Incorporating companies in the UAE

I thought this might be interesting and useful to all of you business-minded individuals here.

1. REGISTRATION IN DUBAI: There are a number of different ways of creating an establishment in Dubai, depending upon the function to be carried out. A Limited Liability Company is the most common way of registering in Dubai and is recommended where the purpose of the entity is to make sales within the region. It should be noted, however, that 100% foreign ownership of such an entity is not permitted. A professional licence will enable the provision of professional services, while a branch or representative office will be suitable where there is no requirement to actually conduct sales or manufacturing, only to provide information and negotiate sales.

2. LIMITED LIABILITY COMPANY (LLC). This type of company allows for a joint venture between national and foreign partners. Non-national partners are permitted to hold shares not exceeding 49% of the capital, with the national partner holding the remaining 51%. The law provides that the minimum share capital required is AED 300,000 (US$ 81,750). Share capital must be fully paid up and deposited with a local bank (can be transferred out once the company is registered). The shares of such companies are not open for subscription by the public. Despite the split in shareholdings, profits may be divided in other ratios agreed upon taking into consideration efforts of non national partners in management, provision of technology or expertise. The expatriate partner may undertake management of the company.

3. PROFESSIONAL LICENCE: It is possible to apply for a professional licence as a means to providing a professional service in Dubai. This involves issuing a licence in the name of an individual who must hold a relevant professional qualification. A UAE resident must be appointed as a service agent whose role is to facilitate visa applications and other administrative issues. Normally the local agent will be paid an agreed lump sum which is subject to negotiation but will be a minimum of US$ 7,500 per annum and may be considerably larger depending on the standing of the local involved.

4. BRANCH OR REPRESENTATIVE OFFICE: Foreign companies may establish a branch or representative office in the UAE. Branches and representative offices may, subject to obtaining the necessary licences, carry out promotional activities and facilitate contracts but cannot sell or manufacture goods locally. As described above, a UAE resident must be appointed as a service agent. Please note it is a requirement that the parent company is well established, usually with the ability to present at least 2 years worth of audited accounts.

5. COSTS: The approximate set-up cost for the registrations detailed above is AED 120,000 (approximately US$ 33,000). This includes fees for local sponsor/local agent but excludes visa charges, rent and municipality tax. Please note that this figure is an estimate only as the very nature of these types of registrations makes it impossible to give a standard schedule of requirements/costs as each registration is unique and processed on a case-by-case basis. An exact quote can be given once an application has been processed.

6. FREE ZONE REGISTRATIONS IN DUBAI AND OTHER EMIRATES: The UAE now boasts many free zones including Jebel Ali Free Zone (which was the first), Dubai International Airport Free Zone, Dubai Internet City, Dubai Media City, Sharjah Airport International Free Zone, Ajman Free Zone and Ras Al Khaimah Free Trade Zone. The main attraction of establishing an entity in one of the free zones is that there is no UAE national shareholding requirement.

Jebel Ali Free Zone: Superbly sited midway between East and West, and a convenient stopping-off point for global trade traffic, the Jebel Ali Free Zone is an ideal world hub. Add to this Dubai's strategic location close to the Gulf entrance with easy access to the entire Arabian peninsula, and it is easy to see why so many multinational giants have chosen the Free Zone as their regional distribution centre to reach the 1.5 billion consumers in the surrounding markets. Some incentives for registering in the Jebel Ali Free Zone are 100% foreign ownership, No corporate taxes for 15 years (renewable for an additional 15 years), 100% repatriation of capital and profits, No personal income taxes, No currency restrictions etc. Once a Company has been accepted into the Free Zone, it will operate under one or more of the four different licences : Trading, Industrial, Service and National Industrial. The licences are issued by JAFZA and each is valid for the period during which the company holds a Lease from JAFZA. Licences are renewable annually while the Lease is in force.

SAIF Zone: Established adjacent to Sharjah International Airport, the Sharjah Airport International Free Zone (SAIF-Zone) represents a unique opportunity for importers and exporters utilising air or sea freight. Although operations only started on 2 September 1995, over 256 companies have already set up operations, making the SAIF-Zone the fastest growing fee zone in the region. Some of the unique advantages are 100% foreign ownership, 100% repatriation of capital and profits, No currency restrictions, No corporate or personal income taxes, 15 years lease (renewable for an additional 15 years), Low cost accommodation for an on-site work force etc. Companies can register as either a branch of a local or foreign Company. Once a Company has been accepted into the Free Zone, it will operate under one or more of the four different licences: Commercial license, General Trading license, Industrial License and Service License.

Bank Accounts in Dubai: It is possible to arrange bank accounts for offshore Companies in Dubai. There is no requirement for the authorised signatories to be residents of Dubai or to be physically present for opening the account. Reference from an existing bank account would be preferable though not absolutely necessary.