Resources

UAE Business Set Up

Business Setup in Dubai with Bank account

United Arab Emirates

The United Arab Emirates, sometimes simply called the Emirates or the UAE, is a country located at the southeast end of the Arabian Peninsula on the Persian Gulf, bordering Oman to the east and Saudi Arabia to the south, as well as sharing sea borders with Qatar and Iran. Established in December 1971, the country is a federation of seven emirates. The constituent emirates are Abu Dhabi (which serves as the capital), Ajman, Dubai, Fujairah, RasAl-Khaimah, Sharjah, and Umm Al-Quwain. Abu Dhabi is the Federal Capital.

The UAE generally has one of the most liberal trade regimes in the Gulf region, a well-established infrastructure and a strong banking system, as well as a stable political system. The economic diversification in trade, logistics, banking, tourism, real estate and manufacturing additionally builds the basis for a high-potential business environment.

UAE Free Zone Company

Free Zone companies are structured for boosting international business through providing 100% ownership to expatriates. A Free Trade Zone Company is a convenient alternative to the onshore company.

Company formation in UAE Main Land (Non-Free Zone)

Any company that wishes to operate in the UAE local market needs to be registered with the local government.

Different categories available to perform the business are:

• Limited Liability Company (LLC)
• Branch/ Representative Offices of Foreign Company
• Professional Firms

Offshore Company

The legislation that allows foreign investors to set up offshore companies in the United Arab Emirates was passed in 2003. With this type of company, all business activities must be conducted outside the Emirates. However, an offshore company may open bank accounts and hold real estate and intellectual property.

An offshore company is a company which does not conduct substantial business in its country of incorporation and formulated in a law of no tax jurisdiction for the purposes of legally minimizing any type of tax payment and improving one’s wealth management.

Unlike some other tax havens, offshore companies in the UAE enjoy an excellent reputation internationally, and are valued business partners in international business, as well as for banks and financial service providers worldwide.

UAE Offshore Jurisdictions:

• JAFZA Offshore (Jebel Ali Free Zone Authority)
• RAK Offshore (Ras Al Khaimah)
• Ajman Free Zone (Offshore)

Benefits

• 100% foreign ownership
• No minimum capital requirement
• Open corporate bank account in UAE or elsewhere in the world
• International Trade and investments
• Can own properties in UAE (in designated freehold areas)

Tax Optimization Strategies

Strategy One: Establish a Free Zone Entity

The free zones allow companies to have a UAE entity that is 100 percent foreign owned and yet take advantage of:

• Low formation and annual costs
• Visa sponsorships
• A range of options for physical presence from flexi desks (virtual desks), to complete buildings and industrial developments
• No taxes
• No exchange controls or thin capitalization restrictions
• Access to the UAE double tax treaty network
• An individual acts as the “Manager” and is required to be nominated for each company

Strategy Two: Combine a free zone entity with an IBC

Owning a free zone entity, or creating a free zone branch of the IBC, provides the following benefits:

• Confidentiality of ownership and operations; physical presence or management, as required by some treaties for treaty protection
• Restricted custodian and nominee shareholdings
• The ability to have investments in the UAE and yet not carry on business
• Choice of any law – common law, civil law, etc
• No local meetings, audits, or local presence requirements, migration in and out of the jurisdiction
• OECD white list jurisdiction

Strategy Three: Global head office company/ IP holding company

In the majority of the UAE double tax treaties which have look-through limitations provisions, the use of the UAE as the head office of a company to minimize global taxes is a vastly under-estimated and under-utilized strategy.

The relocation of the head office of the known US company, Halliburton, to Dubai, is one example of this strategy. However, for the majority of practitioners, the use of UAE treaty networks in this manner has been ignored, possibly due to lack of information.

The choice of law for IBCs provides for Head Office company to own patents, IP trademarks, confidential know how and copyright, under the laws of any jurisdiction, and to license this technology to a free zone entity or to other countries worldwide. The treaty network will reduce withholding taxes, impose no taxes in the UAE and allow for peace of mind, in terms of enforceability, licensing, securities and charges outside the domain of the local UAE or DIFC laws, which may be a concern when otherwise considering the UAE as a base to hold and develop IP

Strategy Four: Residence and domicile for directors and senior staff

Whilst domicile in the UAE may not be possible, depending on the laws of the home country, certainly with a renewable residence visa that is issued to persons or associates of a free zone entity, individuals may reduce or eliminate home country taxation. In many cases, following the OECD model, the treaties provide for Director’s fees, paid to a non-domiciled director of a UAE entity, to be exempt from tax in the home country.

For further details on above, please get in touch with us.

International Business Companies - Jurisdiction Briefings

Our team and associate office can also provide expert advisory on International Business Company set up in RAK Offshore (UAE), United Kingdom, Jersey, Singapore, Switzerland, Malta, Cyprus,Seychelles and Caribbean Islands.

For further details on above, please get in touch with us.