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Incorporation of a free zone company in Ras Al Khaimah Economic Zone (RAKEZ). Service offer

Located in the very heart of Ras Al Khaimah, RAKEZ is a strong industrial center in the United Arab Emirates that offers diverse business solutions. RAKEZ allows for formation of offshore and onshore (free zone) companies.

Establishment of onshore companies implies possibility to obtain resident visas for members/employees, as well as their families, which is undoubtedly an advantage. Moreover, substance is created for onshore companies in the form of a leased office or a flexi desk/flexi office workplace. Office requirements for onshore companies may differ depending on the kind of license for a certain activity.

Main advantages of doing business in the UAE:

  • No profit tax;
  • Stable banking system, high possibility of opening an account with banks of the UAE;
  • Possibility to work with US dollars;
  • Quick company incorporation;
  • Possibility to create substance in the country of incorporation;
  • Possibility to obtain a resident visa for company’s shareholders and employees.

Budget for the creation of business in RAKEZ

Service
Cost (USD)
Incorporation of a company in RAKEZ, including a license, Flexi Desk office lease, stamp, company incorporation services [1]. A refundable e-channel deposit of 5,000 dirhams (approximately 1,370 USD) is also included in the cost[2]. The cost of services is stated for the sole shareholder and possibility to obtain 1 resident visa (minimum package)
10,900
Obtaining a resident visa (the expenses are stated for one investor’s visa), including: - payment of all government fees (Entry Permit, Medical Fitness Report & Emirates ID, Visa Stamping on the Passport); - services for the execution and submission of applications and necessary documents; - support services (a trip to the clinic and migration service). *In the case of obtaining 2 or more visas, please ask your consultant for the exact cost.
4,200
Opening an account with a local bank
2,500
Total:
17,600

COMPANY INCORPORATION

The procedure of incorporation of a company in RAKEZ:

1) The following has to be determined:

  • name of the company to be checked for uniqueness (at least three options): it may be in English or Arabic; it must not be identical or similar to the name of an existing company; it must end with an indication of the form of incorporation (“FZE”);
  • structure of the company (director, manager, secretary, shareholder, attorney);
  • amount of the authorized capital and distribution of shares among shareholders (a minimum authorized capital is prescribed for certain activities);
  • activity and regions;
  • kind of license and an office in RAKEZ suitable for the chosen type of license.

In RAKEZ companies may obtain the following kinds of licenses:

  1. Manufacturing license allows the holder to conduct goods production business, including raw material import, processing, production, assembly, packing and export of finished goods.
  2. General trade license allows the holder to trade in goods, including import, storage, warehousing, supply and export of permitted goods of different categories.
  3. Commercial license allows the holder to trade in goods, including import, storage, warehousing, supply and export of permitted goods.
  4. Service license allows the holder to provide the type of service stated in the license (for example, business consulting, marketing consulting, insurance and others).
  5. E-Commerce license allows the holder to trade in goods and services by electronic means.
  6. Education license allows the holder to provide educational services (organize educational institutions or consulting companies), including services in professional or management training.
  7. Media license allows the holder to engage in TV broadcasting, radio broadcasting, newspaper and magazine publishing and event organization.
  8. Individual/Professional license is issued to a company with one shareholder and allows it to conduct one activity within a narrow specialty.

Some licenses require consent of the relevant regulator, for instance, approval of the Ministry of Health of the UAE is required in order to open a clinic.

2) Payment for services

3) The following directors’/managers’/secretaries’/shareholders’/attorneys’ documents

have to be provided:

  • color passport copy;
  • document confirming the address (if it is not stated in the passport);
  • visa copy / UAE entry stamp;
  • CV.

For UAE residents Emirates ID has to be provided. If a UAE resident acts as a director, manager or attorney, a No Objection Letter by their sponsor will also be required.

At the meeting the original documents have to be provided for collation, or notarized copies.

The shareholders will have to sign a questionnaire form in order to undergo the compliance procedure.

In order to incorporate a company to conduct certain activities, a business plan will also be required.

4) Preparation of a set of documents for the incorporation of a company,

signing of the documents by company’s officers and shareholders.

5) Submission of an application for company incorporation

Upon completion of the incorporation of the company the following documents are issued:

  • Certificate of incorporation of the company
  • Articles of association
  • Share certificates
  • License to conduct business (as a general rule, issued for 1 year)
  • Registers of directors and shareholders
  • Office lease contract

The company seal is also handed over.

After the company has been incorporated one can proceed to obtaining visas and opening an account with a bank. A settlement account for the company may be opened with a UAE bank or with a foreign bank – for further information contact your consultant at GSL.

IMPORTANT: As the UAE is not a signatory to the Hague Convention of 5 October 1961 that abolished the requirement to legalize foreign official documents, in order to use documents of a local company in another country it is necessary to submit such documents for legalization to the consulate of that country.

The incorporation of a new company takes around 10 days.

OBTAINING A VISA

In the UAE there is no such thing as residence permit. The migration rules of the UAE imply issue of resident visas, which are practically an analogue to a residence permit.

A resident visa may be obtained on the following grounds:

  • based on the ownership of an onshore company incorporated in the UAE – investor’s visa;
  • by entering into an employment contract with an onshore company incorporated in the UAE – work visa.

The number of resident visas depends on the business package chosen at the incorporation of the company.

Normally an investor’s visa is issued for 3 years, work visa for 2 years.

Upon expiration a visa may be renewed.

The procedure of obtaining resident visas is as follows (one may start obtaining a visa only after the company has been incorporated):

  1. Obtaining an Establishment Card (opening the migration file of the company) – 10 days. This document is necessary to enable the company to apply for resident visas in the future.
  2. Submission of documents for a resident visa and obtaining an Entry Permit – 1-2 weeks. To obtain a resident visa it is necessary to enter the UAE on an Entry Permit.
  3. Visiting the UAE to obtain a resident visa – in most cases a visa may be obtained within 5 workdays. The applicant must: undergo medical examinations (blood test and fluorography); give biometric data (retina scan and fingerprints). Once the passport with a resident visa in it is received the country may be left.
  4. Obtaining a resident’s Emirates ID.

The card is issued a few days after the issue of the visa. Personal presence is not required to receive it.

IMPORTANT: Permanent residency in the UAE is not required; however, a resident visa will be cancelled in the case of absence from the UAE for over 6 months

The cost of obtaining a resident visa in RAKEZ starts at 4,200 USD. For further information on the procedure of obtaining it contact your consultant.

COMPANY STRUCTURE REQUIREMENTS

DIRECTORS

minimum number:
one
individual / legal entity:
only individual
residency:
no requirement

SHAREHOLDERS

minimum number:
one
maximum number:
50
individual / legal entity:
individual / legal entity
residency:
no requirement

MANAGER

number:
only one
individual / legal entity:
individual
residency:
UAE resident

Companies incorporated in RAKEZ may also have a secretary; an individual or legal entity may be appointed such secretary. The same person may simultaneously be a shareholder, director, secretary, manager and authorized representative of a company.

AUTHORIZED CAPITAL

minimum amount of the authorized capital:
10,000 AED May differ for separate activities

The authorized capital may be denominated in a currency other than AED only with the prior approval of state authorities of RAKEZ. Shares of different classes may also be issued only with the prior approval of state authorities of the emirate. Each share must be issued for 1,000 AED or a multiple thereof.

REGISTERED OFFICE

RAKEZ offers various office packages depending on clients’ necessities relating to the kinds and number of licenses, number of visas, need for substance and location in the free zone.

  1. Flexi desk and flexi office are a separate premises or cell in an open space in first class business centers. Kinds of licenses: commercial, service, general trade.
  2. Office – isolated premises of 6.5 m2 to 11.9 m2. Office – isolated premises of 6.5 m2 to 11.9 m2. Kinds of licenses: commercial, service, general trade.
  3. Administrative office – isolated premises of 12 m2 to 20 m2. Kinds of licenses: commercial, service, general trade.
  4. Auxiliary premises – large office, which can be shaped to fit specific demands of the client, of 120 m2 to 170 m2. Kinds of licenses: commercial, service, general trade.
  5. Warehouse spaces – heat insulated warehouse spaces with offices having different areas, starting from 150 m2. Suitable for all kinds of licenses.
  6. Plot of land – land for development of at least 2,500 m2. Kinds of licenses: commercial, manufacturing, general trade.

The number of resident visas that are allowed to be obtained may vary depending on the office taken on lease by the company. So, for example, flexi desk implies possibility to obtain only one resident visa.

SUBSEQUENT WORK WITH A COMPANY

A company must annually renew its license, by paying the relevant fee, and lease contract.

Profit tax

Companies incorporated in free zones of the UAE are exempt from profit tax, capital gains tax, property tax and other taxes, except VAT.

VAT

Value added tax was introduced in the UAE on 1 January 2018.

VAT, as a general consumption tax, applies to all transactions with goods and services unless such transaction is exempt or taxed at the rate of 0%.

The standard VAT rate in the UAE is 5%.

There is no obligation to register for VAT purposes while the turnover in the territory of the country is below the registration threshold, which in the UAE is 375,000 AED (~100,000 USD).

Registering as a VAT payer is compulsory in the following cases:

  • there is reason to believe that during the following 30 days taxable turnover will exceed the registration threshold (for example, a contract is entered into);
  • at the end of the month taxable turnover for the preceding 12 months actually exceeded the registration threshold;
  • the company receives services that are subject to inclusion in accounts under the reverse charge and that are worth over the registration threshold.

Voluntary registration is also possible after the taxable transactions threshold of 187,500 AED (~ 50,000 USD) has been exceeded.

Registration with the Federal Tax Authority of the UAE and obtaining a Tax Reference Number (TRN) at least take 20 workdays.

After the registration with the Federal Tax Authority and obtaining a VAT payer number, a company must quarterly (and if its annual turnover exceeds 150,000,000 AED ~ 40,830,900 USD, then monthly) prepare and file a VAT return, and pay arising VAT within 28 days after the end of the VAT period.

Before incorporating a company we recommend receiving consultation from a specialist of the non-resident audit department and tax consultant to determine tax burden of the company and discuss issues of further administration of the company.

Audit and accounts

Every company incorporated in RAKEZ must keep accounting records sufficient to confirm its financial position and containing up-to-date information on the assets and liabilities of the company. It is also necessary to annually prepare the company’s financial statements and undergo audit.

The reporting period of a company ends on 31 December of each year (the date of the first reporting period depends on the date of incorporation of the company[3]). A company is allowed 6 months from the date of the end of the period to prepare and file audited financial statements with state authorities.

Companies that have subsidiaries (where their ownership interest exceeds 50% of shares/stock) must prepare consolidated financial statements of the group.

Before incorporating a company we recommend receiving consultation from a specialist of the non-resident audit department and tax consultant to determine tax burden of the company and discuss issues of further administration of the company

Cost of services[4]

Service
Cost (USD)
Incorporation of a company in RAKEZ, including a license, flexi-desk office lease, stamp, company incorporation services. The cost of services is stated for the sole shareholder and possibility to obtain 1 resident visa (minimum package). A refundable e-channel deposit of 5,000 dirhams (about 1,370 USD) is also included in the cost[5]. The cost of the package may vary depending on the number of shareholders, kind of license and size of the office (the size of the office defines the number of resident visas). Other options are available on request. The costs of legalization of the founding documents are not included in the cost of incorporation and are determined separately depending on prices of the consulate of a country where the company’s documents will be used.
10,900
Annual renewal of a company, including a license, HBC office lease, P.O. Box and company renewal services. The cost of services is stated for the sole shareholder and possibility to obtain 1 resident visa (minimum package). Other options are available on request.
10,200
Obtaining a resident visa (the expenses are stated for one investor’s visa), including: - payment of all government fees (Entry Permit, Medical Fitness Report & Emirates ID, Visa Stamping on the Passport); - services for the execution of necessary documents; - support services and transport costs (meeting at the airport to hand over an Entry Permit, a trip to the clinic and migration service).
4,200
Assistance in opening bank accounts (irrespective of the result). Corporate account/Personal account
2,500/2,500
Compliance fee. Paid in case of: company’s renewal, company’s liquidation, transfer to another agent, issue of a power of attorney for a new attorney, change of director/shareholder/beneficiary, except for a change to a nominee director/shareholder
250 (standard fee – includes check of 1 individual) + 50 for each additional individual (director, shareholder or beneficiary) or legal entity (director or shareholder) if legal entity is serviced by GSL; + 100 for each additional legal entity (director or shareholder) if legal entity is not serviced by GSL. 350 (check for High Risk companies, including check of 1 individual)
Keeping accounting records of the company’s business. Systematic archiving of the company’s documents and provision thereof to the client on request
200 / hour[6]
Preparation of financial statements, audit of the company’s business and filing of financial statements with the authorities of the free zone
400 / hour
Registration for VAT purposes
850
Preparation and filing of VAT returns
200 / hour
Tax consultation on VAT and other issues
300 / hour
Other services as agreed with the client
200 / hour

[1] The cost of the package may vary depending on the number of shareholders, kind of license and size of the office (the size of the office and kind of license define the number of resident visas).

[2] The deposit is refunded after the license is cancelled.

[3] If a company is incorporated in the first half of the year, the date of the company’s first reporting period is 31 December of the same year; if a company is incorporated in the second half of the year, the date of the first reporting period is 31 December of the year following the year of incorporation.

[4] The cost of services is effective as of June 2021.

[5] The deposit is refunded after the license is canceled.

[6] The cost of preparation of financial statements and audit of the company’s business is determined based on time spent on work at the rate of 100 to 400 USD per hour depending on the type of work and qualification of the specialist involved; it is at least 1,900 USD – the cost of audit of statements with the minimum number of transactions.

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10900 USD
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