Business Immigration: How to Transfer Business to the UAE

Today, relocating businesses to the UAE stands out as one of the effective ways to move capital abroad, ease tax burdens, and ensure security amidst increasing sanctions. While the situation is changing, the UAE remains a jurisdiction that maintains a neutral status and does not rush to change rules for foreign investors.

Basic rules of business relocation

The United Arab Emirates (UAE) is interested in increasing the number of expatriates because almost all investment projects are carried out by foreigners. In the case of establishing a new company in the UAE or relocating an existing one, you will enjoy the same rights and freedoms as local residents, be able to obtain a visa (equivalent to a residence permit, legalizing residence in the country), and earn income in a comfortable business jurisdiction.

Despite the unstable political and economic situation worldwide, the basic rules of business relocation remain unchanged. Russia exchanges financial information with more than 67 countries and territories - these agreements continue to be in effect.

In addition, the economic feasibility of relocating a business remains significant for all authorities. UAE government agencies should not suspect that relocation is being carried out to reduce the tax burden or due to the negative impact of sanctions.

Those planning to register a business in the UAE should be prepared to learn how to do business anew. In the Emirates, there are peculiarities and informal laws that have been formed over the years. You will have to delve into the business environment, which operates by different rules, so be patient.

Pros and cons for business in the UAE

The UAE government's strategy is aimed at moving away from oil dependence and diversifying the economy. To achieve this, the government attracts investments, creates favorable conditions for doing business, and provides foreign entrepreneurs with equal rights and protection as UAE citizens.

What opportunities does relocating a company to Dubai offer:

• freedom of action and movement;
• transparency of business requirements;
• convenience of working with growing African and Asian markets;
• confidentiality of personal data, business information, and income;
• economic and political stability (neutrality is part of the government's strategy);
• security guaranteed by the country's laws and international agreements;
• the ability to conduct commercial and investment activities worldwide;

an efficient visa system - easy legalization of stay in the UAE for business owners, foreign workers, and their family members.

Although relocating to the UAE allows Russian businesses to protect themselves from many risks, entrepreneurs may face challenges.

Disadvantages of business immigration to the United Arab Emirates:

• intolerance of legislation towards "gray" and "black" schemes;
• lack of a single-window system in some instances, bureaucracy;
• multi-level customer verification system when opening a bank account;
• heterogeneity of legislation. In Dubai, Sharjah, Abu Dhabi, and other emirates, laws may differ, and each free zone (FTZ) also has its own rules.
  

Types of companies available for foreigners to open in the UAE

The choice of company type should be based on the geography of clients and the sphere of activity. For example, to transfer a business that deals only with international clients, you can register in a Free Trade Zone (FTZ), while if you plan to work within the Emirates with both local and international partners, you need to open a mainland company.

You can transfer an existing business to the UAE, establish a new company, or register an offshore firm to obtain a legal address while continuing operations where it is convenient for you.

The main information about the types of companies that can be opened in the UAE is provided in the table.

If you are relocating your business to the UAE to operate in the domestic market, have the ability to receive government contracts, and apply for bank loans, register a mainland company. For this, you will need to find a nominal local director.

For those planning to conduct international business activities, it is necessary to rent premises in the UAE (office, warehouses, manufacturing facilities), utilize local infrastructure (port, airport), and hire a workforce. All of this can be done by registering in one of the free zones.

When choosing a free zone, consider specialization, minimum share capital requirements, and business conduct rules. For example, in Dubai Airport Free Zone, annual audit reports are required, while this requirement is absent in Ajman Media City.

If conducting activities within the territory of the United Arab Emirates is not of interest to you, and the goal of relocating your business is to reduce the tax burden and ensure capital security, you should register an offshore company.

Regarding ownership structure, you can establish:

1. Holding companies;
2. Sole proprietorships;
3. Joint partnerships (requiring a local partner);
4. Limited Liability Companies (LLCs) – the most popular legal form;
5. Public Joint Stock Companies (PJSCs) (suitable for insurance, investment companies, foreign bank branches);
6. Branches of local and foreign companies, as well as businesses registered in free zones.
   

If you are registering in a free zone, gather the required documents and submit them to the administration of the chosen free zone. Often, this can be done online.

Company registration can be completed within two to four weeks. The longest procedures are in Abu Dhabi and Dubai. In other emirates, registration takes three to five working days. It's possible to open a company remotely (with the help of a representative acting under power of attorney).

Tax System in the UAE

Individuals in Dubai and other emirates do not pay income tax. Companies are also exempt from most taxes. However, starting from the 2023 fiscal year, legal entities must pay a corporate income tax rate of 9% (previously 0%) if their annual profit exceeds 375,000 dirhams. The oil and gas sector companies are subject to a corporate tax rate of 55%, while branches of foreign credit and financial institutions are taxed at 20%.

The tax system in the UAE is very favorable to foreign capital. VAT for companies, including those registered by foreign entrepreneurs, is 5%. Some goods are additionally subject to excise tax:

• 100% - beverages containing stimulating components, tobacco products, electronic vaporizers, vape devices, hookahs;
• 50% - sweetened carbonated drinks and any products with sweeteners.

In free zones, the tax burden is minimal. Businesses are exempt from corporate tax for a period ranging from 15 to 50 years. There is no need to pay VAT, customs duties, and profits can be freely repatriated from accounts.

Transferring your business to Dubai is fully justified from an economic point of view, as the UAE is a comfortable and safe jurisdiction. However, carefully study the legislation and consider local specifics to avoid making mistakes that could cost you potential profits.

To ensure a smooth business relocation process to Dubai, seek assistance from The Level Consulting. Our experts will offer you the most convenient and secure way of business immigration to the UAE, based on your needs and capabilities. Call us right now to get advice on transferring assets abroad.