UAE company registration is sought after by those seeking business opportunities in this wealthy part of the world. In addition, the UAE offers very popular Dubai Free Zone registration. It gives foreigners tax-free business opportunities in specified areas of this prosperous emerite. The following provides background information on the UAE and a detailed description of corporation formation in the region.
UAE Background
The United Arab Emirates (UAE) a monarchy on the Arabian Peninsula on the Persian Gulf established in 1971. Its simple name is “Emirates.” Saudi Arabia borders it on the south. Oman is on the east. Iran borders it on the north, and Qatar on the west. The estimated population is 9.3 million where only 1.5 million are UAE citizens and 7.9 million are foreign expats.
The UAE’s legal system follows two standards. First, it uses the Islamic Shari’a Law. Second, it has implemented and a civil code with a Constitution, federal laws and regulations.
The the UAE Commercial Agencies Law of 1981 regulates UAE corporations. The statutes define a “commercial agency” as any agreement where an agent represents a foreign company to sell, distribute, provide or offer goods or services for profit or a commission in the UAE.
UAE Company Formation Benefits
UAE corporations have many benefits including:
• No Corporate or Income Taxes: UAE corporations only pay income tax in specific industries; foreign banks, oil and gas. Otherwise, corporations are exempt from taxation. However, U.S. citizens and those residing in countries who tax worldwide income must report all income to their tax authorities.
• No Capital Gains Tax: The UAE does not tax capital gains. This is especially is good for real estate investors and others normally subject to this tax.
• Reasonable VAT or Sales Tax: The UAE has a reasonable Value Added Tax (VAT) or sales taxes since 2018.
• Free Trade Zones: The UAE has several Free Trade Zones that can allow 100% foreign ownership and in a zero taxation regime
• English widely Spoken: Doing business in the UAE is easier when English is so popular.
• One Shareholder: The law allows for a minimum of one one shareholder for incorporation.
• Strategic Location: The UAE offers a close access point to other Gulf countries. Thus, it can work as an entry point to other Gulf Cooperation Council (GCC) countries. Dubai, in particular, is a local hub of business for the Middle East and North Africa.
• Ease of doing Business: The World Bank’s “Ease of Doing Business” Report ranked the UAE 31st in the world, and first in the Middle East and North Africa.
• Skilled Labor Force: The UAE offers a large population of skilled labor. As such, the region can provide an excellent potential workforce for any company choosing to incorporate there.
• Political and Economic Stability: There is a strong banking system and a stable political system present in the UAE. Moreover, the UAE’s gas and oil reserves rank it as tenth largest on the globe.
UAE Company Registration Details
Corporate Name
UAE corporations must pick a unique name that is not similar to already existing corporation names. Typically, an incorporator will submit three versions of the business name with the hope that the government will approve one of them.
Registering a company name requires a company to get preliminary approvals from the Licensing Section of the Dubai Department of Economic Development (DED). For example, the DED needs to approve the company’s activities, trade name, and various ownership identities. Afterwards, the incorporating agency can check the availability of the name, reserve the name, and even make payment to reserve the name online at the DED’s website.
Office Address and Local Agent
UAE corporations must have a local registered agent and a local office address. The company uses this address for process service requests and official notices.
Shareholders
UAE corporations must have at least one shareholder.
Directors and Officers
UAE corporations must have at least two officers, one executive director and one secretary.
Authorized Capital
The minimum capital requirements vary from Emirate to Emirate jurisdiction (e.g. Dubai is AED 300,000, while Abu Dhabi only requires AED150,000).
Taxes
UAE corporations only need to pay income tax if their industry is oil and gas or a foreign bank. Otherwise, corporations are exempt from taxes. Also, there is no capital gains tax.
Direct personal taxation does not exist in the UAE. However, most Emirates do levy municipal taxes, or taxes through various fees.
Annual Fees
UAE corporations can expect to pay annual renewal fees of AED 2,000.
Public Records
UAE corporations are able to use nominee directors and shareholders for increased privacy.
One must file annual financial and taxation statements with the Securities and Commodities Authority. The agency publishes these statements on their website.
Operating Your Company
Accounting and Audit Requirements
Auditors must be appointed if a corporation is joint stock or a limited liability. UAE corporate entities, in turn, must file their audited financial statements with the Ministry of Economy, and have their trade licenses renewed (if applicable).
The UAE does not allow for any exceptions as far as the appointment of auditors is concerned, nor are there restrictions. However, one of the Big Four auditing firms must audit certain corporations, especially banks.
Corporations must prepare annual accounts, and banks must prepare their accounts and follow the requirements of the Central Bank of the UAE.
All listed corporations must file both quarterly reviewed and audited financial statements in English and Arabic with the Securities and Commodities Authority, which publishes these annual statements on its website.
Annual General Meeting
A UAE corporation must have an annual general meeting. Fortunately, these principles do not need to hold these meetings in the UAE. The parties can hold meetings for UAE corporations anywhere in the world.
Time Required for Incorporation
UAE corporations can expect the entire process to take from 8 – 20 days. The completion time depends on the approval the corporate name, as well as, how accurately the applicant completes the registration documents.
Shelf Corporations
UAE corporations can use shelf corporations for faster incorporation.
Conclusion
UAE corporations have several benefits including: no corporate, income, capital gains taxes. Since 2018, UAE now charges VAT taxes. In addition, English is widely spoken. Moreover, one can have access to Free Trade Zones. The UAE company gives one strategic access to locations in the Mideast, Gulf countries, and North Africa. UAE offers political and economic stability, ease of doing business, and only one shareholder required to incorporate.
