Expert Business Counsel on Company Formation in Dubai

  • Why Consider Setting Up a Business in Dubai?

    For starting a business in Dubai, one needs to be well versed with the market, taxation, registration and licensing processes. We at S K Patodia & Associates have got that covered for you. Once you’ve decided to set up your company in Dubai we step up your business agenda and complete all the procedures. This involves compliances like steps required for company formation in Dubai, types of business entities, requirements and time period involved. We offer a conducive and detailed guide for your company formation in Dubai.

    Dubai is one of the most coveted places to set up a business because of its brilliant tax set-up, which makes it one of the most desired business destinations for investors from all prospective zones. There are almost 35 Free Trade Zones in Dubai, all of which have truly captivated investors from all around the globe. The chief benefit of company incorporation in Dubai is that they are exempt from trade barriers, quotas and taxes.

  • Different Types of Companies to Setup in Dubai

    As per the Dubai Company Act, an investor from a foreign country needs to have a partner who is a resident in Dubai and will thereafter gain the major part of the interest. Additionally, Dubai Free Zone is the only place a business person can incorporate a company that is entirely foreign owned. Requirements for registering a company in Dubai vary depending upon the kind of firm one wants to open. Listed below are the popular types of entities one can incorporate in Dubai.

    Free Zone Company

    Free Trade Zone is a distinctly demarcated area in UAE that has a separate tax and customs system from the rest of the nation. Free Zone Companies in Dubai can be in the form of any of the below mentioned structures:

    • Foreign company branch
    • UAE established legal business body
    • Free Zone Establishment where the only shareholder is an individual or corporate
    • Free Zone company with 2 or more individual or corporate shareholders

    Limited Liability Company

    Limited Liability Company or LLC is closest to the concept of a private limited company as understood in common law and is broadly used by immigrants for business setup in Dubai. Additionally, 51% shares are held in UAE resident’s name whereas the rest is owned by the foreign partner.

    Offshore Company

    It is most popularly termed as Non-resident Company or International Business Company. Offshore Company is ideal for business people who wish to carry out international trade in a cost-effective manner. It is similar to an LLC that can be incorporated in an off-shore dominion and does not have tax obligations.

    Branch Office

    It is essentially a branch of foreign company that is incorporated for carrying out the activities of the parent company. It does not possess a distinct legal body of its own and is considered as a part of the main company. Essentially, it incorporates promotional activities or conducting non-trading service of the main company.

  • Procedure to Start a Business in Dubai

    1. Choose the kind of company you want to set up
    2. The main documents required to register a company in Dubai are as follows:
      1. Passport
      2. Residence proof
      3. Bank reference letter
      4. Application form
      5. 6 month bank statement of shareholder / annual financial report
    3. Get the name and the activity of the business approved by the Department of Economic Development
    4. A tenancy contract is necessary to get the company registered in Dubai
    5. A Memorandum of Association has to be created with the sponsor and presented to the DED
    6. Obtain a general trading license
    7. Discover the license appropriate for you, i.e. Commercial, Industrial or Professional
  • Requirements for Company Formation in Dubai

    There are different requirements for Company registration in Dubai, owing to the fact that certain kinds of company are completely foreign owned, work only as a branch or are entitled only to the free zone. The requirements for different business entities are as mentioned below:

    Free Zone Company

    Legal Liability Liable to the extent of shares purchased
    Wholly foreign owned Foreign Owned
    Minimum share capital for registration Varies
    Local Shareholder Not Required
    Resident director Not Required
    Corporate Shareholders Yes
    Individual Shareholders Yes
    Can buy property No

    Limited Liability Company

    Legal Liability Limited
    Wholly foreign owned Only 49%
    Minimum share capital for registration Nil
    Local Shareholder Yes
    Resident director No
    Corporate Shareholders Yes
    Individual Shareholders Yes
    Can buy property Yes

    Offshore Company

    Legal Liability Limited
    Wholly foreign owned Yes
    Minimum share capital for registration Nil
    Local Shareholder No
    Resident director No
    Corporate Shareholders Yes
    Individual Shareholders Yes
    Can buy property Yes

    Branch Office

    Legal Liability Unlimited
    Wholly foreign owned Yes
    Minimum share capital for registration Bond of US$ 16,500
    Local Shareholder No
    Resident director No
    Corporate Shareholders Yes
    Individual Shareholders No
    Can buy property No
  • Our Business Setup Services in Dubai

    Along with the work of company incorporation, we further assist in the service of bank account opening as well as tax consultation for company formation in Dubai.

    Bank Account Opening

    Acquiring a resident visa is the first step to opening a bank account in Dubai. The requirements vary from bank to bank but almost all the companies persist on the attendance of signatories. Documents required for opening a bank account for business registration in Dubai are as follows:

    • Incorporation documents
    • Bank reference letters
    • Past bank statements
    • Directors proof of address

    At the time of incorporation we will further compile your documents considering needs that arise for the opening of a Bank Account. Additionally, we also liaison with banks for appointments. Your process will be consolidated within a minimum possibly time frame.

    Taxation

    Dubai is graded as 4th in the world for tax regime and this facilitated the zone to achieve the sustainable growth of the economy. It is one of the most lucrative business destinations in the world today, due to its 0 % tax rate.

    • Taxes are not levied on dividends, VAT and capital gains
    • Real estate tax is imposed
    • Oil and gas companies are subject to 50% tax rate
    • Branches of foreign are subject to 20% tax rate

    Although Dubai tax administration is favorable, Indian tax authority is rigorous to Tax dividends and capital gains, as worldwide income of Indian resident is taxable. Taxpayers can claim double taxation relief as per the provisions of Double Taxation Avoidance Agreement (DTAA) between India & UAE. Here we help our clients by sharing our expertise of DTAA analysis as well as considering provisions of section 115BBD and other sections of the Act.

  • Advantages and Disadvantages of Company Formation in Dubai

    Free Zone Company

    Advantages of a Free Zone Company
    • 100% ownership without any association to local partners
    • Exempt from corporate and personal tax for a period of 50 years
    • Usage of any currency
    • Immune to local duties on import and export
    • Lenient labour laws
    • Complete capital repatriation
    • Liberal official rules and formalities
    • Effortless recruitment
    • Can participate in more than one venture
    • Simple working environment
    Disadvantages of a Free Zone Company
    • Must operate within the free zone boundaries and cannot trade directly in the UAE market
    • 5 % duty when trying to trade with the UAE market
    • A visa in the free zone entails you work only in that particular territory
    • Setting up the business and capital required is comparatively more expensive
    • Can practice only the kind of activity that a particular free zone is entitled to
    • Certain activities are not authorized, i.e. real-estate, hospitality, transportation, banking, insurance, etc.

    Limited Liability Company

    Advantages of a Limited Liability Company
    • It offers unparalleled access to business in Dubai and the UAE
    • A license can be obtained to indulge in few ventures that are initially restricted by the government
    • It can help business people obtain a substantial presence in the country
    • Easier to open a bank account
    • 0 % tax
    • 100 % repatriation
    • The firm is qualified to hold infinite properties in the UAE
    • Investors are authorized to open branches
    • UAE resident visas are offered to investors
    • No minimum capital required
    • Ease of getting employment visas
    Disadvantages of a Limited Liability Company
    • It is more expensive any other kind of partnership
    • Difficult to transfer ownership

    Offshore Company

    Advantages of an Offshore Company
    • Exempt from personal tax, capital tax, corporate tax and VAT
    • Faster to incorporate
    • Anonymous and private trade
    • Complete foreign ownership
    • No minimum share capital
    • Adaptable and private banking system
    • No restriction on currency
    • Complete repatriation
    • Comparatively cheaper to set up
    Disadvantages of an Offshore Company
    • Not authorized to carry out trading activities in the UAE
    • Not permitted to rent properties
    • Cannot hire employees in the UAE
    • The stay and work visa of employees is not secure
    • Not allowed to engage in activities like insurance, banking and advertising

    Branch Office

    Advantages of Branch Office
    • More often than not, it is the quickest to establish, depending on the situation
    • It can engage in activities related to both the public and the private sector
    Disadvantages of Branch Office
    • Not authorized to import goods within Dubai
    • Generally restricted to conduct activities within the premises of Dubai for which prior approval is required
    • It cannot be formed for the sole reason of promoting the activities of the parent company
  • Time Period for Company Formation in Dubai

    There is no specific time period for company formation in Dubai owing to the different kind of business entities whose time period varies. Nonetheless, it usually takes approximately 15 – 20 days to register a company in Dubai.

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