For a country currently ranked 16th on the World Bank’s Ease of Doing Business Index, The United Arab Emirates (UAE) has displayed remarkable ambition in declaring their goal of topping the 2021 edition of the World Bank’s Ease of Doing Business rankings.
Given that 100% foreign ownership was only allowed from 1st December 2020 onwards, the UAE definitely has a lot to catch up on in terms of policies and regulatory framework in order to challenge the dominance of more established business hubs like Hong Kong and Singapore that have been operating with such business-friendly models for much longer. However, with UAE’s willingness to continually update and reform regulatory frameworks, Dubai has combined this immense potential with a strategic location between Asia, Africa and Europe to become one of the most promising business hubs in the Middle East. Dubai is the most heavily populated city in the UAE and has put into place initiatives of its own that make it very much worthwhile for you to register company in Dubai.
One of these initiatives is Smart Dubai, that aims to help Dubai leverage on emerging smart technology such as Blockchain, Artificial Intelligence and Data Science to improve the everyday experiences of its residents and visitors. With all this in mind, here is our guide to setup company in Dubai in 2021 for you to tap on its immense potential to achieve your long term business goals.
Step 1: Choosing a suitable corporate entity
There are many different company structures in Dubai, each tailored for different types of businesses. When deciding the most suitable company structure, it is important to consider various factors that include but are not limited to availability of personal liability protection, tax ramifications, ownership and management flexibility as well as compliance requirements.
Common types of foreign companies include:
Dubai free zone companies. There are various free zones in Dubai with different specialties that you can choose to establish your business. Offering attractive taxation regimes, these free zones are specifically catered towards import and export firms. However, it is limited in the sense that it can only conduct local business through appointed distributors.
Limited liability company. Key benefits of this structure are that it is easy to incorporate and manage, offers liability protection, and can operate indefinitely regardless of transfer or changes in ownership or membership. Different requirements might apply if they are incorporated in the free zones.
Civil company. Mainly used by professional services firms, regular investors should be wary since this structure offers no form of liability protection.
Joint venture company. Behaves similar to an LLC, but require a local partner owns a majority share in the company. This might make business easier for those with local networks since you are exempted from certain license requirements.
Foreign offices. Otherwise known as a branch office, they are only an option if you have a pre-existing incorporated parent company. Although they are easier to manage, branch offices do not offer limited liability, making the parent office fully liable for the debts of the branch office. Thus, they would be more suitable if you are looking to expand the same product line into the Middle East.
Partnerships. Partnerships require that one of the partners be a UAE national, thus this structure is not as commonly used.
Step 2: Reservation of company name
You will need to reserve your preferred company name with the Dubai International Financial Centre, Registrar of Companies.
Step 3: Preparation of supporting documents
In most cases, the directors and shareholders are required to provide basic KYC documents. Some of these documents include the names of directors, certified true passport copies, proof of address, bank reference letter and CV.
Investors who are looking to incorporate in UAE will need a local registered office address. This office will be used to maintain all corporate records and official documents.
Based on the corporate structure of your choice and your desired business activity, you will also need to prepare the Articles of Association, business plan and other incorporation documents.
The drafted Articles of Association should include key information about your company and its directors, the amount of subscribed share capital, share classes, duration of the company and other information with regards to your business activities.
Step 4: Filing for registration
You can then proceed to file for registration with the Registrar of Companies.
Upon approval, you will receive the Certificate of Incorporation, Memorandum and Articles of Association and other corporate documents.
According to your business activities, you will also need to apply for the relevant business permits.
Step 5: Corporate Bank Account Opening
After successful company incorporation, you will need to open a corporate bank account in order to facilitate payments from customers and to suppliers. A separate corporate bank account from your personal bank account is usually required as it prevents creditors from piercing the corporate veil to lay claim to your personal assets, and also makes it a lot easier for you to track and manage the financial health and performance of your business. Corporate bank accounts also offer more convenient payment options in multiple currencies, facilitating any international transactions that your company would have to make.
In general, a corporate bank account opening will take roughly four weeks. In most cases, the directors and shareholders will not be required to travel.
Once your account has been successfully opened, you will receive your internet banking token and access codes.
Step 6: Financial reporting and taxation obligations
In order to legally conduct business, you will need to comply with the relevant financial reporting and taxation requirements of the UAE.
You will also need to prepare your company’s annual financial statements and tax returns. Audits are also required as per Dubai’s Commercial Law.
All businesses located outside the Free Trade Zones also need to file financial declarations with the Ministry of Commerce annually according to International Financial Reporting Standards.
If you plan to be physically present and working in Dubai, you will also need to secure a work visa.
Find out how you can setup your business easily in Dubai by emailing us at email@example.com