Available Options For Corporate Set Up – United Arab Emirates

27 Aug '21

Available Options For Corporate Set Up – United Arab Emirates

Posted in

Posted by Shoeb Saher

The United Arab Emirates has been able to grasp the attention of the entire world due to the opportunities and flexible structures it provides to businesses in addition to a comprehensive legal framework. The large number of free zones operating in Dubai and throughout the UAE with properly structured laws allows investors to pick and choose the most beneficial form of setup. By now, UAE Free Zones are home to around 70,000 companies.

UAE Free Zones are fully equipped and ready for business with all the facilities, communicational infrastructure and facilities made available for investors. Investors are advised to take proper legal advice from a qualified lawyer or law firm in Dubai.

UAE Structuring

	Regular Limited Liability Company	Free Zone Limited Liability Company	International Business Company (IBC) / Offshore
In a nutshell	The most common form of corporate vehicle for equity participation by foreign investors. A recent policy change and subsequent amendment in the legislations has done away with a previously mandatory involvement of a local partner except for few regulated activity like real estate.	Corporate structure with physical presence allowing 100% foreign ownership. Subject to some restrictions in the geographical scope of the activity.	Flexible dematerialized corporate vehicle designed on the BVI model, but benefiting from UAE’s substance and credibility.
Activity	Any lawful activity as listed in the Standard Classification of Economic Activities issued by the Authorities. Exception: some activities –i.e. mostly services activities – cannot be undertaken in a limited liability form. Ability to conduct any authorized commercial activity in the UAE and abroad.	Any lawful activity as allowed by the Zone. No restriction to conduct services activities in a limited liability form. Ability to conduct any authorized commercial activity in the Zone and abroad. Companies deploying trading activities have to rely on a local agent duly licensed in the respective Emirate for their operations in the UAE. The provision of services in the UAE is common but constitutes a grey area practice.	Any lawful activity as allowed by the Registrar. Ability to notably: conduct any authorized commercial activity abroad. holding company including assets (including real estate) abroad and in the UAE. operate a bank account abroad and in the UAE (recently it has become very difficult to open bank accounts of such companies in the UAE due to various factors). Inability to deploy a commercial activity in the UAE.
Primarily suitable for	trading in the UAE and abroad. commercial brokerage in the UAE and abroad. manufacturing/industrial activities for prime distribution in the UAE and other Middle East countries.	trading outside the UAE consultancy services head/regional office operation group structuring manufacturing/industrial activities for prime distribution in the UAE and larger Middle East countries.	trading outside the UAE consultancy services material assets holding (including real estate) abroad immaterial assets (e.g. IP) holding in the UAE and abroad group structuring head/regional office operation operating a bank account in the UAE and abroad
Advantages	not subject to corporate taxes in the UAE credibility in high profile trading operations ability to physically trade in the UAE and abroad stable environment white-listed jurisdiction ability to arrange local residence visas	not subject to corporate taxes in the UAE credibility in high profile trading operations stable environment white-listed jurisdiction ability to arrange local residence visas	not subject to corporate taxes in the UAE flexible legislation low annual fees stable jurisdiction white-listed jurisdiction
Disadvantages	accounts must be audited and filed yearly at the time of license renewal heavier constitution and operating requirements (as opposed to Free Zones) costly structuring option	accounts must be audited and filed yearly at the time of license renewal heavier administration requirements (as opposed to IBCs) higher constitution and maintenance costs as compared to an offshore entity have to rely on a duly licensed local agent for their operations in the UAE depending on the Free Zone; share capital to be paid up at constitution	relatively lower credibility in high profile trading operations difficulties to obtain banking facilities (e.g. trade finance, credit/debit cards) inability to arrange local residence visas cannot avail themselves of treaties’ benefits difficulty in opening bank accounts in the UAE

Statutory Considerations

Ownership	100% foreign ownership allowed	100% foreign ownership allowed	100% foreign ownership allowed
Minimum Number of Shareholders	1	1	1
Minimum Capital	No minimum capital. Depends upon the activity.	AED 10,000 – 1,000,000, depending from Zone to Zone	AED 1.00
Capital pay-up at Inception	Not required in principle	Depending from Zone to Zone	Not required
Nature of Shares	Registered	Registered	Registered
Directors: Minimum required Corporate director (s) Location	1 Not required At least one Director must be a UAE Resident	1-2, depending from Zone to Zone Not allowed Depending on the Free Zone	1 Allowed No restriction
Audited Accounts	Required. To be filed yearly at the time of license renewal	Required. To be filed yearly at the time of license renewal	Not required
Name	Prior approval required – some wording sensitive. Ends with “LLC”	Prior approval required – some wording sensitive. Ends with “FZE”, “FZC” or “FZ-LLC”	Prior approval required – some wording sensitive. Ends with “Ltd”
Audited Accounts	Required. To be filed yearly at the time of license renewal	Required. To be filed yearly at the time of license renewal	Not required
Time Frame for Incorporation	4 weeks upon receipt of full documentation	2-8 weeks upon receipt of full documentation, depending on the Zone	2-3 weeks upon receipt of full documentation
Language	Arabic/English	English	English
Legalization Process of PoA & Corporate Documents	Mandatory	Mandatory	Mandatory
Registered Office	Mandatory tenancy agreement on physical premises	Mandatory tenancy agreement on physical premises – smart office facility available in some Zones	c/o Registered Agent
Tax Status	Not subject to: Corporate tax Withholding tax	Total tax and duty exemption	Total tax and duty exemption
Double Tax Treaties, special treaties	Full benefits of DTTs; full benefits of special treaties	Full benefits of DTTs	No. Considered non-resident for tax purpose, IBCs cannot avail themselves of treaties’ benefits
Disclosure	Identity of shareholders and offices is publicly available	Accessibility to information will vary depending on each Zone’s practice	Information contained within the Registrar is not public. A Court Order or equivalents is necessary to obtain the identity of shareholders and officers.