DOING BUSINESS IN DUBAI IN 2022
For over a decade, Bejarano ADF Consultants Group PLC has been efficiently and effectively assisting our Clients with i) company registration in Dubai (UAE); ii) business/trade licensing; iii) how a UAE national sponsor will help their work; iv) Dubai banking solutions; v) visa options and staff recruitment strategies and vi) office space solutions.
| Summary | Trading LLC | Professional services LLC | Fast solution LLC | Offshore LLC | Free zone LLC | LLP | Representative office | Branch office |
|---|---|---|---|---|---|---|---|---|
| Specifically | Dubai LLC | Dubai services LLC | Dubai nominee LLC | Jebel Ali Offshore | DMCC Free zone | Dubai LLP | Dubai RO | Dubai Branch office |
| Best use of company? | Trading | Professional services | Close a customer deal now | International trading | Global trading | Professional services | Marketing & research | Specific project |
| Our Client needs to travel to this country for company set up? | No | No | No | No | No | No | Yes | No |
| How soon can you sales invoice UAE customers? | 2 months | 2 months | 3 weeks | Cannot trade locally | 2 months | 6 weeks | 2 months | 3 months |
| How soon can you sales invoice global customers? | 2 months | 2 months | 3 weeks | 2 weeks | 2 months | 6 weeks | 2 months | 3 months |
| How soon can you sign legal contracts in Dubai? | 2 months | 2 months | 3 weeks | Cannot | 2 months | 6 weeks | 2 months | 2 months |
| How soon can you hire staff in Dubai? | 2 months | 2 months | 3 weeks | Cannot hire locally | 2 months | 6 weeks | 2 months | 2 months |
| Can be wholly foreign owned? | No | Yes | Yes | Yes | Yes | No | Yes | Yes |
| Resident director/partner/manager/agent required? | Yes | Yes | Yes | No | No | Yes | Yes | Yes |
| Minimum paid up share capital? | US$1 | US$1 | US$1 | US$1 | US$14,000 | US$1 | US$1 | US$1 |
| Can bid for Government contracts? | Yes | Yes | Yes | No | No | Yes | No | Yes |
| Corporate bank account location? | Emirates NBD | ADIB | Noor Bank | Emirates NBD | Noor Bank | Mashreq bank | ADIB | Emirates Islamic |
| Can secure trade finance? | Yes | Yes | Yes | Yes | Yes | Yes | No | Yes |
| Limited liability entity? | Yes | Yes | Yes | Yes | Yes | Yes | No | No |
| Average total engagement costs? | US$28,187 | US$22,980 | US$38,500 | US$18,300 | US$28,786 | US$21,980 | US$26,200 | US$35.450 |
| Average total engagement period? | 3 months | 3 months | 1 month | 2 months | 3 months | 3 months | 3 months | 4 months |
| Accounting and tax considerations | Dubai LLC | Dubai services LLC | Dubai nominee LLC | Jebel Ali Offshore | DMCC Free zone | Dubai LLP | Dubai RO | Dubai Branch office |
|---|---|---|---|---|---|---|---|---|
| Statutory corporate tax payable? | 0% | 0% | 0% | 0% | 0% | 0% | 0% | 0% |
| Group HQ tax incentives? | Yes | Yes | Yes | No | Yes | Yes | No | No |
| Must appoint an auditor? | Yes | Yes | Yes | No | Yes | Yes | No | No |
| Access to double taxation treaties? | Yes | Yes | Yes | No | Yes | Yes | No | Yes |
| This entity enjoys Government incentives? | Yes | Yes | Yes | No | Yes | Yes | No | Yes |
| GST/VAT payable on sales to local customers? | 5% | 5% | 5% | N/A | 5% | 5% | 5% | 5% |
| Must file an quarterly tax return? | Yes | Yes | Yes | N/A | Yes | Yes | Yes | Yes |
| Must file annual financial statements? | Yes | Yes | Yes | No | Yes | Yes | Yes | Yes |
| Company Registration | Dubai LLC | Dubai services LLC | Dubai nominee LLC | Jebel Ali Offshore | DMCC Free zone | Dubai LLP | Dubai RO | Dubai Branch office |
| Resident director/partner/manager/agent required? | Yes | Yes | Yes | No | No | Yes | Yes | Yes |
| Minimum number of shareholders/partners? | 2 | 1 | 1 | 1 | 1 | 2 | parent company | parent company |
| Maximum shareholding for foreigners? | 49% | 100% | 100% | 100% | 100% | 99% | 100% | 100% |
| Minimum number of directors/managers? | 1 | 1 | 1 | 2 | 1 | 1 | 1 | 1 |
| Minimum statutory paid up share capital? | US$1 | US$1 | US$1 | US$1 | US$14,000 | US$1 | US$1 | US$1 |
| Security deposit to be kept with Government? | No | No | No | No | No | No | No | US$13,650 |
| Must sign an office lease agreement? | Yes | Yes | Yes | No | Yes | No | Yes | Yes |
| Shareholders and directors documents to be translated? | Yes | Yes | Yes | No | No | No | Yes | Yes |
| Shareholders and directors documents to be attested? | Yes | Yes | Yes | No | Yes | Yes | Yes | Yes |
| The entity will likely be regulated by? | DED | DED | DED | JAFZA | DMCC | DED | DED | DED and MoE |
| Shelf companies available? | Yes | Yes | Yes | Yes | Yes | Yes | No | No |
| Time to incorporate a new entity? | 3 months | 3 months | 1 month | 2 months | 3 months | 3 months | 3 months | 3 months |
| Can have preference shareholders? | Yes | Yes | Yes | Yes | Yes | Yes | No | No |
| Business Considerations | Dubai LLC | Dubai services LLC | Dubai nominee LLC | Jebel Ali Offshore | DMCC Free zone | Dubai LLP | Dubai RO | Dubai Branch office |
| Sponsorship by a local citizen required? | Yes | No | No | No | No | No | No | No |
| Foreign director needs a residence visa? | No | No | No | Yes | No | No | No | No |
| Can invoice customers in your company name? | Yes | Yes | Yes | Yes | Yes | Yes | No | Yes |
| Maximum number of staff allowed? | No | No | No | No | No | No | 5 | No |
| Can secure residence visa for business owner? | Yes | Yes | Yes | No | Yes | Yes | Yes | Yes |
| Good entity for trademark registration? | Yes | No | Yes | No | Yes | Yes | No | Yes |
| Can secure an import and export license? | Yes | No | Yes | No | Yes | Yes | No | No |
| Company can hire local staff? | Yes | Yes | Yes | No | Yes | Yes | Yes | Yes |
| Corporate tax rate on annual net profits? | 0% |
| Legally tax exempt if properly structured? | Yes |
| How soon can you sign a lease agreement? | 1 month |
| Withholding tax on payments to shareholders? | No |
| Dividends received in UAE are legally tax exempt? | Yes |
| You need a local resident as bank signatory? | No |
| Temporary physical office solutions available? | Yes |
| Foreign director needs a tax number? | No |
| Can easily convert to a PLC? | No |
| Public register of shareholders and directors? | No |
| Government approval required for foreign owners? | No |
| Government grants available? | No |
| Restrictions on nature of business activities | No |
| Expatriate to local staff ratio? | No |
| Company can rent local office space? | Yes |
| Other useful information | |
| This country has signed free trade agreements? | Yes |
| This country is a member of WIPO/TRIPS? | Yes |
| This country is a member of the ICSID? | Yes |
| Average customs duties suffered? | 5% |
| Government foreign investment approval required? | No |
| Average monthly office rental? (US$ per sq m) | US$ 150 |
| Minimum statutory annual salary? | N/A |
| Average monthly US$ salary for skilled employees? | US$2,595 |
| AED deposit interest rate? (1 year average) | 1% |
| US$ deposit interest rate? (1 year average) | 1% |
| Overseas remittance currency controls? | No |
| Banking considerations | |
| Multi-currency bank accounts available? | Yes |
| Corporate visa debit cards available? | Yes |
| Quality of e-banking platform? | Good |
| Crowd funding available in this country? | Yes |
Dubai business setup summary
- Our Clients see Dubai as the gateway to the massive Middle Eastern and African markets;
- The most popular business vehicles for foreign company registration in Dubai include the LLC, the free zone company and the branch office;
- In Dubai, only a free zone company can be wholly foreign owned. An LLC must be 51% owned by a local shareholder;
- A Dubai LLC can trade within the UAE. However, a Dubai free zone company may only transact within the UAE through resident agents;
- Dubai Branch cannot be engaged in manufacturing, Import and export of products to/from UAE;
- There are no corporate income taxes or withholding taxes in Dubai;
- From January 2018 Federal Tax Authority implemented a Value Added Tax of 5% and applies on a broad range of good and services;
- All companies registered in the UAE must i) create and maintain a register of their ultimate beneficial ownership (UBO) and ii) submit UBO data to the relevant registrar or licensing authority.
Press the link headings below to read detailed, relevant, up to date information.
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Benefits and problems
Benefits of Dubai company registration
Dubai is the most successful and the most cosmopolitan city in the Middle East as it combines elements of both East and West. Therefore, registering a business in Dubai has several advantages which are mentioned below:
- A Dubai company offers our Clients several taxation benefits including:
- A Dubai company faces no company tax, personal tax, withholding taxes, import/export taxes and capital gains tax, payroll tax. Thus, our Clients can legally enhance their profits through a Dubai company while minimizing their tax liabilities;
- Our Clients may also use Dubai’s offshore business solutions to register a legally tax-exempt company to extract funds in the form of dividends, management fees, and royalties from regional subsidiaries;
- Resident businesses also benefit from the city’s 66 international double tax treaties which help reduce the withholding tax on foreign remittances;
- Our Clients may also use their Dubai company to offer financial services in the region because:
- Dubai is the undisputed financial capital of the MEA region. The city’s financial centre (DIFC) is used by several bank and non-bank financial institutions, insurance firms and asset management firms;
- Dubai is the 1st jurisdiction in the Middle East to issue tailored regulations for crowdfunding. As a result, Dubai registered businesses will now have access to peer-to-peer funding platforms to raise capital for business expansion;
- Also, by setting up a Dubai business, our Clients can get easy access to the local currency as there are no exchange controls in the country.
- Clients can now register a 100% foreign-owned Dubai mainland LLC, without a local partner or registered agent, for all trading and industrial activities;
- UAE has a significant presence of enormous international banks. A total of 46 domestic and foreign banks are operating in the country;
- UAE maintains protection of intellectual property rights; trademarks and it has enforced laws against piracy;
- The UAE provides the most progressive and developed infrastructural facilities in all sectors;
- The minimum capital requirement for setting up an LLC was removed in 2009. It has drastically reduced the costs of setting up a business and attracted more foreign investment;
- Expanding to Dubai mainland and free zones allows businesses to work anywhere in the UAE without setting up local registered branches, which means higher market presence with lower costs. It also increases the scope of the business, especially if it is based in the mainland, as these companies can work with government bodies, unlike free zone companies;
- The United Arab Emirates is ranked 11 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings;
- According to the latest Cost of Living Index data by Numbeo, Dubai is rated as the 217th costliest city in the world in 2019 compared to 210th in the previous year. It became more affordable now, thanks to persistent decline in rents, reduced government fees and fines;
- The UAE cabinet has begun the implementation of 100% foreign ownership and 10-year residency visas for expats, investors and business people. Investors will be eligible for a five or 10-year residency visa depending on the size of their investment in the UAE.
- There is no public disclosure of the company’s shareholders and directors in UAE. Therefore, international entrepreneurs can enjoy full confidentiality;
- Recently, the Dubai government has approved additional 122 economic activities across 13 sectors to be eligible for up to 100% foreign ownership such as renewable energy, space, agriculture and manufacturing industry;
- There is a great opportunity for those Free Zone companies who wants to retain a 100% foreign ownership but wants to have an access to mainland clients, to establish a Branch with the Dubai Department of Economic Development (“DED”) through his free zone entity. However, there are still some restrictions on the activities that the branch of Free Zone can conduct such as trading, commercial agencies, labor supply services or restaurants;
- Our client may benefit from large numbers of multinational professionals from around the globe available in the country. The UAE government is now increasingly training the local Emirati population to be employed;
- Dubai Free Zone Council has implemented new regulations for free zones to boost foreign direct investment in the e-commerce sector, which shall create attractive environment for major global e-commerce companies;
- In 2020, Dubai Multi Commodities Centre (DMCC) was awarded the Global Free Zone of the Year title from Financial Times’ fDi Magazine for a record sixth consecutive year.
Problems with Dubai company registration
- Our Clients must be aware of the business challenges of working in Dubai including:
- Due to openness of the Dubai economy, there is an overdependence on foreign trade. As a result, Dubai economy is likely to be negatively affected in case of a global recession;
- It can be expensive to carry out company registration in Dubai (UAE) due to i) nominee shareholder costs ii) multiple government fees iii) translation, notarization and legalization costs and iv) mandatory office space rentals;
- Except Free Zone companies in UAE, all other types of companies will require the appointment of an Emirati; either in the form of a 51% local shareholder or a UAE national service agent, which makes company set up expensive;
- A branch of foreign company is required to deposit a bank guarantee of AED50,000 (USD13,650) during branch registration. This deposit cannot be used for business operations and will remain blocked into your UAE corporate bank account until entity de-registration;
- A branch in UAE is likely to pay USD275 in fines to the Ministry of Economy during branch registration. Therefore, our Client should budget for this additional fee payment in advance;
- Most company visas and trade licenses in Dubai are sponsored by UAE nationals, giving the latter indirect control over the Dubai business;
- It can be difficult for foreigners to operate in Dubai as the business practices and laws still favour UAE nationals in cases of business disputes. Furthermore, the government tenders have also favoured UAE nationals and Dubai company with UAE nationals;
- A business in Dubai will suffer as the city is uniquely susceptible to a terrorist attack. A terrorist attack would have a devastating impact i) on the property prices ii) on the economy iii) on foreign investment iv) on the personal safety enjoyed by residents and tourists and v) business confidence.
- Due to the inefficiency of the local authorities and banks, it is usual our Clients experience delays during company registration and bank account opening processes;
- From January 2018 every company in UAE must register for Value Added Tax. UAE imposes VAT on tax-registered businesses at a rate of 5 per cent on a taxable supply of goods or services;
- Setting up in a free zone legally restricts it from trading with companies registered in mainland UAE, unless your business is prepared to employ a local agent or secures a no objection certificate (NOC) from the DED;
- The telecommunications and oil industries are closed to foreign investment as they are monopolized by the government;
- Dubai gas and oil companies are subject to a 55% tax rate applied to the company’s profits. Branches of foreign banks are required to pay a 20% tax rate on the taxable income;
- Post-dated cheques are commonly used in Dubai, Abu Dhabi, and UAE for bill payments. There is a high rate of bounced cheques in the country, which can negatively impact business. According to the Central Bank report, there were 546,000 bounced cheques worth AED28.9 billion in 2018;
- In 2019 European Union included UAE in tax heaven blacklisted jurisdictions;
- Effective 1 January 2019, locally-incorporated Dubai entities, foreign entities registered in Dubai and limited partnerships engaging in i) holding company activities ii) banking business iii) distribution and service centre business iv) finance and leasing v) fund management vi) headquarters business vii) insurance viii) intellectual property holding and ix) shipping are required to employ local staff and lease a physical office. For more information on UAE economic substance requirements, click here;
- In 2020, the UAE introduced new regulations requiring all UAE companies to maintain and submit registers of their i) Ultimate Beneficial Owners (UBOs) or Real Beneficiaries ii) shareholders and iii) directors. Fortunately, information contained within company registers is kept confidential by the authorities.
- A Dubai company offers our Clients several taxation benefits including:
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Best uses for a Dubai company
- A Dubai company can be used as the gateway to the Middle East and Africa because:
- Dubai is the historic trading hub in the Middle East and Africa (MEA). Due to its strategic location and well developed shipping sector, the city currently hosts several international trading companies and freight and shipping companies;
- Dubai boasts highly developed logistics and transportation infrastructure, making the city a perfect choice for product distribution. Furthermore, the city allows duty free exports to 17 Middle Eastern countries which encourages foreign investors to opt for offshore company formation in Dubai;
- The Dubai Free Zones are specialized in various industries ranging from logistics to media, power and information technology. Moreover, the world-class infrastructural facilities along with high-quality business premises makes conducting business in Dubai an attractive venture for investors;
- Dubai is the most business-friendly city in the MEA with simple import/export policies and no trade barriers. Several international banking firms and non-bank financial institutions operate here, making the city an excellent source for trade finance facilities.
- A Dubai company is used by several multi-national Clients as headquarters for the MEA business because:
- Amongst global cities, Dubai was the 7th largest recipient of Foreign Direct Investment in the world in 2016. This is due to the fact, the city i) is viewed by Clients as business friendly; and ii) enjoys a free market environment;
- Most cities in the MEA region do not view foreign companies positively. By contrast, a company registered in Dubai will benefit from the most liberal business laws in the region, while giving it access to Middle East, African and Asian markets;
- Dubai is also the most liveable city in the MEA due to i) presence of popular global brands and ii) availability of well-developed infrastructure for both residential accommodation, studies, work, entertainment and tourism. Furthermore, the city is a paradise for high net worth foreign entrepreneurs, providing highly luxurious life for entrepreneurs and their families;
- A Dubai business also allows access to several international entrepreneurs as 80% of the city’s population is foreigners. This forms the perfect ingredients for creativity and exchange of skills across industries and cultures. The East and West blend quite happily in the city;
- Consequently, the number of active businesses in Dubai stand at 148,842, with approximately 20,000 new licenses issued in 2017. Additionally, around 130,000 businesses were renewed in 2017.
- A Dubai company can be used as the gateway to the Middle East and Africa because:
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