Who is the founder of the UAE

What has to be considered?

How to start a company in Dubai (UAE)

How do you start a company in Dubai? Thousands of people ask themselves this question every year. Be it because as a private person you want to live and work where others go on vacation or because you want to set up business there as an existing company and / or use the tax advantages of the country.

100% TAX FREE
Dubai is a city of superlatives and offers another priceless advantage for companies as well as for private individuals: 100% tax exemption - in Dubai there are no taxes, neither corporation taxes for companies nor income tax for private individuals. The only exception is VAT, which is only 5% and is of course only a transit item for companies.

DO YOU NEED A RESIDENCE IN DUBAI?
A residence in the UAE is not required to set up a company in Dubai. Depending on the type of company and the respective license, there are different provisions. In principle, however, you do not need a place of residence in Dubai to set up a company.

WHAT ARE THE FORMS OF COMPANIES?
The first step is to decide which type of company is the right one? Basically, a distinction is made between three types of company, offshore company, freezone company and mainland company. The company forms offer different options but are also subject to different regulations.

A detailed description of the respective company form can be found below.

Practical examples

Which type of company is right for me?

EXAMPLE 1
Mr. Anton owns several companies in Germany and would like to set up a kind of holding company in Dubai for these companies. He does not plan to do business with companies in Dubai or the other Emirates with this company and does not want to relocate to Dubai. He doesn't need a bank account. The company only serves the purpose of a holding company.

Company form: FreeZone company without Visa

EXAMPLE 2
Ms. Kunert runs an online agency and exclusively looks after international customers outside of the Emirates with this company. Since she can carry out her work from anywhere, Ms. Kunert wants to relocate her company and possibly her place of residence to Dubai, but does not plan any customers in the UAE. A bank account is essential.

Company form: FreeZone company with 1 Visa

EXAMPLE 3
Mr. and Mrs. Kohlmann work in the textile industry. You are now planning to set up a business in Dubai to sell your products there directly to customers in the United Arab Emirates. A bank account is essential.

Company form: Mainland LLC or Professional License

This type of company is currently still offered by many agencies. Since it is practically impossible to get a bank account for an offshore company, this type of company can actually be excluded from the outset.

However, if you decide to use this type of company, please note the following:

  1. No Visa authorization
  2. No business relationships with companies within the UAE
2. The Freezone company (free trade zone)

This type of company is intended for companies that want to use the tax advantages of Dubai or the UAE but do not plan to do business with customers within the UAE.

Freezone companies offer many advantages:

  1. No corporate tax
  2. No withholding tax on dividends abroad
  3. No UAE income tax
  4. 100% owned by you
  5. Limited visa eligibility
  6. No business relationships with UAE companies
  7. Costs: from € 4,500 (including our basic carefree package)
  8. Foundation time: approx. 5-7 days


In Dubai there are over 27 free zones (free trade zones) where foreign companies can settle accordingly. Which Freezone is the right one basically depends on the area of ​​activity.

List of free trade zones in Dubai

  • Dubai Airport Free Zone (DAFZA)
  • Dubai Auto Zone (DAZ)
  • Dubai Cars and Automotive Zone (DUCAMZ)
  • Dubai Design District
  • Dubai Flower Center
  • Dubai Gold and Diamond Park (GDP)
  • Dubai Healthcare City (DHCC)
  • Dubai International Academic City (DIAC)
  • Dubai International Financial Center (DIFC)
  • Dubai Internet City (DIC)
  • Dubai Knowledge Park (DKP)
  • Dubai Logistics City (DLC)
  • Dubai Maritime City Authority (DMCA)
  • Dubai Media City (DMC)
  • Dubai Multi Commodities Center (DMCC)
  • Dubai Outsource City (DOC)
  • Dubai Production City (DPC)
  • Dubai Science Park (DSP)
  • Dubai Silicon Oasis (DSOA)
  • Dubai Studio City (DSC)
  • Dubai Textile City (TEXMAS)
  • Dubai - the Energy and Environment Park (ENPARK)
  • International Freezone Authority (IFZA)
  • International Humanitarian City (IHC)
  • Jebel Ali Free Zone Authority (JAFZA)
  • Jumeirah Lakes Towers Free Zone (JLT Freezone)
  • National Industrial Park (NIP)
  • 3. The Mainland LLC or Professional Service License

    The most popular and common mainland company form is the Mainland LLC, L.imited L.iability C.company. An LLC is comparable to a GmbH in Germany or Austria, i.e. the company consists of at least one or more shareholders and you need an Emirati partner who holds 51% of the shares. The shareholders can be private individuals as well as foreign companies and a managing director or director who is authorized to sign is required. There is also the possibility of a mainland company with a local service agent (100% ownership).

    ADVANTAGES OF A MAINLAND COMPANY IN DUBAI

    1. No corporate tax
    2. 100% ownership possible
    3. No withholding tax on dividends abroad
    4. No UAE income tax
    5. No share capital deposit necessary
    6. Unlimited visa permissions
    7. Better image with banks and business partners
    8. Business relationships with all Emirati and GCC companies
    9. Cost: from € 7500
    10. Foundation duration: approx. 1 week

    There are 3 ways to set up a Mainland company in Dubai or Abu Dhabi (see below). No share capital has to be paid in.

    1. Mainland company with local partner - like GmbH
    The most common company model so far is an LLC with a local partner. This officially holds 51% of the company's shares in the trade license. Of course, this only applies to paper. A subsidiary contract can be made and in this it is mentioned that the company is 100% owned. The owner is not personally liable. The local partner receives a fixed, previously agreed, annual sum and has no access to any bank account or other internal information of your company.

    2. Mainland company - 100% ownership with local service agent - like GbR
    When the company is founded, the company remains 100% in their possession, but a so-called local service agent is appointed. If you only have one shareholder then it is a professional license and more than one partner is involved, then one speaks of a civil company. The company form is similar to a German GbR and therefore you are liable as the owner. The Local Service Agent receives an annual, previously agreed, sum and there are no other obligations or commissions to be paid.

    3. Mainland company - 100% ownership without local service agent - like GmbH
    Recently there have been some profound changes in relation to the LLC. Until now, every company needed a so-called local sponsor or local service agent, i.e. a local business partner. In August 2019, these regulations were relaxed and the FDI approved a so-called "positive list" of activities that can be 100% foreign owned. However, there are some strict requirements and an Emirati partner is still required for most activities and sectors. This in turn can be avoided with a Local Service Agent Agreement (see above).

    We have to point out that it is very difficult and costly to do without a Local Partner or Local Service Agent at all. The requirements are very high and you have to support several institutions. We therefore recommend 1. or 2.

    Sectors that still require a local sponsor include the oil and gas, road and air transport, postal and telecommunications, banking and finance, fisheries and some other areas of activity, particularly in the medical field.

    Below you will find an overview of the industries in which a local partner or service agent is no longer required.

    100% ownership for foreign company founders

    The UAE Positive List

    The positive list contains 122 economic activities in three sectors.

    1. Agriculture (19 activities)
    2. Industry (51 Activities)
    3. Services (52 activities)

    1. AGRICULTURE

    The 19 agricultural activities (e.g. growing fruit, vegetables, cereals, etc.) are subject to the following provisions:

    • With the exception of one activity, all activities require a minimum capital of AED 7.5 million (approx. EUR 1.8 million).
    • Companies must join the Emiratisation Partners Club *
    • The use of modern technology in the production process is mandatory

    2. INDUSTRY

    The 51 industry activities are subject to the following conditions:

    • The minimum capital required varies between AED 15 and 100 million (approx. EUR 3.75 to 25 million).
    • Companies must join the Emiratisation Partners Club *
    • The use of modern technology in the production process is mandatory

    * The Emiratisation Partners Club is an initiative launched in 2017 by the Ministry of Human Resources and Emiratisation (MOHRE).

    The positive list differentiates between light and heavy industry. Typically, activities in light industry (e.g., garment manufacturing, leather product manufacturing, pharmaceutical product manufacturing, aircraft maintenance and repair, aircraft engine maintenance and repair, ship maintenance and repair, marine engine maintenance and repair, etc.) require .) a lower share capital of AED 15mil.

    Heavy industrial activities (e.g. manufacture of motor vehicles, trailers and semi-trailers, construction of merchant ships, manufacture of ship parts and floating structures, construction of floating or submerged drilling platforms, construction of floating structures) generally require a higher share capital of AED 100mil.


    3. SERVICE (SERVICES)

    The positive list contains 52 service activities

    • Civil engineering, electricity, plumbing, demolition and site preparation, building construction, rental of construction and demolition machines and equipment, but limited to infrastructure projects such as airports, highways and sports facilities with a value of AED 450 million and other construction activities;
    • Educational services (preschool, elementary, secondary and higher education); and hotel and restaurant management.

    Some of the service activities require AED 100 million share capital - approximately € 25 million.

    Is a 100% share possible with all of the above activities?

    To date, the percentage of ownership allowed for each activity has not been disclosed to the public. The positive list does not contain any restrictions on shareholdings. However, it is to be expected that some of the above-mentioned activities still require a minimum participation of around 30% from an Emirati partner. In addition, the amount of foreign ownership depends on the emirate and its respective laws.

    What are the requirements to get a permit?

    The requirements for the approval to set up a company with 100% foreign ownership are set out in Article 10 of the FDI Act. The conditions depend solely on the local regulations of each emirate.

    INQUIRE NOW

    The newly approved FDI Act contains both a positive and a negative list. The negative list contains the following activities and sectors:

    • Oil exploration and production
    • Investigation, Security, Military (including manufacture of military weapons, explosives, clothing and equipment)
    • Banking and financing activities
    • Insurance companies
    • Pilgrimage and Umrah services
    • Certain recruiting activities
    • Water and electricity supply
    • Fishing and related services
    • Postal, telecommunications and other audiovisual services
    • Road and air transport
    • Print and publish
    • Commercial agency
    • Medical retail (including pharmacies)
    • Blood banks
    CONTACT US FORMATION COSTS

    Address & contact

    EmiratesSetup - Business Consultants

    a Service powered by The Austrians LLC

    Al Marakib Street - Silver Tower - GlassQube Offices
    Abu Dhabi
    United Arab Emirates (UAE)

    Email: [email protected]