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Secrets of starting a business in the UAE

Mar 23, 2017

The United Arab Emirates have developed a reputation of a jurisdiction, which is great for business through last years. Despite the fact that oil and gas are dominating business activities in the UAE, nowadays almost every type of activity can successfully operate inside the country. Tourism, healthcare, information technology, aviation, transport are also very successful fields of business. There are things which every entrepreneur should know while forming a business in the UAE. First of all, this jurisdiction offers a really favorable climate for business. We are talking about political state of country, economic development, infrastructure, banking facilities and other advantages. For different types of businesses, these reasons might be crucial. Also, the UAE have a 79.6 percent of business freedom score which makes the Emirates a very favorable jurisdiction.

The UAE tax policy is different for foreign and domestic companies. However, the rate is reasonable for both. The most taxable business fields are gas and oil but other activities are subjected to 10% annual tax and 5% employer tax. This makes taxation policy of the UAE favorable for fresh business.

There is a very important point to consider when forming your company in the United Arab Emirates. It consists of seven Emirates, which have different free trade areas, customs rules and investment climate. Different zones have different control authorities, trading requirements and documentation. You should perform a detailed study of these aspects to choose the best Emirate for your company and decide which type of entity will suit you best.

Legal entities differ as offshore companies, free zone companies and free zone establishments. All of them have different advantages and disadvantages. For example, free zone entities allow 100% foreign ownership and can be formed by different number of founders depending on business activity of the company. However, these entities have issues with trading outside free zones and need to establish a local agent company. On the contrary, offshore entities are allowed to trade outside the UAE and need to obtain special licenses and permissions to go on the market.

To decide which zone to choose it is better to consult with an analyst or offshore specialist. Different Emirates’ free zones will suit for various types of businesses and it depends on your specialization, where to incorporate the company. Same rules will apply to offshore companies.

You don`t need months to set your business up and requirements are reasonable. There are no citizenship or nationality restrictions, age and share capital are the only personal requirements that needs to be considered. Founder need to be older than 21 or 25 years depending on the Emirate, and the capital should be over $135,000. Considering the fact that many business jurisdictions have similar limits, this should not stop you from starting business in the UAE.

Talking about other requirements, you sure need to collect a number of documents to incorporate a company and obtain a business license in the UAE. Documents may vary depending on who you are: individual or a head of legal entity. However, you do not need to submit any irregular documents: only personal or business certificates (passport or incorporation statute), M&A documents if needed and other standard papers that will confirm your ownership of business and other details. Next step is to obtain a license, but each free zone has its own Independent Authority and they work effectively and promptly while issuing permits.

The positive thing that you do not need to obtain a residence permit in the UAE to manage your business. Founders need to be present to register and apply for bank account opening but afterwards management can easily be handled to the employees. However, if you want to obtain a residence permit, you can apply to the immigration service. Keep in mind that every zone has their own policy statement and visa issues so it is better to learn more about the details first. Basically, residency visas will be valid for three years and need to be extended afterwards.

There is a long list of requirements and restrictions that can be applied to your newly incorporated company, depending on the type of the business you choose. For example, gamble companies are restricted in the UAE, and in case if you would like to provide any insurance services, you will face a wide range of restrictions from Dubai International Financial Center Free Zone.

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