Advantages for Business When Registering Companies in the UAE

In the UAE, there is a soft and comfortable regulatory environment, an attractive tax system, and many opportunities – these are far from the only advantages for business in Dubai. An entrepreneur can establish a company with 100% ownership (since 2021, there is no longer a need to hire a formal UAE citizen director) and benefit from a wide range of economic incentives. Such advantages for business in Dubai predetermine the active development of firms operating in various sectors of the economy.

Attractive Tax System

In the UAE, most taxes are nonexistent. Corporate bank account withdrawals are virtually unmonitored, and there are no strict accounting requirements (though maintaining accounting documents is necessary). Residency in the UAE requires only three months of living there. The shortest duration to obtain this status is only two months in Cyprus.

Overall corporate income tax rate is 10%

In the UAE, there is only one tax for corporations – VAT (5%). Profit tax is absent for all companies except foreign banks, insurers, and the oil and gas sector. For companies operating in insurance and finance, a 20% tax is levied, while companies in the oil refining and gas sector face rates ranging from 55% to 85%.

Starting from June 1, 2023, the rate for medium and large business representatives will be determined by annual profit: up to AED 375,000 – 0%; above this amount – 9%. Small enterprises and firms registered in free economic zones (FEZs) are exempt from tax.

Benefits and Features for Specific Types of Activities

The new tax regime offers certain benefits for legal entities:

Amounts paid as corporate tax abroad are credited against the tax in the UAE.
Groups of companies pay tax to the budget only once, not for each participant.
Part of the funds paid to the emirate's budget can be refunded as a tax deduction.

Favorable conditions are offered in FEZs. Each specializes in a certain sector of the economy, so choosing the location for business registration depends on the leading area of activity. It is essential to consider the size of the authorized capital and the need for foreign trade.

Fast and Easy Business Registration

To start a business in the UAE, you need to:

Obtain a business activity permit. Obtaining a license takes up to three weeks.
Purchase or lease commercial real estate. It can be a physical office or flexi-desk.
Prepare a document package. You will need articles of association and a memorandum, a license, a copy of the lease agreement, etc. You can specify the exact list of required documents at the emirate's Department of Economic Development or on the website of the chosen FEZ.
Obtain a resident visa. To obtain it, you need to register a company. This takes 2-3 weeks.
Open a bank account. Few banks work with foreigners. Resolving the account issue takes about a month.

Convenient Business Infrastructure

In the UAE, many stages of company registration and management are simplified. For example, in FEZs, you can purchase a flexi-desk – a postal address for correspondence. This is cheaper than renting an office. However, it is difficult to open a corporate account for a company with a virtual address. Therefore, entrepreneurs often choose to rent a small commercial space.

It is possible to fully remotely establish a company, but it is quite challenging, and some FEZs cannot do it if you have never been to the UAE before. Also, to obtain an "Emirates ID" document, you need to fly in for a medical test and fingerprinting. To open a corporate bank account, you also need to have an Emirates ID and a lease agreement.

Support for Company Registration and Management

Supporting agents assist in the registration and management of companies in the UAE according to your needs. You only need to provide correct data and monitor the registration process. Contact The Level Consulting for consultation to clarify all the nuances.

Favorable Geographic Location

The advantageous geographical position between Asia, Africa, and Europe opens up prospects for business. Abu Dhabi and Dubai are the largest logistics hubs in the Gulf countries. The UAE has well-developed air connections with major airports worldwide. Maritime ports are equipped with modern technology, with some of them included in the free economic zones (FEZs).

Attractiveness for Companies with International Commercial Links

A significant advantage for business in the UAE is the developed logistical infrastructure and transportation accessibility. Innovative startups and multinational companies seek to capitalize on Dubai and Abu Dhabi's geographical location as the most popular emirates for business registration and relocation to access markets in Europe, the Middle East, Africa, and South Asia.

Many Free Economic Zones

Foreigners can conduct business in the UAE in FEZs or on the mainland. Over 50 special areas (with more than 20 concentrated in Dubai) are autonomous and offer entrepreneurs their own corporate regulation.

Previously, for the registration of mainland enterprises in certain economic sectors, it was necessary for 51% of the business to be owned by a UAE citizen. In 2021, according to Federal Decree-Law No. 26/2020, this requirement was abolished. Companies can now operate throughout the country, not just in free zones. Moreover, it is easier to open a bank account for mainland businesses.

Business Incentives in Free Economic Zones

Each free zone specializes in specific types of activities:

Dubai Multi Commodities Centre (DMCC) – a major trading hub for commodities.
Sharjah International Airport Free Zone (SAIF) offers favorable conditions for companies trading in gold and jewelry.
Dubai Healthcare City (DHCC) – a free zone offering special incentives to healthcare organizations.
Dubai Silicon Oasis (DSO) – a promising location for IT startups.
Hamriyah Free Zone (HFTZ), Umm Al Quwain Free Zone (UAQFZ), or Ras Al Khaimah Economic Zone (RAKEZ) are suitable for industrial enterprises.

Available incentives for foreign businesses in FEZs include:

Reduced tax burden
Fixed exchange rate
Access to modern infrastructure
No mandatory lease requirement
Reduced customs clearance costs, etc.

FEZs also provide other privileges to specific market participants. For example, in free zones with direct access to ports, businessmen can store goods in warehouses without going through customs.

Diverse and Rich Business Environment

The UAE is a major international center for business activity. The country offers the most favorable climate for entrepreneurial activities: most taxes are absent, legislation is transparent, demand for basic goods and services steadily grows, etc. Advantages of opening a business in the United Arab Emirates include operational efficiency, convenience, and a deep penetration of modern technologies into all processes.

Attractiveness for Establishing Business Connections and Partnerships

The UAE is a convenient starting point for entering the markets of major developing countries and establishing partnerships, as well as the only jurisdiction for optimizing international business. However, the multiculturalism of various market sectors in the UAE may create communication challenges. It is necessary to consider the peculiarities of the historical cultural background, which remains Arab, and the fact that the motivations and reasons for decision-making among representatives of different cultures vary greatly.

In the UAE, there are many representatives of the largest Russian business communities who can assist in scaling and managing a company. Russian-speaking entrepreneurs and investors are members of the RBC Dubai, TGIT, Gingo communities. Association members participate in networking events, receive priority access to investment venture deals from trusted organizers, can act as speakers at specialized events, etc.

Simple Entry and Exit Regime

Russian citizens can stay in the UAE visa-free for 90 days within every 180 days. Only a passport and medical insurance are required for entry. With a resident visa, you can stay in Dubai for the entire duration of its validity.

There is direct air communication between Russia and the UAE. Russian and foreign airlines fly from airports in Moscow, St. Petersburg, Novosibirsk, Yekaterinburg, and other cities in Russia to Dubai, Sharjah, or Abu Dhabi.

Convenience in Business Management and Establishing Business Connections

If you can provide a passport with a UAE entry stamp, you can register a company remotely. However, you still need to come to the country to open a bank account. You can subsequently manage your business from Russia. For convenience, it is advisable to appoint an assistant who will be permanently present in the UAE and able to act on your behalf.

The UAE is a very popular destination for creating and relocating existing businesses. Such business advantages in the UAE as reduced financial burden, incentives in FEZs, ease of establishing partnerships with foreign partners, and the opportunity to access markets of developed countries attract entrepreneurs from Russia, but the market is still not oversaturated.