In UAE, a company can be formed in any of the following three jurisdictions: Mainland, Free Zone and Offshore.
A mainland company is an onshore company and license to establish the entity is issued by the Department of Economic Development (DED) of the respective emirate. A mainland business is allowed to do business in the local UAE market as well as outside UAE without any restrictions. It is necessary to understand the term "Mainland" as per DED's definition in order for an entrepreneur to take a decision to register a Mainland Company in UAE. Different types of license under mainland are:
- Professional license
- Commercial license
- Industrial license
- Tourism license
In commercial & industrial licenses, 51% shares is owned by an UAE National and 49% shares is for the expat partner. In professional license, 100% shares is owned by expat partner and an UAE national is appointed as a Local Service Agent.
Following are the facts about Mainland Companies in UAE.
- These companies are regulated under Federal Law No. 2 of 2015 which came in to effect on 1 July 2015.
- No expatriate can own more than 49% shares in any commercial limited liability company (LLC).
- GCCnational can own 100% shares in any company.
- GCCcompanies or individual GCC national can make partnership with UAE national.
- For certain business activities, as per law only UAE national can own 100% shares.
- Business activities covered under professional category can be 100% owned by expat / foreigners but it is mandatory to have UAE national as a service agent.
Free Zone Company
Establishing a business entity in one of the UAE's many Free trade zones (FTZs) can be an attractive option for foreign investors. UAE has over 37 FTZs of which more than 30 are located in Dubai. The main attraction for setting up a company in a free zone is that there is no UAE national shareholding required. All free zones in UAE offer the following incentives:
- 100% foreign ownership of the enterprises
- 100% import and export tax exemptions
- 100% repatriation of capital and profits
- No currency restrictions
- Corporate tax exemption for 15 years, renewable for an additional 15 years
- No personal income taxes
UAE Free Zone companies can only operate within the free zone boundaries and are generally limited to performing solely those activities listed in their license.
Offshore Company Setup
UAE Offshore company registration is a very popular method of doing business in the Middle East region. In UAE there are three offshore jurisdictions – Dubai (Jebel Ali Offshore Company) Ras Al Khaimah and Ajman. They offer similar services but serve different strategic goals of offshore company registration.
The Jebel Ali Offshore Company is an International Business Crown/holds the only offshore vehicle that is permitted to own / hold real estate in the Emirate of Dubai. JAFZA Offshore operated under JAFZA Free zone.
The RAK Offshore and the RAK International Company (RAKICC) are International Business Companies. They provide a flexible and credible option for foreign investors to register an offshore company in UAE without the need to establish a physical presence in the UAE. RAKICC is also allowed to hold the freehold property in Dubai.
UAE Offshore companies offer the following benefits:
- No Corporate tax
- 100% foreign ownership
- 100% Capital and Profit Repatriation
- UAE Bank Account
- International Invoicing
- Limited Liability Company
- Absolute Privacy and Confidentiality
- Ability to maintain multi-currency Bank accounts in the UAE
- Virtual office facilities available in the UAE
If you need any advice related to business setup in UAE, RVG is always there to help you.