Dubai has earned the epithet of an internationally renowned trading hub in UAE, due to its prudent business set up and highly favorable operating environment. It provides maximum business opportunities, tax-free ownership, flexible working hours, complete anonymity, limited liability, and restricted use of the property, in setting up a business in Dubai. The emirate also offers lucrative domestic prospects for international businesses. However, before you plan to establish a business in Dubai, it is advisable to avail the services of skilled personnel who can guide you on legal issues, prepare your business proposal, negotiate with suppliers, obtain necessary licenses and registrations, as well as deal with financial matters.
There are several reasons why an individual or firm would want to establish a business in Dubai, and one of the main considerations is tax benefits. It is a known fact that the country possesses some of the most favorable tax climates in the world, with no personal income tax or corporate tax required. Consequently, every business owner hopes to reap tax relief, as he/she may be entitled to both national and offshore tax treatments. But, there are laws that prohibit certain types of foreign investment, especially through companies based in Dubai.
Therefore, if you are planning to establish a business in Dubai, it is imperative to undertake a proper business formation procedure, which will enable you to enjoy tax benefits and enjoy other business advantages available to individuals. However, it is difficult to find a legal entity that will serve your purpose, without violating any laws. Therefore, before you proceed with setting up a company in the emirate, it is advisable to seek the services of professional law firms that offer formation services. They are well-aware of all the requirements involved in the formation of a company in Dubai and can easily accomplish your task within a short span of time.
When you decide to set up a company in Dubai, it is essential to apply for an EID (oil export) or an E visa (oil worker visa). The reasons for applying for these two different kinds of permits are that they are not considered as legal requirements by the government of UAE and their application cannot be handled by the companies based in the country. Similarly, both of these permit types are valid for six months each year, with the first three months free of charge. Therefore, it is important for the individual to plan his budget and financial transactions in advance, so that he/she does not face any problems when it comes to these issues.
Once you have obtained the necessary documents, you can proceed with the final formalities related to the establishment of a company in Dubai. These documents include a letter of agreement between the person initiating the venture and the corporate sponsor, a registration form, payment of an assessment fee, an income tax certificate, a confirmation of the corporate registration of the company and an export/import license. If you need an investor visa, you will also need a visa number from the issuer of the investor visa.
Once all these documents are in place, you can proceed with the actual business setup in Dubai. The company can be established through one of the many commercial centres located in Dubai like Madinat Jumeirah, Dubai Festival City or Arabian Ranches. You
may choose to purchase shares from this company or get into a limited partnership with other investors. You can trade freely in all markets across the world with the help of your trade license. If you want to expand your business setup, you have a choice of opening a corporate bank account in Dubai which will enable you to start off trading even further.
As far as the legal requirement is concerned, all UAE national corporations and entities require a valid business permit from the Dubai Ministry of Economic Affairs and Trade. This business permit enables the sponsor to start off trading and perform all the commercial activities as per the law of the emirate. Similarly, investors from foreign countries need to get a sponsor who is a UAE national or a designated representative of that country. The sponsor provides a credit facility to the individual and acts as a coordinator for all business activities in Dubai during the initial period of investment.
There are several ways to benefit from the tax-free status of the Dubai Company Registration Office (DEO). You may invest an amount not exceeding the minimum capital for the year in any of the businesses listed with the DEO. Moreover, there is no need to pay income tax until the company makes profits. The company may invest money in different properties and pay the income tax on them at the end of the year. All these facilities and benefits are available only to the nationals and no other foreign national. However, there are some localised business setups in Dubai such as food stalls, car boot sales, street vendors etc, which you may not be able to enjoy for the simple reason that they are not registered with the Dubai Companies House.