Incorporation of a limited liability company with a Freelance license in Ajman Free Zone, UAE. Service offer

• obtaining permission to conduct only 1 type of activity;
• obtaining one resident visa;
• appointment of only one director / shareholder.

1) The following has to be determined:

• company name for uniqueness check (at least 2 variants): must not be identical or similar to the name of an existing company; Latin characters are allowed; the company name must not contradict the public policy of the UAE;
• structure of the company (directors, members);
• kind of license.

A company may obtain licenses of the following categories:

• Business Invest,
• Commercial,
• E-Commerce,
• Educational,
• Professional,
• Industrial,
• Media and Services.

Some licenses require consent of the relevant regulator, for instance, a number of production licenses require consent of the environmental service of the UAE or certain ministry.

2) Payment for services

3) The following directors and shareholders’ documents have to be provided (originals or notarized copies):

• passport;
• document confirming the address (if it is not stated in the passport);
• resume;
• a copy of the page of the passport with a stamp of entry into the UAE;
• questionnaire details in the form of a letter: telephone, e-mail address, residential address, country of residence, mother's name, marital status, religion, nationality.

The shareholder will also be required to sign the Compliance Questionnaire Form as well as the Service Contract.

A business plan may also be required; it shall be provided if the client has decided to incorporate a company with a service, industrial or e-commerce license.

The shareholders will have to sign a client’s questionnaire form in order to undergo the compliance procedure as well as a service contract.

4) Preparation and submission of a set of documents for the incorporation of a company:

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

• company incorporation application (signed by shareholder);
• specimen signature card (signed by shareholder and director);
• security approval form (filled in and signed by each director and shareholder)

Before the incorporation of a company the administration of the free zone checks the company’s shareholders and directors based on the provided security approval form; additional documents may be requested at this stage, for example, a no criminal record certificate. Such a check takes 2 to 4 workdays.

After the check is done, company incorporation takes place, which takes 2 to 3 workdays. Upon completion of the incorporation the administration of the free zone issues the following documents:

• Certificate of incorporation containing the registration number and date, kind 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) – a Freelance license.

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.

As the UAE is not a signatory to the Hague Convention of 5 October 1961 that abolished the requirement to legalize foreign official documents and does not apostille 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.

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.

Upon expiration a visa may be renewed.

(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) – 3-5 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 – 5-7 days.

To obtain a resident visa it is necessary to enter the UAE on 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 resident 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 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.

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

In AFZ companies of two types may be established:

• FZE – Free zone establishment, a limited liability company with one shareholder;
• FZC – Free zone company, a limited liability company with 2 (or more) shareholders.

An FZE may be converted into an FZC if the number of shareholders increases.

In Ajman it is also possible to register branches of local and foreign companies as well as subsidiaries (of foreign legal entities).

Only an individual may be a director (manager); the minimum number of directors is 1. No requirements are imposed regarding directors’ residency.

Information on directors is filed with the administration of the free zone but is not available to third persons.

The minimum number of a company’s members/shareholders is 1; individuals and legal entities are allowed; no requirements are imposed regarding residency. In AFZ there is no requirement for a company to have a local shareholder.

If a shareholder is an individual, such individual must be over 21 years of age.

The minimum authorized capital is AED 185 000 (~ USD 50 300), but currently the administration of the free zone does not request proof of its payment at the incorporation of a company.

Normally a company issues 185 shares with the par value of AED 1 000 per 1 share.

At incorporation an office lease contract is necessarily 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. The company also has the right to take on lease additional office, production or warehouse premises in the territory of AFZ.

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.

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%.

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 AED 375 000 (~ USD 100 000).

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 AED 187 500 (~ 50 000 USD) has been exceeded.

After the registration with the Federal Tax Authority and obtaining a VAT payer number, a company must quarterly (and if its annual turnover exceeds AED 150 000 000 (~ USD 40 830 90), 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.

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

A company’s financial statements must be prepared annually, but there is no requirement to undergo audit and file accounts with state authorities.

In order to determine tax burden of a company we recommend consulting a tax consultant (we can arrange it on request).

Assistance with opening corporate and personal bank accounts, including[6]:

[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.

[4] VAT of 5% is applied.

[5] 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).

[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 an 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.