Incorporation of a limited liability company in Jebel Ali Free Zone (JAFZA), Dubai. Service offer

• Stable banking system;
• Ability to work with US dollars;
• Quick company incorporation;
• Ability to create substance in the country of incorporation;
• Ability to obtain a resident visa for company’s shareholders and employees.

[1] VAT of 5% is applied.

[2] The cost of package may vary depending on the number of shareholders, type of licence, and size of office (office size dictates how many residence visas a company can have).

[3] The description of the account opening stages and the conditions for charging an additional success fee can be found below, in the Fees section.

There are 4 forms of company incorporation in JAFZA:

1. Free Zone Establishment (FZE) – company with one shareholder;
2. Free Zone Company (FZCO) – company with several shareholders;
3. Public Listed Company (PLC) – company listed on a stock exchange;
4. Branch – branch of a local or foreign company.

The procedure of incorporation of a company in JAFZA:

1. Name of the company to be checked for uniqueness (at least three options):

• the name must be approved by the registration authority;
• it must not be identical or similar to the name of an existing company;
• characters of the Latin alphabet may be used;
• it must end with an indication of the form of incorporation (“FZE” / ”FZCO”).

2. Structure of the company (director, shareholders, manager, secretary);

3. Kind and size of premises necessary for the proposed activity;

4. Amount of the authorized capital;

5. Kind of license:

JAFZA issues licenses to conduct business in the following sectors:

• Trading license allows the holder to trade in goods, including import, storage, warehousing, supply and export of permitted goods of different categories. A license may be issued to trade a maximum of 7 products from one group of goods and a trading license to trade a maximum of 12 products from 2 groups of goods;
• General trading license grants the holder access to a wider range of activities and goods stated in the license;
• Service license allows the holder to provide the type of service stated in the license (for example, business consulting, marketing consulting, insurance and others);
• Industrial license allows the holder to conduct goods production business, including raw material import, processing, production, assembly, packing and export of finished goods. A license may be issued to manufacture a maximum of 7 products from one group of goods and a license to manufacture a maximum of 12 products from 2 groups of goods;
• National industrial license is issued to manufacturing companies that are at least 51% owned by the Gulf Co-operation Council (GCC);
• Logistics license allows companies to be engaged in freight transportation (sea, land and air), warehousing, packing, transportation and distribution;
• E-commerce license: companies providing individual services and goods to third persons through electronic media, such as a search engine, portal, website, social media, etc. for the purpose of facilitating trading business.
• Innovation license allows the holder to develop new products or services.

the following directors’ / managers’ / secretaries’ / shareholders’ documents (originals or notarized copies, at least 6 months until the passport expires):

• colour copy of internal passport;
• colour copy of international passport;
• copy of an international passport page with UAE entry stamp;
• proof of address (unless the internal passport contains an address stamp);
• CV;
• legalized power of attorney if the company is being incorporated by a representative.

The following documents are prepared for the submission to the registration authority:

• Company incorporation Application Form (signed by shareholder);
• Environment, Health and Safety Form (JAFZA EHS Form);
• Copies of passports / Emirates IDs of all shareholders, directors, manager and secretary;
• Project summary (business plan);
• No Objection Certificate (No Objection Letter by the sponsor) if there is a valid UAE visa issued by another company;
• Memorandum and articles of association for the purpose of registration authority’s approval;
• Application for lease of premises necessary to conduct the company’s business.

Before the incorporation of a company, the administration of the free zone checks the company’s shareholders and directors (security check); additional documents may be requested at this stage, for example, a no criminal record certificate.

After the check is done, company incorporation takes place. Upon completion of the incorporation, the administration of the free zone issues the following documents:

• Certificate of incorporation containing the registration number and date, type of license, information on the shareholder and share capital of the company;
• License for the proposed activity of the company (license is issued for 1 year);
• Office lease contract (for 1 year);
• Share certificate;
• Memorandum and articles of association.

The company seal is also issued.

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.

The cost of translation of documents, notarization, legalization and apostille shall be paid separately.

The UAE does not have such concept as a residence permit. UAE migration rules require the issuance of residence visas, which in practice are similar to a residence permit.

A residence visa can be obtained on the following grounds:

• based on owning a UAE onshore company – investor visa;
• by making an employment contract with a UAE onshore company – work visa.

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

Resident visa is issued for 2 years.

Upon expiration, a visa may be renewed.

1. Opening an Establishment Card (the migration file of the company) – 3 - 5 days. This document is necessary for the company to be able to apply for residence visas in the future.
2. Submitting documents for a residence visa and obtaining an Entry Permit (permission to enter the country) – 5 - 7 days. To obtain a residence visa, an individual must enter the UAE with an Entry Permit. If at the time of issuing of Entry Permit the applicant is already in the UAE, then in order to complete the issuance of a residence visa without leaving and re-entering the country, it is necessary to change the status of the visa. The service of changing the status of a visa is provided upon request and is subject to additional charges.
3. Visiting the UAE to obtain a residence visa – in most cases, a visa can be obtained within 5 working days. The applicant needs to: undergo a medical examination (blood test and chest X-ray); submit biometric data (retina and fingerprints scan). After receiving a passport with a residence visa inserted into it, one can leave the country.
4. Obtaining a resident ID-card - ID Emirates.

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

The fees for obtaining a residence visa in JAFZA start from USD 4 200.

Additional requirements based on which a person may NOT hold office:

• under 21 years;
• criminal record related to fraud or immoral behavior for the last 10 years;
• have been found guilty of trading in insider information;
• have been removed from director’s office by court decision;
• do not meet criteria stated in the founding documents;
• are an undischarged bankrupt.

Additional requirements based on which a person may NOT hold office:

• under 21 years;
• have been found guilty of trading in insider information;
• have been removed from director’s office by court decision;
• do not meet criteria stated in the founding documents.

An FZE / FZCO must have a secretary.

The authorized capital may only be denominated in UAE Dirhams. In accordance with the Regulations, the minimum amount of the authorized capital is not set for an FZE or FZCO. However, there is a requirement for a company to have authorized capital sufficient for the activity for which it obtained the license.

As a result of changes made to the legislation on 23 May 2016, issue of shares of different classes has become available to companies incorporated in JAFZA.

According to the regulations of JAFZA, an FZCO may issue different classes of shares with the approval of the registration authority. The rights on shares may be changed by making amendments to the memorandum and articles of association of the company if such a change is approved by a resolution of more than 75% of votes of shareholders or resolution of all shareholders holding shares of the same category. A PLC may also have different classes of shares if it is provided for in its memorandum and articles of association.

PLCs may also issue shares of different classes if it is provided for in the company’s founding documents.

Bearer shares or partially paid shares may not be issued.

At incorporation an office lease contract is entered into between the company and the administration of the free zone; the address of such office is considered the official registered address of the company.

JAFZA offers various office packages depending on the needs of clients in term of type and number of licenses, number of visas, need for substance and location in the free zone: office, plots of land, warehouses, showrooms, business parks, retail outlets. Minimum office area is 26 m2.

The company must annually renew the licence, by paying a relevant fee, and the lease agreement.

Companies registered in UAE free zones are exempt from capital gains tax, property tax and other taxes, except corporate tax and VAT.

A federal corporate tax was introduced in the UAE on 1 June 2023. Free zone companies may be subject to both the standard rate of corporate tax (9%) and a zero rate. The application of a particular rate depends on a number of factors such as the company’s income, the types of its activities (whether they are excluded or qualifying, or not), counterparties, whether the company maintains adequate economic substance in the UAE, and other aspects.

From 1 January 2018, the UAE introduced a Value Added Tax.

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

The standard VAT rate in the UAE is 5%.

There is no obligation to register for VAT unless sales turnover within the country exceeds the registration threshold, which is AED 375 000 (~ USD 100 000) in the UAE.

• there is reason to believe that the taxable turnover in the next 30 days will exceed the registration threshold (for example, a contract has been made);
• at the end of the month, the taxable turnover for the previous 12 months actually exceeded the registration threshold;
• the company receives services to be included in the return using the reverse charge method, in excess of the registration threshold.

It is possible to initiate a voluntary registration after exceeding the threshold of taxable transactions in the amount of AED 187 500 (~ USD 50 000).

Registration with the UAE Federal Tax Administration and allocation of the company’s Tax Reference Number (TRN) takes 20 business days, on average.

Upon registration with the Federal Tax Administration and allocation of the VAT number, a company must quarterly (or monthly in the case of annual turnover exceeding AED 150 000 000 (~ USD 40 830 900) prepare and file a VAT return, and pay the resulting VAT within 28 days of the VAT period end.

Every company incorporated in JAFZA must keep accounting records sufficient to confirm its financial position and reflecting up-to-date information about the assets and liabilities of the company.

The first reporting period of a company starts at its incorporation and lasts 6 to 18 months. Each subsequent reporting period lasts exactly 12 months from the date of the end of the previous reporting period.

By each reporting date, directors of the company must prepare financial statements of the company, including an auditor’s report. According to the current requirement, a copy of the signed financial statements along with the auditor’s report must be filed with the administration of the free zone within 90 days of the end of the company’s financial year.

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

The company’s renewal date is the date of issue of the license. In the case of late payment for renewal, the administration of the free zone reserves the right to impose a fine and suspend the license.

[4] VAT of 5% is applied.

[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).

[6] For more details on how fees for account opening assistance are charged, please contact your GSL consultant.

[7] The fees for preparing financial statements and conducting audit are charged based on the time spent at hourly rates ranging from USD 100 to 400, depending on the type of work and qualification of a specialist involved, but not less than USD 2 200 – fees for audited financial statements with a minimum number of transactions.