Company Registration in the UAE: Key Stages

Published on

An increasing number of Russians prefer to open offshore companies in the UAE to minimize the tax burden on their businesses and explore new opportunities for successful development. The United Arab Emirates attract businessmen with a favorable tax regime, the possibility of conducting economic activities in Free Zones, or registering in offshore zones, which practically exempts them from paying taxes. Registration may take some time; however, it ultimately offers the opportunity to run a profitable business and minimize expenses.

Which companies can operate in the UAE?

In the Emirates, three types of commercial firms can operate:

  • Local businesses registered outside the free zones (referred to as mainland). Opening such firms allows for legal operation within the country and is a popular choice for offline businesses in the Emirates.
  • Free Zone companies registered in zones with free economic regimes. They can operate both within and outside the UAE.
  • Offshore companies. They are registered in the UAE but can only operate outside the country.

The main advantages of opening an offshore company in Dubai

The main advantages of offshore in the UAE include the ability to minimize taxation and fairly liberal legislation in the field of currency and financial control. There is an agreement between Russia and the UAE to avoid double taxation. Several key benefits can be listed for conducting business in the Emirates:

  • Complete absence of taxes on corporate profits, dividends received, individual incomes, and capital gains. There is no need to pay even VAT when conducting international trade.
  • No requirements for regular financial reporting. The company chooses independently how and to what extent to keep accounting records.
  • Ability to conduct business for foreigners. When registering in free zones and offshore, there are no restrictions for representatives of other states.
  • Complete confidentiality. Information about business owners is not disclosed, and there won't be constant attention from supervisory authorities.

Such conditions have made registration in Dubai attractive for organizations seeking to minimize tax expenses and contacts with government agencies.

Procedure for registering a company in Dubai

Registering an offshore commercial organization in Dubai includes the following steps:

  • Preparation for registration. This involves choosing a name according to requirements and gathering a standard set of documents. To open an offshore firm, articles of association, a memorandum of association, information about shareholders, and the authorized capital will be needed. For offshore in Dubai, the starting amount of authorized capital can be as little as 1 AED.
  • Submitting an online application on the chosen free economic zone's website with attached documents.
  • Obtaining a legal address. It will be necessary to register an office provided by a licensed agent.
  • Opening a bank account. The timeframe usually ranges from two weeks to two months – the bank will carefully verify the provided information.
  • Assignment of a unique registration number and obtaining a certificate confirming incorporation.

As a result, the new enterprise gains the opportunity to conduct legal activities within the country.

Main Types of Activities for Offshore Companies

When choosing the type of organization, it is important to consider the pros and cons of opening a company in the UAE. Offshore may not be suitable for those who want to work specifically in the Emirates, but it will be very convenient for those planning international trade. Such organizations can engage in exporting and importing goods worldwide without paying taxes on profits.

Within the Emirates, offshore holding companies can be established – organizations that do not engage in production themselves but own shares in other enterprises and control their activities. This form of operation is convenient for companies with several branches in different countries. Offshore registration can also be used for transportation companies for international shipping or for organizations engaged in activities not subject to restrictions.

Restrictions for Offshore Companies

In the Emirates, there are a number of restrictions on the activities of offshore organizations. Such companies are not allowed to open banks, engage in insurance activities, guardianship, or fiduciary management. Additionally, the company cannot engage in fiduciary financial investment. Any type of business cannot be conducted within the Emirates, so this registration option is not suitable for those who want to engage in production within the country.

If an offshore is registered in RAK ICC, such entity cannot own real estate in the Emirates. Requirements are not as strict when registering in Dubai: real estate can be chosen from a special list established by the government.

Is it possible to register a company in the UAE for a foreigner?

Legislation allows foreigners to register offshore companies, and such enterprises can be fully owned by foreign citizens. A similar rule applies to companies registered in free zones. If a local business is being established, at least 51% of the shares must be owned by citizens of the country.

Which companies pay taxes in the UAE and how much

Among the key pros and cons of companies in the UAE, it is necessary to note the features of local taxation. Offshore enterprises are exempt from paying any taxes, significantly reducing expenses. There are no restrictions on transferring funds to other countries, and there are no currency limits.

If a company is offshore, meaning it is registered in a free zone, it will not need to pay corporate tax or personal income tax. Legislation only provides for the payment of VAT at a rate of 5%. When conducting international trade, VAT is not required to be paid. An additional advantage is the absence of customs duties. Raw materials can be imported into the free economic zone, goods manufactured and resold without the need to pay duties.

Does registering a company in the UAE allow you to obtain a UAE visa?

Registering an offshore company in the Emirates does not grant the right to obtain a resident visa - this should be taken into account when planning your business. Opening an offshore company in a free economic zone allows you to obtain a resident visa for three years, which can be extended subsequently. By investing a significant amount in a local business, you can obtain a visa valid for ten years. Along with the main applicant, family members such as spouse and unmarried children can also be eligible for the visa.

If you want to open a company in Dubai, specialists from The Level Consulting can help you understand the pros and cons of such a decision. You can receive detailed consultations on the peculiarities of conducting commercial activities in the Emirates, opening bank accounts, and choosing a suitable zone for registration. We will assist in resolving all immigration matters, preparing the business for a successful launch, and rapid development. Order a consultation online or give us a call.

Order a consultation

Learn about the benefits and details of starting or relocating a business in the UAE