UAE: Company registration in Hamriyah Free Zone. Hamriyah Free Zone

Hamriyah Free Zone is located in the Emirate of Sharjah. With an area of 2 590 sq. km., Sharjah is the third largest emirate in the UAE and is situated 10 km off Dubai and an hour’s drive from Abu Dhabi. Due to its geocentric location, the emirate is an important business centre both domestically and internationally, including key markets in Asia, the Middle East and Africa.

The proximity to the main trade routes, highly developed urban and social infrastructure, relatively low cost of rent, utilities and living made this emirate attractive for business and life, and also increased its reputation as the eleventh most attractive international destination for direct foreign investment in the world.

1. Stable banking system;
2. Ability to work with US dollars;
3. Quick company registration;
4. Ability to create substance in the country of registration;
5. Ability to obtain a resident visa for the 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.

Company registration in Hamriyah Free Zone includes the following steps:

1) You need to select:

• Company name to be checked for availability (at least 2 names), which name

1. must not be identical or similar to the name of an existing company;
2. may contain Latin letters;

• Company structure (directors, secretary and members)
• Type of licence.

Hamriyah Free Zone has three types of licence:

• Service licence – allows the holder to provide the type of services specified in the licence.

Examples of service licences: business consulting, marketing consulting, project consulting, IT consulting, etc.

• Commercial licence – allows the holder to import, export, sell, distribute and store the goods specified in the licence.

Examples of commercial licences: general trading, e-commerce, trading in certain types of goods: 3 to 5 types.

• Industrial licence – allows the holder to import raw materials for production, processing and/or assembly of these products. Finished products can be exported outside the UAE.

Examples of industrial licences: processing licence, assembly licence, packaging licence, production licence.

Some licences require approval from the relevant regulator: for example, a number of production licences require approval by the UAE Environment and Protected Areas Authority or a specific ministry.

2) Payment of fees

At this stage, not only do you need to pay the fees of the registering person (lawyer handling the company registration), but also leave a deposit to cover other expenses, such as notary fees, registration fees, etc.

3) You need to provide documents for directors / members / attorneys (either originals or notarized copies):

• internal and international passports;
• proof of address (unless the internal passport contains an address stamp);
• CV.

The shareholders need additionally provide:

• copy of the passport page with a UAE entry stamp;
• personal data in the form of a letter: phone, email, residential address, country of residence, mother's name, marital status, religion, citizenship.

A business plan may also be requested. It is provided if the client has chosen to register a company with a service, industrial or e-commerce licence.

Shareholders will need to sign a Client Questionnaire Form for completing compliance procedure, and an administration contract.

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

• Application for company registration (signed by the shareholder);
• Security Approval form (filled in and signed by each director and shareholder);
• No Objection Letter (from the sponsor) – where there is a valid UAE visa issued by another company;
• Power of attorney – where the company registration application is submitted by a representative of the client.

Upon registration, the Free Zone Authority issues the following documents:

• Certificate of Incorporation indicating the registration number and date, type of licence, details of shareholder and share capital of the company;
• Licence for the declared type of business (valid for 1 year);
• Office lease agreement (for 1 year);
• Share Certificate;
• Articles.

A company seal is also issued.

Upon registration, you can proceed with visas and bank account opening. You can open a bank account for the company both at a UAE bank and a foreign bank – please contact your GSL consultant for details.

The fees for translation, notarization, legalization and apostille are charged additionally.

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

A resident 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 registration of the company.

Upon expiration, a visa can be renewed.

Application for resident visas includes the following steps (a visa can only be applied for after registration of the company):

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 resident visas in the future.

2. Submitting documents for a resident visa and obtaining the Entry Permit (permission to enter) - 5-7 days.

To obtain a resident visa, you must enter the UAE with an Entry Permit.

3. Visiting the UAE to obtain a resident 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 resident 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.

A FZE can be transformed into FZC in the case of increase in the number of shareholders.

The director (manager) can only be an individual – a resident of the UAE (non-resident can be appointed if the director does not carry out activities in the UAE).

The minimum number of directors is 1, the maximum is 5.

Details of directors are not accessible to public.

The secretary can only be an individual. Can be the same person as director. If the secretary is not specifically indicated when filing a company registration application, the first director is assumed to act as secretary.

Details of the secretary are not accessible to public.

The minimum number of members/shareholders in the company is 1. They can be individuals or legal entities, and there are no residency requirements.

Hamriyah Free Zone does not require a local shareholder in the company’s structure.

Details of the shareholders are not accessible to public.

A company can only issue one class of shares. Bearer shares are not permitted.

The capital can be denominated in AED only. A company can issue shares of AED 1 000 or a multiple amount each.

There is no requirement to provide a bank letter confirming the payment of share capital, in order to register a company in Hamriyah Free Zone.

Upon registration the company and the Free Zone administration necessarily sign an office lease agreement; the address of such office is considered the official registered office address of the company. At the same time, the company is free to rent additional offices, industrial premises or warehouses in the territory of Hamriyah Free Zone.

Hamriyah Free Zone offers various office packages depending on the client’s needs regarding the type and number of licences, number of visas, need for substance and placement in the free zone.

Hamriyah Business Centre (HBC) – “virtual” office[4]

• Types of licence: commercial or service, up to 3 types of goods/services
• Legal form: Free Zone Establishment (1 shareholder)
• Enables to apply for one visa

E-Office – provides a dedicated office space of 10 sq.m.

• Types of licence: any commercial or service
• Legal forms:

• Branch or subsidiary
• Enables to apply for 4 to 7 visas depending on the office option selected.

Executive office (Administrative office) – office space of 15 to 40 sq.m.

• Types of licence: any commercial or service
• Legal forms:

• Branch or subsidiary
• Enables to apply for 4 to 7 visas depending on the office option selected.

The free zone also offers ready-made warehouses and land for short-term and long-term leases.

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 in the country exceeds the registration threshold, which is AED 375 000 (~ USD 100 000) in the UAE.

Registration as a VAT taxpayer is required in the following cases:

• 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).

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 registered in Hamriyah Free Zone must keep accounting records sufficient to confirm its financial position and reflecting up-to-date information about the assets and liabilities of the company. It is also necessary to prepare annual financial statements of the company and have them audited.

The free zone administration offers the option of temporary exemption from submitting financial statements to the authorities. Please contact your consultant for details.

The company’s first accounting period lasts 6 to 18 months and depends on the legal form of the company and the date of registration. Subsequent periods last 12 months from the end-date of the first accounting period. The company is given 3 months from the end of the period, to prepare and submit audited financial statements to government authorities.

Companies that have subsidiaries (more than 50%-owned) are required to prepare consolidated financial statements for the group.

The company must annually renew the licence (by paying the relevant fee) and the lease agreement.

The company’s renewal date is the anniversary of the issue of the licence, but one should initiate the renewal at least 30 days in advance.

The company renewal costs include renewal of the office lease agreement, of the licence, and the P.O. Box. Upon renewal, an updated licence is issued.

[4] Please note that not all banks accept this type of office

[5] VAT of 5% is applied.

[6] 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).

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

[8] 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.