With strong competition for the best international jurisdiction to establish a company, more foreign nationals are opting for business registration in the UAE. The jurisdiction, with its high-profile cities such as Dubai and Abu Dhabi, offers a range of business climate incentives as well as free trade zones ideal for successful integration into the global market.
The Aspen Trust Group shares the information on business registration in the UAE that has helped their clients find the perfect solution to international company formation. Learn about the benefits of doing business in the UAE, the types of structures options available, as well as the application requirements and process.
UAE’s Business Climate
The business environment of the UAE is recognized as one of the top global destinations for company formation and business success. In 2020, World Bank ranked the UAE as No. 1 regional location for ease of doing business and No. 16 internationally. The Global Entrepreneurship Monitor (GEM-NECI) awarded the jurisdiction 1st regionally and 4th global among its list of jurisdictions on the Global Entrepreneurship Index (2020). Further, the UAE has maintained its No. 1 ranking in the Middle East on the Global Innovation Index and improved its ranking among international competitors (33rd).
International Connectivity
Alongside its success within the global market for its business environment, the jurisdiction has also become key signatories to international initiatives to strengthen transparency and compliance in conjunction with favorable tax policies on domestic businesses. The UAE entered into the OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) in 2018, actively working to implement modern standards on tax practices, tax treaties, and transparency.
Tax Incentives
Over 90 double tax treaties out of an extended network of 117 have been in force in the jurisdiction. In addition, the UAE is a member of the Gulf Cooperation Council (GCC) and other multinational world organizations. In order to deepen ties within the business community, the jurisdiction has introduced policies for UAE entities that require these to demonstrate and report on economic substance. These policies fall in line with other notable business regions, such as the EU, which have also taken measures to combat poor business practices through the use of economic substance demonstration in recent years.
Moreover, opting for business registration in the UAE comes with considerable tax benefits for residents. In 45 tax-free zones (FTZ), largely in Dubai and Abu Dhabi but also found in other areas, personal income and profits are both tax-free.
Previously, corporate tax was only found at the authority level of each emirate for the specific industries of oil, gas, and petrochemical businesses as well as foreign banks. No federal corporate tax had been enforced. Most FTZs provided 0% corporate income tax or an exemption to their residents. In 2022, the UAE introduced corporate tax in accordance with the OECD. While the corporate tax provisions apply to all UAE business and activities, the UAE stated that it would honor tax-free zone business tax incentives for companies that comply with all regulatory requirements and who do not conduct business on the mainland. Taxable income under AED 375,000 would be taxed at 0% and taxable income over this amount would be taxed at 9%.
Healthy Business Environment
Finally, business registration in the UAE means that foreign companies can strategically enter into important business markets in Europe, Africa, and Asia. The jurisdiction is friendly towards foreign investors with an English-language working climate and provides a robust financial system and business infrastructure. The government initiatives through programs such as Vision 2021 aim to continue to foster the development of the business environment.
Business Registration in the UAE Structure Options
Most foreign nationals interested in company formation will look to International Financial Centers that operate under certain policies for business management. For instance, in Dubai, there are areas within the Dubai International Financial Center (DIFC) and outside. Most foreign nationals find being registered inside the DIFC is more suitable for not only an inclusive process and ease of compliance but also foreign ownership.
Within the DIFC, a company may be 100% foreign-owned, whereas outside the DIFC, 51% of ownership must be held by a UAE national. A local sponsor is mandatory for each new business registration in the UAE outside of the International Financial Centre, but recommended also for companies applying within.
There are several structures available for business registration in the UAE, which include the following:
- Private Limited Company by Shares
- Limited Liability Company
- Limited Liability Partnership
- Foreign Limited Liability Partnership
- Branch Office
- DIFC Transferred Company
What Goes into an Application?
Necessary Documents
The professionals at The Aspen Trust Group can help you prepare the documents necessary for business registration in the UAE. These include:
- The application form
- A business plan
- The memorandum of association (MOA) and articles of association (AOA), notarized by the authority
- Passports of both the managers of the business and the sponsor (must be a UAE national)
- NOC from the UAE sponsor
- A bank reference letter for each individual shareholder
- Documentation pertaining to industry licenses that include the existing company profile, information pertaining to the investor, and a copy of the Feasibility study
Branch office set-up also requires:
- Board resolution of the company
- A copy of the Certificate of Incorporate, MOA, and AOA
- Bank statement for a three-month period related to the parent company
- Passport copy and original Power of Attorney
The Process of Company Formation
Business registration in the UAE is not unlike company formation in other major international jurisdictions, and ease of the process has been noted in many of the country’s global ease of doing business rankings. Most of the steps of company formation can be done in about 1 month, however final steps such as opening a bank account and post-registration set-up may take an additional few weeks.
To get started, here is an overview of the procedure for business registration, which may change based on company structure:
- If necessary, select a sponsor and collect necessary documentation for the application
- Proceed with the reservation of the company name with the Department of Economic Development and pay associated fees
- Draft the memorandum of association (MOA) and articles of association (AOA), ensuring that are notarized by the authority
- Choose real estate option for company presence within the jurisdiction
- Once the application is compiled, forward the application and supporting documents to the Department of Economic Development as well as the Companies Registry, with the Companies Registry processing the documents
- Open a bank account
- Receive the certificate of incorporation by the Companies Registry
- Select and apply for the appropriate business license
- Apply for investor visa and IDA and VAT
Get Professional Assistance with Our Experts
The Aspen Trust Group has been committed to helping clients around the world find the global jurisdiction that matches their business vision. Our professionals can help you consider business registration in the UAE or other key international destinations and then put you on the path to successfully apply for the necessary registration requirements, find the right real estate, and assist with long-term financial solutions.
Contact our experts to discuss more options for business registration in the UAE and let us assist you in thriving in the global market.
