How to start a business in Dubai? Thousands of people are migrating to the UAE every year. Be it because many people want to live and work in this fabulous country, where others spend their vacation or because the want to start doing business here and use the tax advantages of Dubai.
Dubai is a city of superlatives and offers a priceless advantage for companies and individuals: 100% tax exemption - in Dubai there are no taxes, neither corporate tax for companies nor income tax for individuals. The only exception is the VAT, which is only 5% and for companies, of course, only a pass through component.
It is not mandatory to live in the UAE when you own a company in Dubai. A Residence Visa in most cases is required but it is not necessary to live in the UAE as there is no reporting obligation. In order not to have the Residence Visa canceled one must travel to the UAE every 6 months, thats all.
The first step in opening a firm in Dubai is to decide which company form is the right one? Basically, one differentiates between three types of companies, each of which offers different possibilities but is also subject to different regulations.
Mr. Alcott owns several companies in London and would like to found a holding company in Dubai for these companies. He does not plan to do business with companies in Dubai or the other Emirates and does not want to relocate to Dubai.
Company Form: Freezone with Zero Visa
Mrs. Butterfield runs an online agency and exclusively deals with clients in Germany . Since she can carry out her work from anywhere, she wants to relocate her company and her place of residence to Dubai, but does not plan to have customers in the UAE.
Company Form: Freezone with 1 visa
Mr. and Mrs. Smith work in the textile industry. They are now planning to set up a business in Dubai to sell their products there directly to customers within the United Arab Emirates. For this purpose, they also want to move with the entire family to Dubai and live there.
Company Form: Mainland LLC
This form of company is currently still offered by many agencies. Since it is practically impossible to obtain a bank account for an offshore company, this form of company can actually be ruled out from the outset.
If you nevertheless decide on this form of company, please note the following:
- No residence visa authorization hence no corporate bank account
- No business relationships with companies within the UAE
A Freezone is perfect for individuals or existing companies that want to take advantage of the tax advantages of Dubai, but do not plan to have any business relationships within the UAE.
Freezone companies offer many advantages:
There are over 27 freezones in Dubai for foreigners to chose from. To determine which Freezone is the right one depends on the field of activity you are planning and your budget.
The LLC is comparable to any LLC worldwide. The company consists of at least one or more shareholders. These partners can be both private persons or foreign companies and an authorized signatory General Manager or director is required.
Features of a LLC company in Dubai:
In 2018, there were some profound changes. Until then, each company needed a so-called Local Sponsor, a local business partner. In August 2018, these provisions were relaxed and the Local Partner is only needed for certain industries and areas of activity.
The sectors that still require a local sponsor include the oil and gas sector, roads and air transport, postal and telecommunications, banking and finance, fishing and some other areas of activity, especially in the medical field.
A list for which industries the Local Sponsor is no longer needed, is currently not available. The release of this list was announced by the government for the first quarter of 2019.
For this reason, we have to clarify the requirements for each company individually, from case to case.