{"id":1997,"date":"2022-04-11T10:39:02","date_gmt":"2022-04-11T10:39:02","guid":{"rendered":"https:\/\/aspentrust.com\/?p=1997"},"modified":"2023-01-04T15:49:48","modified_gmt":"2023-01-04T15:49:48","slug":"what-to-know-about-business-registration-in-the-uae","status":"publish","type":"post","link":"https:\/\/aspentrust.com\/what-to-know-about-business-registration-in-the-uae\/","title":{"rendered":"What to Know About Business Registration in the UAE"},"content":{"rendered":"\n

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.<\/p>\n\n\n\n

The Aspen Trust Group<\/a> 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.<\/p>\n\n\n\n

UAE\u2019s Business Climate<\/h2>\n\n\n\n

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<\/a> ranked the UAE as No. 1 regional location for ease of doing business and No. 16 internationally. The Global Entrepreneurship Monitor (GEM-NECI)<\/a> awarded the jurisdiction 1st<\/sup> regionally and 4th<\/sup> 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<\/a> and improved its ranking among international competitors (33rd<\/sup>).<\/p>\n\n\n\n

International Connectivity<\/em><\/p>\n\n\n\n

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.<\/p>\n\n\n\n

Tax Incentives<\/em><\/p>\n\n\n\n

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<\/a> in recent years.<\/p>\n\n\n\n

Moreover, opting for business registration in the UAE comes with considerable tax benefits<\/a> 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.<\/p>\n\n\n\n

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<\/a>. 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%.<\/p>\n\n\n\n

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Healthy Business Environment<\/em><\/p>\n\n\n\n

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<\/a> aim to continue to foster the development of the business environment.<\/p>\n\n\n\n

Business Registration in the UAE Structure Options<\/h2>\n\n\n\n

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.<\/p>\n\n\n\n

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.<\/p>\n\n\n\n

There are several structures available for business registration in the UAE, which include the following:<\/p>\n\n\n\n