Company Formation United Arab Emirates, UAE, Free Zone VAE Dubai- Dubai Offshore Company-Company
Formation, offshore company formation -General information on company formation in a free trade zone of UAE|
Company Formation United Arab Emirates - UAE: Free Trade Zone Company and Offshore-Company "RAS AL Khaimah"
Company Formation UAE- Free trade Zone RAK:
Company formation UAE: General information on company formation in a free-trade-zone of UAE
Shares of companies within one of the free-trade-zones of the UAE (RAK, Jebel Ali, Sarah) may be owned by foreigners in whole. These companies are allowed to do their business within the FTZ or abroad UAE only. Business wthin the UAE can only be made via a representative.
Foreign investors must fulfil the following requirements to their companies:
The following steps have to be realized in any case:
-Visa for Management, shareholders and resident employees
(UAE does not allow a sole registered office or a virtual office;
affordable office space is available e.g. in RAK )
(approval to run a certain business. For each business a license is
required and only after obtaining the license may the appropriate action
If the only business of an enterprise is in the UAE, please notice chapter 5 of the DTA:
Company Formation UAE: Double Taxation Agreements, Definition of Permanent Establishment (Article of the DTA)
(1) For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
(2) The term "permanent establishment" includes especially:
(3) A building site or construction or installation project constitutes a permanent establishment only if it lasts more than nine months.
(4) Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include :
(a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise ;
(5) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, where a person - other than an agent of an independent status to whom paragraph (6) of this Article applies - is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts on behalf of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph (4) of this Article which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.
(6) An enterprise shall not be deemed to have a permanent establishment
(7) The fact that a company which is a resident of a Contracting State
controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State
(whether through a permanent establishment or otherwise), shall not of
itself constitute either company a permanent establishment of the other.
If there is no factory, workshop, mine, quarry or any other place of extraction of natural resources or a building site or construction or installation that lasts more than nine months, a resident of the UAE has to manage the operations of the business, to located the permanent establishment in the UAE. Besides this, a non-resident director can bring the proof that he is present to fulfill his management duties (place of management).
We cannot provide a trustee director in the UAE.
Companies in the FTZ are tax free
The initial capital is very different and we have to refer to our survey on our Internet sites.
Fees for an incorporation in the FTZ vary by services of ETC and governmental fees.
Governmental fees are available on our Internet site. Our fees are between € 2,900.00 and € 4,900.00, depending on the service.
Notwithstanding this, it is possible to incorporate an Offshore Company (Exempted Company). An UAE Offshore Company may only do business outside the UAE, does not need any intial capital and can be owned by foreigners at 100% also. A trustee director can be provided.
Company Formation UAE/Dubai: RAK
Any company that wishes to operate at the RAK FTZ should register as a legal entity at the RAK FTZ (company registration), open a bank account, acquire a valid permit to undertake approved activities (business license) and sign a lease contract for using the selected facility at the RAK FTZ.
Once all of these procedures have been completed successfully, the company will be entitled to activate a P.O. Box, a bank account, apply for the approved number of visas (UAE residence permits) and to start the business activities in the RAK FTZ.
A company or individual wishing to operate a business at the RAK FTZ can be registered at the zone in one of the following four legal forms:
A branch of an existing company
A new establishment
Every company operating
within the RAK FTZ is required to obtain a business license. A business
license is a time-limited permit granted to a company to undertake
commercial, consulting, service or industrial activities within the RAK
FTZ. It does not, however, authorise the holder to do business in the
UAE - a special agent has to be appointed for trading activities in the
Four types of business licenses:
Business Center Services
The RAK Innovation and
Promotion Centre is a free zone facility which gives investors an
opportunity to start business with minimum hassles. Some of the key
features of the RAK Innovation and Promotion Centre are the serviced,
fully-functional and ready-to-use offices, flexi-offices and flexi-desks,
plus a wide variety of services. All of these are offered at highly
Front Desk Services
The Contact Centre will enable
you to receive your calls even when you are not in the office or site.
The Contact Centre Operator will receive and answer the call on your
Prices Flexi Facilities
Attorney fees : 3.900 Euro
: 3.900 Euro
(Commercial or Consultancy License)
(Commercial, Consultancy or General Trading License)
Executive Office Package
Dubai/UAE has double taxation agreements = DTA with most other countries. EU freedom of establishment is not applicable. For approval of the permanent establishment according to tax laws, a commercially equipped business operation must be installed in Dubai/UAE, and active business must be transacted in UAE/Dubai.
Since only oil companies and banks are subject to taxation in the UAE/Dubai, and any other companies do not pay any taxes, this results in interesting opportunities for investment in Dubai/UAE. In order to be able to use the tax advantages, a permanent establishment according to DTA must be installed in Dubai. On the one hand, a Dubai company is no offshore company in this sense, since the UAE/Dubai also maintain double taxation agreements with many countries – including Sweden and Denmark – but on the other hand, the EU freedom of establishment is not applicable. Therefore, the following prerequisites for approval of a permanent establishment according to tax laws in Dubai must be met:
Under the stated conditions, for example the Swedish could be a majority shareholder of the Dubai company, but nevertheless Dubai/UAE has the sole right of taxation, provided that the Articles of Association state that all relevant decisions are made at the shareholders’ meetings, which exclusively take place in Dubai, at which the Swedish shareholder must be present. However, the UAE company law stipulates that 51% of the company shares must be held by persons resident in Dubai. As a rule, the founder will use a “sponsor”. This requirement may be omitted in case of company formations in the free zones. In the free zones, 100 % of the shareholders may be foreigners.
Company Formation UAE: Introduction
The basic requirement for all business activity in Dubai is one of the following three categories of licence:
These licences are all issued by the Dubai Economic Department. However, licences for some categories of business require approval from certain ministries and other authorities: for example, banks and financial institutions from the Central Bank of the UAE; insurance companies and related agencies from the Ministry of Economy and Commerce; manufacturing from the Ministry of Finance and Industry; and pharmaceutical and medical products from the Ministry of Health.
More detailed procedures apply to businesses engaged in oil or gas production and related industries.
Practising some trade activities (e.g. jewellery and insurance) requires the submission of a financial guarantee issued by a bank operating in Dubai.
In general, all commercial and industrial businesses in Dubai should be registered with the Dubai Chamber of Commerce and Industry.
Fifty-one per cent participation by UAE nationals is the general requirement for all Dubai-established companies except:
In the past, each emirate followed its own procedures governing the operations of foreign business interests. In practice, however, Dubai and the other emirates followed the same general system, whereby foreign companies operated in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company incorporated by Ruler's decree.
Since 1984, steps have been taken to introduce a codified companies law applicable throughout the UAE. Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988 - the "Commercial Companies Law" - and its by-laws have been issued. In broad terms the provisions of the Law are as follows:
The Federal Law stipulates a total local equity of not less than 51% in any commercial company and defines seven categories of business organisation which can be established in the UAE. It sets out the requirements in terms of shareholders, directors, minimum capital levels and incorporation procedures. It further lays down provisions governing conversion, merger and dissolution of companies.
The seven categories of business organisation defined by the law are:
General partnership company
Joint Venture Company
A joint venture is a contractual agreement between a foreign party and a local party licensed to engage in the desired activity. The local equity participation in the joint venture must be at least 51%, but the profit and loss distribution can be prescribed. There is no need to license the joint venture or publish the agreement. The foreign partner deals with third parties under the name of the local partner who - unless the agreement is publicised - bears all liability.
In practice, joint ventures are seen as offering a suitable structure for companies working together on specific projects.
Public and Private Shareholding companies
The law stipulates that companies engaging in banking, insurance, or financial activities should be run as public shareholding companies. Foreign banks, insurance and financial companies, however, can establish a presence in Dubai by opening a branch or representative office.
Shareholding companies are suitable primarily for large projects or operations, since the minimum capital required is Dh. 10 million (US$ 2.725 million) for a public company, and Dh. 2 million (US$ 0.545 million) for a private shareholding company. The chairman and a majority of directors must be UAE nationals and there is less flexibility of profit distribution than is permissible in the case of limited liability companies.
Limited Liability Company
A limited liability company can be formed by a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company's capital. Such companies are recognised as offering a suitable structure for organisations interested in developing a long term relationship in the local market.
In Dubai, the minimum capital is currently Dh. 300,000 (US$ 82,000), contributed in cash or in kind. While foreign equity in the company may not exceed 49%, profit and loss distribution can be prescribed. Responsibility for the management of a limited liability company can be vested in the foreign or national partners or a third party.
The following steps are required in establishing a limited liability company in Dubai:
Branches and Representative Offices
The Commercial Companies Law also covers the formation and regulation of branches and representative offices of foreign companies in the UAE and stipulates that they may be 100% foreign owned, provided a local agent is appointed.
Only UAE nationals or companies 100% owned by UAE nationals may be appointed as local agents (which should not be confused with the term "commercial agent"). Local agents -- also sometimes referred to as sponsors -- are not involved in the operations of the company but assist in obtaining visas, labour cards, etc and are paid a lump sum and/or a percentage of profits or turnover. In general, branches and offices of foreign commercial companies are not licensed to engage in importing activity except for re-export or in the case of products of a highly technical nature.
To establish a branch or representative office in Dubai, a foreign commercial company should proceed as follows:
Branches and Representative Offices of Foreign Professional Companies
Branches and representative offices of foreign professional firms may be 100% foreign owned provided UAE nationals or 100% UAE owned companies are appointed as local agents. Such agents are not involved in the operations of the firm but assist in obtaining visas, labour cards etc and are paid a lump sum as remuneration. The Economic Department is the authority in charge of licensing such branches or representational offices.
In setting up a professional firm, 100% foreign ownership, sole proprietorships or civil companies are permitted. Such firms may engage in professional or artisan activities but the number of staff members that may be employed is limited. A UAE national must be appointed as local service agent, but he has no direct involvement in the business and is paid a lump sum and/or percentage of profits or turnover. The role of the local service agent is to assist in obtaining licences, visas, labour cards, etc.
Offshore-Companies in the United Arab Emirates
Since the year 2003 the United Arab Emirates allow the
formation of offshore companies in the Jebel Ali Freezone in Dubai. With
this step Dubai is positioning itself as a regional alternative among the
worldwide network of offshore locations such as Liechtenstein, Madeira,
Malta and the Canal Islands.