export centre after Hong Kong and Singapore, a fact which has made Dubai Company incorporation increasingly popular in recent years.
The following detailed information will help determine whether Dubai Company incorporation is the optimum investment solution to meet your business and financial objectives:
1. Dubai is considered one of the most attractive locations in the Middle East in which to set up a regional or global headquarters. According to the Dubai Department of Economic Development, Dubai's main strategic advantages include:
1.1. Dubai's excellent geographical location. Centred in the UAE, Dubai is close to markets in the Gulf, the wider Middle East, the Eastern Mediterranean, the Commonwealth of Independent States (CIS), Central Asia, Africa and the Asian subcontinent. Dubai Company incorporation is an ideal way tap these emerging areas, whose economies are growing rapidly;
1.2. Dubai is one of the busiest ports in the world. Dubai is served by more than 120 shipping lines and 85 airlines to more than 130 destinations around the world;
1.3. Dubai has an efficient and pro-active government; Dubai also enjoys a fair amount of political and economic stability;
1.4. Dubai has a well-established banking system, linking it to major markets in the east and west, which supports Dubai Company incorporation;
1.5. Dubai is located in a region with cheap and plentiful energy resources. Dubai Company incorporation is therefore an ideal solution for energy-intensive industries;
2. Foreigners can own 100% of a Dubai company if it is located in one of the UAE Free Zones. Through a Dubai branch company, one can wholly own the entity and not be subject to an annual audit.
3. Dubai's government takes a "hands off" regulatory approach. There is minimal government control and regulation of the private sector.
4. Dubai also has no exchange controls, quotas or trade barriers.
5. Dubai has a generous approach to taxes as there are no corporate or income taxes in the emirate.
6. Dubai levies low customs duties of only 4%.
7. Dubai permits 100% repatriation of capital and profits for operators of a Dubai Company incorporation.
8. Dubai maintains a stable exchange rate between the US Dollar and UAE Dirham.
9. Dubai's liberal hiring practices make it easier for skilled expatriate labour to be imported to meet the needs of investors undertaking Dubai Company incorporation.
10. Dubai's port is the world's third-largest export and re-export centre after Hong Kong and Singapore.
11. The Dubai Development and Investment Authority (DDIA), the government authority set up to attract investment into Dubai and the UAE, has taken a pro-business approach to attracting foreign investment by offering a range of incentives for entrepreneurs and Companies interested in Dubai Company incorporation. Some of these incentives include:
11.1. Project Development Assistance: Including business plan development support, market testing, legal structuring and corporate governance services;
11.2. Assistance in raising project capital and introducing multinational corporations to potential investors;
11.3. One Stop Shop Government and Convenience services: Providing "Single window "Government and Convenience services to investors and MNC’s , providing assistance in executing and setting-up projects at a fast rate;
11.4. Providing Regional Research and Analysis Macro and micro economic data on all aspects of business information including- legal, financial and demographic information in the UAE, to assist with investment and expansion decisions.
12. A Dubai company is not perceived as an offshore company in a tax haven. (*)
Dubai is a reputable and regulated international trading jurisdiction.
(*) Offshore Tax Havens
For individuals and trusts, tax havens can offer substantial advantages depending on the ultimate residence of the individual or trustee and the activity being carried out. Passive holding companies and trusts may, in particular, enjoy exemption from capital gains tax and estate taxes in the country where assets are situated. They are often used as a means to safeguard assets for long-term family use, for will planning, or to distance beneficial ownership from an individual for asset protection purposes.
Tax havens can have a useful role in multinational corporate tax planning if they have a tax treaty network; otherwise they are of limited value so far as flows of dividends, interest and royalties are concerned which emanate from countries that impose withholding taxes. Tax havens without treaty networks can nevertheless offer the possibility of lessening the highest rates of tax in some other areas of activity. Very often an offshore company - whether trading, investment or holding - is owned by shareholders or a parent company in a high taxed jurisdiction, or if it is controlled in such a jurisdiction, the tax advantages are reduced or eliminated - but this is not a universal truth!
13 Dubai has strong client confidentiality laws and refuses to exchange information with the Organisation for Economic Cooperation and Development (OECD).
14. If properly-structured, Dubai company formation is the perfect way to legitimately book international profits without paying local corporation tax.
15. Dubai is a highly competitive economy. According to the International Institute for Management Development, Dubai was the 17th most competitive economy in the world in 2005.
SUMMARY OF THE BENEFITS OF
ESTABLISHING A COMPANY IN DUBAI
Hassle free legal and documentation procedures
Free zone offshore companies are exempted from legal aspects pertaining to onshore counterparts
Single point regulatory body - Free zone authorities are the single point of contact for all matters related to licensing and other regulations
Nominal registration fees (as low as 5,000 Dirham currently)
100% foreign ownership of the company and customs privileges
Tax free import and re-export on most commodities
100% allowance for repatriation of all profits and gains
Corporate tax free operations for 15 to 50 years (renewable)
Free foreign manpower recruitment policy
No currency restrictions
Ongoing administrative assistance from the free zone authorities
Attractive Tax Regime: (a) Dubai Offshore Companies are exempted from taxes on profit, capital gains or anything else; (b) Personal income tax exemptions
No Tax on offshore companies except oil companies and banks
Liberal immigration regulations for offshore professionals
No exchange controls
High Degree of Confidentiality due to absence of Taxation department
No Disclosure of Beneficial Owner
Offshore companies / owners allowed to operate confidential bank accounts in Dubai
Duty Free Status
Low Operating Cost Environment
Strategic Location and well equipped port (easy access to India, North Africa and the rest of Middle East)
Hi-tech Infrastructure facilities (including medical, transport and high speed, high bandwidth telecommunications)
High skill low cost professional support available for offshore development
Full support and commitment from the Government
HOW WE WILL HELP YOU WITH SETTING UP AN OFFSHORE BUSINESS UNIT AT DUBAI
Our Group has strong local partners and vast experience in incorporating a Dubai company for our clients; our range of services includes bank account opening and financial services such as accounting, auditing along with consultancy services on just any aspect related to your offshore business set up and operation. Please feel free to get in touch with us for any clarification that you may require - simply click the link below to fill up our brief order form and we shall get back to you at the earliest. We look forward to be of service to you!
HOW DOES IT WORK FOR DUBAI COMPANY FORMATION?
In Dubai there are 2 types of companies that we can incorporation for you:
LIMITED LIABILITY COMPANY (LLC)
For this type of company it is not possible to do it online without you coming to Dubai. The LLC companies being a bit more complicated to incorporation, and the right choice of the business license and the offshore zone, will necessitate that you come to Dubai and meet with our adviser/lawyer to better identify your needs. A 5 days stay in Dubai might be required to go through all the process of setting up a new LLC company in one of Dubai's free zones. No advice nor information will be given through internet except from taking an appointment for your for the time you come to Dubai to meet us. A telephone consultation or email consultation maybe be ordered to have a first legal advice on your project, in that case please contact us.
FREE ZONE COMPANY – OFFSHORE STATUS - (FZCO)
The offshore type of company is much simpler to form. We can do everything through internet and post mails.
However, compared to other offshore countries Dubai require some specific steps in order to form your company without coming to Dubai. You will need to print and sign and then notarize a Power of Attorney (POA) and get it apostilled by the U.A.E embassy of your country. Once you have this Legalized POA you will have to send it back to us by post mail so that we can incorporate the offshore Dubai Company on your behalf.
If you do not wish to go through this step of POA Legalization we have 2 alternatives:
- You can come to Dubai to sign the POA and other documents, a 3 to 5 days stay will be necessary.
- Or we form a UK or US company for you and we appoint one of our staff to be Nominee Director. And our No nominee director will go and get the POA legalized by the U.A.E Embassy in UK or US and send it back to our Dubai office. This way you will have an additional holding company in UK or US that will own your Dubai entity and you will not need to the a legalized POA yourself.
BANK ACCOUNT FOR AN OFFSHORE DUBAI COMPANY
It is almost impossible to open a bank account in Dubai for a non Emirate resident. Thus we are offering the opening of a Business Offshore account in many of our Offshore International partner banks. From the order from you will be ale to select the type of bank account you wish to have for your Offshore Dubai Company.
DUBAI FOR USE AS AN OFFSHORE JURISDICTION
This is an interesting jurisdiction. In Dubai there are no taxes of any sort one has to contend with, so there is no tax filing and no tax audits, etc. Most offshore jurisdictions have no taxes pertaining to offshore derived income but do tax onshore derived income like if you owned a restaurant in the jurisdiction. Panama is loose in that if you had no onshore income you do not have any tax returns to even file. Dubai has no tax collection organization period. BUT Dubai is in tax treaties, which is generally a big negative since it opens the door to fishing expeditions.
The double taxation treaties are aimed at reducing taxation in the foreign jurisdiction on profits generated abroad by foreign corporations operating in Dubai.
There are double taxation agreements with Algeria, Jordan, Sudan, Syria, Kuwait, Yemen, Egypt, Finland, France, India, Malta, Pakistan, Poland, China, Germany, India, Indonesia, Italy, Malaysia, Poland, Romania, Singapore, South Korea, Sudan, Algeria and Turkey. These treaties call for profits derived from shares, dividends, interest, royalties and fees to be taxed only in the contracting state where the income is earned which should ideally be Dubai. There is no corporate income tax in Dubai and the provisions of the treaties do not state that such income must be taxed to qualify for benefits. Thus there could be a tax exemption from the home country even though Dubai/UAE has not levied any taxes on it. Some countries require taxes to be paid and other have a minimum taxation level so the individual treaties must be studied carefully and they may not be very effective tax remedies all.
DISADVANTAGES TO INCORPORATE IN DUBAI
1. Dubai company formation is both difficult and expensive because of i) high government fees ii) inconsistent and complex Dubai company law and iii) inefficient bureaucracy.
2. A Dubai limited liability company (LLC) requires a UAE national to hold a 51% share.
3. It is very difficult to incorporate a Dubai company unless your Firm enters an expensive lease to open a local office and employed local staff.
4. Following Dubai company formation, most entities are required to submit annual audited accounts to the Dubai authorities.
5. The majority of new business set ups in Dubai are required to place large cash deposits with the government, usually amounting to US$50,000.
6. There are no clear, consistent laws and rules governing Dubai company formation, including cash payments to the government.
7. A Dubai Branch company requires a UAE national sponsor.
8. Dubai corporate and personal banking products and customer service are of a poor standard.
9. For investors considering Dubai company formation, the UAE is perceived as the 34th least corrupt country in the world, according to the 2007 Corruption Perceptions Index by Transparency International.
TIME TO INCORPORATE
Dubai company registration is time consuming and complex procedure. Recent studies by the World Bank indicate no less than 12 procedures are involved, covering a time-frame from 2 to 6 weeks. That said, our Firm endeavours to make Dubai company registration procedures as smooth as possible for clients.
For a Dubai Limited Liability Company (LLC), we will legally complete Dubai company start-up within a time period of 14 weeks.
For an offshore company, Dubai company registration can take up to nine weeks.
When starting a company in Dubai, our clients need not visit the UAE, our Consultants officers will complete all Dubai company start-up formalities on your behalf.
Should you wish however to incorporate in Dubai and have full control and ownership, please do not hesitate to contact one of our Tax Consultants.
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