More Profitable than in Other Countries: Opening Business in Dubai

Entrepreneurs from all over the world come to the UAE. They register their businesses there, obtain freelancer visas, and purchase real estate.

Tax Advantages in Dubai: Full tax exemption (except VAT-5%).

0% tax on:

• profit;
• capital withdrawal;
• capital gains;
• property and real estate;
• wages and income of individuals.

The ability to send cargo anywhere in the world is facilitated by Dubai’s convenient transport hub for air and sea communications.

Financial Benefits in Dubai:

• Developed banking system;
• Financial and investment security;
• The fixed exchange rate of the UAE currency to the dollar at 1 dollar = 3.65 dirhams (unchanged over the past 20 years).

Corporate Benefits in Dubai:

• Lack of a register that would allow identifying the ultimate owner of the company;
• Non-public register, information about the company’s shareholders is not available to others;
• No obligation to provide tax information to other countries;
• No need to rent a physical office for certain types of companies;
• Some activities do not require auditing or accounting.

Advantages over Other Countries:

• The UAE is not a member of the EU and is not subject to EU regulations;
• The UAE is not on the OECD blacklist of tax havens;
• The UAE is not included in the FATF blacklist;
• The UAE is not a member of the OECD, resulting in minimal information exchange.

READ: Bybit Moved to Dubai: Five Years of Success and Strategies for Successful Trading

Company Registration Options: Free Economic Zone (FEZ) or Mainland

Free Economic Zones (FEZs): These are areas within the emirate, each following its laws and regulations for new businesses. There are more than 50 free zones in the UAE.

Mainland: This is a company registered on the mainland of the UAE, within Dubai, excluding the territorial boundaries of free economic zones.

Ownership

In Free Economic Zones: 100% ownership.

On the Mainland: Until April 2020, foreign investors could only own 49% of the shares of a mainland company, with the remaining 51% owned by the Emirati sponsor. However, changes in the law allow 100% business ownership for most activities, except certain sectors.

Territory of Activity

In Free Economic Zones: Companies are only allowed to conduct business outside the country or inside the free zone where they are registered. To operate in the rest of the UAE, they need to work with local intermediaries.

On the Mainland: A local company can trade directly in the local market, in any other free zone, or outside the UAE without restrictions, subject to obtaining permission from the free zone administration.

Office Selection

In Free Economic Zones: Companies are obliged to rent an office within their zone, limiting their choices. Offices and warehouses must be located within the free zone.

On the Mainland: The company’s office can be situated in any part of the emirate, offering a wide variety of options in the market. Production and warehouse spaces can be rented anywhere in the emirate.

Visas

In Free Economic Zones: Companies in free zones may face restrictions on the number of employee visas according to the zone’s regulations.

Permits for Business Creation

In Free Economic Zones: When registering a company in a free economic zone, the license is issued by the zone itself.

READ: The Dubai World Cup: Horse Racing’s Grand Spectacle

Mainland: All licenses are issued by the Department of Economic Development of the respective emirate (DED).

Company Audit

In Free Economic Zones: Required.

On the Mainland: Not required.

Activities

In Free Economic Zones: The list of available activities may vary in each Free Zone. While many specialize in specific industries like healthcare, media, and technology, there are also universal free zones.

On the Mainland: A wide range of activities is possible (over 1000 activities).

Submission of Documents by Partners

In Free Economic Zones: Partners can submit documents for company registration without their physical presence or a power of attorney. However, the partner must have visited the UAE at least once previously for remote registration.

On the Mainland:  Submitting documents for company registration through a partner requires a power of attorney.

Company Registration Period

In Free Economic Zones: Usually takes 2-3 weeks (may vary depending on the chosen free zone).

On the Mainland: Approximately 1 week.

Participation in Government Tenders

In Free Economic Zones: Not permitted to participate in government tenders.

On the Mainland: Can participate in government tenders.

READ: Investing in Dubai Villas May Become Irrelevant: Understanding the Situation and Revealing Myths

Additionally, in Free Zones:

• Opening a real estate agency is prohibited.
• Remote workers can register in the free zone and provide services on the UAE mainland.
• Possibility of visiting the customer’s site.
• Prohibited from working at the customer’s site. For example, a designer creating work in an office might visit a client on the mainland, take measurements create a design in his office, and then deliver it to the client. This cannot be physically controlled.