The Emirate of Dubai is located on the Arabian Peninsula, in the south of the Persian Gulf.
Among the seven emirates that make up the UAE, it is the most populated one and second largest after Abu Dhabi. Dubai has more than 20 free zones.
- Dubai Internet City. Free Zone specializes for the companies engaged in technologies. Here you can find the offices of such transnational corporations as Fortune 500, Facebook and LinkedIn, as well as many other small and medium businesses.
- Dubai Media City. Free Zone specializes for the companies engaged in media business. Here you can find the offices of such transnational corporations as CNN, Forbes, MBC, Reuters, Showtime, Sony and many others.
- Dubai International Financial Center. The largest companies in financial and insurance markets use this jurisdictions enter the market of the UAE and other markets of the Middle East and Northern Africa.
- Dubai Multi Commodities Centre specializes on the companies engaged in trade on commodity markets (gold, diamonds, pearls, tea), and companies providing related services. The free zone plays a role of an international center of raw material in the region.
- Dubai World Central. Free Zone allows to establish companies specializing in production, trade and service in various fields of economy. The Free Zone is located on the territory of the largest international airport Al Maktoum International Airport, what gives great opportunities for logistic companies and companies connected with international air carriage.
- Dubai World Central. Free Zone allows to open companies focused on production, trade and services in various sectors of the economy. The Free Zone is open on the territory of the largest international airport Al Maktum International Airport, which opens up broad horizons for logistics companies and companies related to international air transportation.
- Dubai South. Free Zone is located around the new international airport Al Maktoum International (South of Dubai). Companies operating in the aviation and logistics sectors, as well as in the field of trade, have already become residents.
- Dubai Internet City. Free Zone has successfully established a thriving ecosystem for technology organizations and is one of the pioneers in the vision of transforming Dubai into a smart economy. More than 1,600 companies are registered with DIC, including several of the latest Forbes lists, as well as the most dynamic and successful small and medium technology enterprises and start-ups, which include all elements of the information and communication technology value chain.
- Jebel Ali (JAFZA). It is the oldest economic zone of the Emirates (operating since 1985). FZ JAFZA has a strategic location. It is located in close proximity to the world's largest port, as well as a few minutes from the 8th largest airport Dubai International Airport and the new Al Maktoum International Airport. Offers excellent conditions for entrepreneurs of any sector. More than 7 thousand companies operate on its territory, which provide the UAE economy with 50% of the total export volume.
- International Free Zone Authority (IFZA). One of the youngest Free Zones in the UAE. Offers licenses based on a portfolio of scalable business creation solutions spanning over 2,000 professional, commercial and industrial activities.
- etc.
Legal system of the UAE is a mixed legal system which combines:
Codified laws regulating labor relations, maritime law relations, commercial transactions, civil acts, intellectual property, etc. apply in the UAE.
There are two main types of law in the UAE:
- federal law;
- local legislative acts (at the level of emirates).
Federal laws have effect on the whole territory of the UAE and are adopted by the legislative body or ministers. Local decrees and acts have effect only on the territory of a separate emirate. Local decrees is adopted by the Emir or Hereditary Prince of the emirate; local acts is issued by the member of the royal family of the emirate.
Companies registered in the UAE can be divided into 3 categories:
- Onshore companies: companies registered in Free Zones;
- Offshore companies;
- Mainland companies: types of such companies are regulated by the Civil Code of the UAE as well as federal Commercial Companies Act.
Besides, commercial activities can be established through Sole Establishment (sole trader). Foreign companies can also establish a branch or a representative office in the UAE or Free Zone.
Mainland companies may carry on business indicated in license on the territory of the UAE and Free Zones. They provide for obtaining visas for the founder and employees of the company and members of their families. At the same time, number of staff should be proportional to the occupied office space. The presence of an registered office is compulsory (from Flexi desk). Foreigners can own 100% of a local company, unless such a local company is carrying out activities of "strategic importance"
Onshore companies may carry on business indicated in license on the territory of the Free Zone or outside the UAE. It is envisaged to obtain visas for the founder and employees of the company and members of their families. At the same time, number of staff should be proportional to the occupied office space. The registered office can only be located in a Free Zone. Some Zones provide a seat in a business center. Possible 100% foreign ownership.
Offshore companies may carry on any activity which is not specially regulated outside the UAE only. The company's activities must be carried out exclusively outside the UAE. The company may not have an office in the UAE, Possible 100% foreign ownership through an individual or legal entity.
According to the UAE Commercial Companies Act, the following business forma can be established in the UAE:
- Sole Proprietorship;
- Limited Liability Companies;
- Private Joint Stock Companies;
- Public Joint Stock Companies;
- Joint Participation Ventures (or Private Unlimited Companies);
- Limited Partnerships (or Simple Commandite Companies);
- Partnership Limited with Shares (or Share Commandite Companies);
- General Partnerships (or Joint Liability Companies);
- Branch of a foreign company;
- Branch of a Free Zone company.
According to the Civil Code civil companies can be established in the UAE. Types of activities of such companies are restricted – they can carry on professional activities in technologies, law, medicine, etc. The local shareholder is not required.
There are more than 40 Free Zones in the UAE. The federal laws, local laws and special laws adopted by the zone, regulate activities of the companies registered in a Free Zone. According to the general rule, local founder is not required.
To carry on international transactions a company is obliged to obtain a related license which is issued in the process of incorporation. The company may not carry on business outside the Free Zone. However, international activity is not restricted by the law if it complies with the issued license.
The law requires to lease a minimum office space in a Free Zone or a seat in the business center.
Free Zone companies can be established in the following forms:
- branch or representative office of a foreign company;
- Free Zone Establishment;
- Free Zone Company.
Each Free Zone has its own requirements of share capital, number of directors, audit of accounts, etc.
The activities of offshore companies, along with federal law and the legislation of the relevant Emirate, are governed by special laws adopted in relation to such offshore jurisdictions.
The establishment of an offshore company does not require the involvement of a local partner as the founder.
Such companies generally do not have the right to conduct activities in the UAE, but are not restricted from conducting foreign trade operations outside the UAE. An offshore company cannot own real estate in the UAE and, unlike a resident company, cannot be used to obtain visas for its employees or directors.
Offshore companies are fully exempt from taxation in the UAE.
Such companies are not required to maintain an office or staff, or audit their annual financial statements.
Offshore companies cannot benefit from double taxation agreements.
The Dubai company registration procedure includes the following steps:
- Select a company name to be checked for availability (at least three names);
- Select the company structure (shareholders, manager, local agent/partner);
- Select the type of license (service, trading, industrial, or tourism);
- Pay fees for services;
- Provide the documents for the directors / shareholders / attorneys (either originals or notarized copies);
- Choose an office space for the company and make a lease agreement;
- Prepare and submit a set of documents for company registration, get the documents signed by the officers and shareholders of the company;
- Receive the certificate of registration, articles and seal in the specified address.
The UAE does not have public company registries that would contain details of shareholders or directors. Information about companies can only be obtained at the request of a local court.
The register of shareholders and directors of the company is not accessible to third parties.
Every Dubai mainland company must have an office in the Emirate of Dubai.
The area of the premises for one license must be at least 100 sq. feet.
Companies are required to have a common seal.
The redomiciliation of companies both to and from the UAE is permitted.
The director can be an individual (in DMCC a corporate director can be appointed with the permission of the Registrar). There are no requirements as to the residence of the director. The minimum number of directors is one, the maximum is set by the local authorities (mostly without restrictions, but, for example, in the SEZ Dubai South - 7, and in the DIC - 5). Details of directors are not accessible to public.
The secretary can be either an individual (over 21 years of age) or a legal entity. There are no requirements as to the residence of the secretary. In some Free Zones there can be the same person as director. Details of the secretary are not accessible to public. In some Free Zones, as well as for local companies, there is no requirement for a secretary
The minimum number of members / shareholders in the company is one (maximum - 50 or more). Both individuals and legal entities can be shareholders. There are no residence requirements. Details of shareholders are not accessible to public.
The manager (if necessary) can only be an individual over 21 years of age (for Dubai South it can be a corporate person), the minimum number is one. Residence requirements depend on the Free Zone. It can be the same person as director / shareholder. Details of managers are not accessible to public.
Despite that many jurisdictions consider creating a public register of beneficial owners, the UAE does not have one yet. This means that there is no open access to the beneficial ownership information. It is stored by a service provider, namely a company registration agent, trustees, lawyers, accountants and other professionals, subject to strict confidentiality. Information about the beneficial owner can only be disclosed to regulatory authorities (for example, during inspections for its availability) or by court order.
The share capital can be denominated in UAE Dirhams (AED) only. Its size varies depending on the Free Zones (from AED 10,000 and more). For some companies, there is no minimum share capital. Sometimes a bank letter is required confirming the payment of share capital. Bearer shares are not permitted.
How to start a company in Dubai?
Starting a company in Dubai involves several steps, and these steps may vary depending on the type of company and related requirements. Here is a quick guide to registering a company in Dubai that can help you get started: 1) Selecting the type of company and the free economic zone (if you want to do business outside the free zones, you can register a local company). 2) Obtaining a license - depending on your business, you need to obtain the appropriate license. For example, it can be a commercial, industrial, professional or other license. 3) Choosing the legal form of the company - determine whether you will be a sole proprietor, limited liability company (LLC), branch office, etc. 4) Registering the company name - come up with several variations of the company name in order of preference and check them for uniqueness with the registration authorities. 5) Document preparation - provide the necessary documents as required by the chosen zone or registration authority. Usually, incorporation documents, copies of passports of the owners, etc. are required. 6) Obtaining approval and signing the agreement - after submitting the application to open a company and verifying the documents, you will receive approval for registration. Then a lease agreement for office space is signed (if required). 7) Opening a bank account: choose a bank and open a corporate bank account. Banks in Dubai offer different types of accounts - current accounts, savings accounts, etc. 8) License issuance and company registration: once the procedure is completed, you will receive your business license. Depending on the chosen zone, this may take from a few days to a few weeks. 9) Office and staff - rent an office if required by the BMS requirements. Negotiate the necessary contracts with staff. 10) Additional permits (if required) - consider additional requirements depending on your industry, such as obtaining permits from specialized regulatory boards.
How much does it cost to start a company in Dubai?
The cost of starting a company in Dubai can vary significantly depending on several factors, such as the chosen Free Zone, the type of company, the need to rent office space, the services of an agency or consultant and other additional services. The minimum package of services costs 9500 USD and includes: turnkey company registration in Dubai, rent of a legal address for a year and secretarial services, payment of all necessary duties and fees, as well as apostilized translation of constituent documents.
Dubai is offshore or not?
Dubai is not a classic offshore in the meaning that it does not offer the same high levels of privacy and tax benefits as some well-known offshore zones. However, there are a number of advantages for international businesses in Dubai and its Free Zones: 1) Dubai Free Zones provide exemptions from corporate and personal taxes. 2) Foreign companies can fully own and manage their assets without the need for a local partnership. 3) Favorable business environment, modern infrastructure, high level of service and easy business registration procedures. 4) Dubai has no currency restrictions, which facilitates international financial transactions. 5) Due to its strategic geographical location, Dubai provides easy access to a multitude of global markets. 6) Banking privacy in Dubai ensures confidentiality for its customers.
