Introduction to our Dubai Company Formation Guide
Dubai, a vibrant city in the UAE, offers diverse opportunities for business setup, attracting entrepreneurs globally. Its strategic location, robust economy, and business-friendly environment make it a sought-after destination for company formation. We aim to bring to you in our Dubai Company Formation Guide all informations you need to be understand the frame of this jurisdiction.
Step 1: Choose the Right Jurisdiction
Mainland: Best for businesses targeting the local UAE market, allowing direct trade within the region.
Free Zone: Ideal for businesses focusing on international markets, offering benefits like 100% foreign ownership and tax exemptions.
Offshore: Suitable for businesses needing a legal entity without a physical presence in the UAE.
Step 2: Prepare Necessary Documentation
Commonly required documents across all jurisdictions include:
Memorandum of Association (MoA)
Articles of Association
Power of Attorney (if applicable)
Visa Sponsorship Documents (for employees)
Additional documents may include passport copies of shareholders and directors, proof of initial business activity, and a No Objection Certificate (NOC) if you're already a UAE resident.
Step 3: Choose a Business License
Depending on your business activity, select from various licenses:
Commercial License for trading activities.
Professional License for services, artisans, and craftsmen.
Industrial License for manufacturing or industrial activities.
Step 4: Visa Processing
For non-UAE nationals: Obtain an investor or employment visa, involving medical testing and Emirates ID issuance.
Dependent Visas: Process visas for family members, if needed.
Step 5: Open a Bank Account
Choose from numerous local and international banks in the UAE. Requirements generally include company incorporation documents, passport copies, and a business plan.
Additional Steps and Considerations
Business Plan: Crucial for free zone and offshore setups.
Physical Office Space: Required in mainland and most free zones.
Local Sponsor/Agent: Mandatory for mainland companies; local sponsors must own at least 51% of the business.
Regulatory Approvals: Certain activities may need extra government department approvals.
Post-Setup Compliance: Be aware of ongoing legal and financial obligations, including license and visa renewals.
Choosing Your Free Zone
Dubai offers over 20 free zones, each catering to specific industries.
Popular free zones include Jebel Ali Free Zone (JAFZA), Dubai International Financial Centre (DIFC), Dubai Internet City, and DMCC.
Consider your business goals and practical needs when choosing a free zone.
Free Zone Company Structures
Options include:
Free Zone Establishment (FZE): Single shareholder entity.
Free Zone Company (FZCO): Requires at least two shareholders.
Public/Private Limited Liability Companies (PJSC/LLC): Multiple shareholders, with different rules on public trading of shares.
Branch of a Local or International Company: Operates as an extension of an existing company.
Understanding Setup Costs
Costs vary based on requirements like office space and visa numbers.
Typical costs range from US$1,360 for freelancers to around US$17,000 for companies requiring office space.
Visa quotas often link to rented space size.
Free Zone Company Set-Up Process
Mostly online, streamlined for efficiency.
Register the company, lease business premises, obtain a business license (3-5 working days), and set up additional services like bank accounts and employee visas.
Advantages of Setting Up in Dubai
Access to a vast international market.
Tax benefits and 100% foreign ownership in free zones.
State-of-the-art infrastructure and strong support for businesses.
Taxation and Corporate tax in UAE
In 2023 (starting from june 2023), the UAE will implement a corporate tax rate of 9% on the profits of all businesses generating over 375,000 AED (approximately USD $100,000). Businesses earning less than this threshold will continue to be exempt from corporate taxes, maintaining a 0% tax rate.
According to the Ministry of Finance, the corporate tax rates for 2023 are as follows:
0% for taxable income up to AED 375,000.
9% for taxable income above AED 375,000.
For large multinationals meeting specific criteria outlined in 'Pillar two' of the OECD Base Erosion and Profit Shifting Project, a different tax rate will apply, although it has not yet been specified.
Corporate tax (CT) will apply to:
The corporate tax in the UAE applies to:
All businesses and individuals with commercial licenses operating in the UAE.
Free zone businesses, as long as they comply with regulatory requirements and do not conduct business operations in the mainland.
Foreign entities and individuals conducting ongoing or regular trade or business activities in the UAE.
Banking operations.
Businesses involved in real estate management, construction, development, agency, and brokerage activities.
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