Company in UAE. Exotics or clear and beneficial solution for business structuring? In the present publication our advisors give the answers to the most frequently asked questions we receive in respect to the UAE companies.
On the companies in United Arab Emirates we often hear from our customers: “There is the requirement to have the local partner being the local citizen when registering the company in Dubai or other emirates of UAE company and I’m not ready to take such risks”.
The source of such misleading opinion is totally unclear, but we face it all the time. Yes, there is some specific type of the companies in UAE which requires the local partner. However, such type of the companies is required only for some specific types of business activities and, for most of the types of the business, the incorporation of the company in UAE with the 100% foreign ownership is totally applicable and is applied in the praxis all the time.
United Arab Emirates has more than 30 Free Trade Zones which provide the possibility to incorporate the company in UAE with the really functioning office, personnel, taxation at 0% rate and the entire ownership of the company by the foreign citizen.
At the same time such company can use the advantages of the existing double tax treaties signed by UAE with a number of countries.
Countries, which signed the Double Tax Treaties with the UAE are:
Austria, Azerbaijan, Bangladesh, Belgium, Belorussia, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Columbia, Cyprus, Czech, Egypt, Finland, France, Georgia, Germany, Greece, Holland, Hong Kong, India, Indonesia, Italy, Japan, Jordan, Korea, Lebanon, Libya, Luxemburg, Malaysia, Malta, Mauritius, Mongolia, Morocco, Mozambique, New Zealand, Pakistan, Poland, Romania, Russia, Seychelles, Singapore, South Korea, Spain, Sri Lanka, Sudan, Switzerland, Syria, Tajikistan, Thailand, Tunis, Turkey, Turkmenistan, Ukraine, Uzbekistan, Venezuela, Vietnam, Yemen.
In addition to the above such companies provide the possibility to receive the residency visas in UAE for the company shareholders, its directors, family members and employees.
Thus the advantages of the companies in UAE
- Advantages in taxation with the tax rate of 0%.
- Company tax residency in the country.
- Possibility to receive the residency visas in UAE over such companies.
Disadvantages? Resident companies in UAE, even though such companies do not pay taxes, shall prepare the accounting and file it for audit. But is this the real disadvantage? Financial reporting, being quite simple in UAE, and additional control over the company finances which you have to do once a year did not really harm anyone. In fact, as according to the yearly analysis of the Price Water Coopers on the different tax systems in the world, the average number of hours spent in UAE to prepare the financing reporting is 12 hours per annum.
Another relative disadvantage of such companies in UAE are the relatively high costs of setting up such companies when comparing it, for example, with the offshore companies in most of the international offshore jurisdictions. However, for the business of a reasonable size, this factor is not the real disadvantage when considering that such company in UAE is the fully tax resident company in the sound jurisdiction with zero taxation. Moreover it is not a proper way for decision making when comparing the international offshore company with all its disadvantages attached to it with the fully tax resident company in UAE.
And last possible disadvantage – due to the large number of free trade zones in UAE with slightly different regulations and permitted types of business activities it is quite complicated, without the help of the specialists, to find your way in this specifics and to make the right choice. However we do not see this as the real obstacle – there is a number professional consulting companies which can help you to get the complete overview on all the nuances on the company incorporation in UAE on all stages of its incorporation.
The proof of the fact of the clear advantages of the companies in UAE and absolutely minor and relative disadvantages of such is the fact of the presence in UAE of the most of the largest international companies as well as substantial number of mid-size and small companies from all over the world. And the number of such companies keeps growing every year whereby this trend is seen on the country with very scarce natural resources (apart of the oil)
In addition to the above UAE has the clear legislation, professional local and international banks and highly developed infrastructure.
Do you require the company in UAE? You are the one to make decision