13 08 2020

What type of companies can be opened in the UAE?

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According to many businessmen from all over the world, the UAE is one of the best places to open and develop your business.

Businessmen mainly pursue two goals when starting a business in the UAE. The first is to organize a successful business in the international market. The second is to sell goods and services within the Arab Emirates.

In this article, the types of companies available for registration, their distinctive features and benefits will be considered.

The United Arab Emirates is a tax-free place with a high business reputation. To set up a business in the UAE you do not need to perform a complex of operations and no matter what type of company you choose. It all comes down to one simplified diagram:

1 - obtaining a license for your chosen type of activity;

2 - opening a bank account;

3 - the beginning of the company's activities.

1 - So, let's start with the companies, called “local or mainland companies”.

If your goal is to carry out activities within the UAE, then you definitely need to register a local company. Only such companies have access to the domestic market of the Arab Emirates.

This type of company has a major drawback that can be eventually settled. The disadvantage is the foreign investor's share of capital ownership: shares cannot exceed 49%. The remaining 51% of the shares must be issued to a partner, a UAE citizen. Local partner (sponsor) - not less than 51%, foreign investor - not more than 49%. Now about how you can eliminate this drawback. You can conclude an agreement with a partner, where he will indicate that he does not claim to management and profit from the company. Of course, for remuneration in the form of a fixed annual payment.

2 - Now let's move on to companies registered in the territory of Free Economic Zones.

The UAE government has created a large number of independent FEZs. On their territory you can easily open a company.

In contrast to local companies, we would like to mention that a foreign investor has the right to fully own a company without involving local partners and additional agreements.

The area of the company's activity within the FEZ is the area in which the business is registered and any other country of the world. The only exception is the UAE domestic market. As we wrote earlier, only local companies can operate within the United Arab Emirates.

Such companies are ideal for international trade, placing a warehouse with goods or organizing of their own production within the zone, and then selling products on the international market.

Why is it so profitable to do international trade? There is no customs tax on the export and import of goods.

3 - And the final type of company is offshore.

These companies are distinguished by the ease of opening. Remote company opening is available in some Free Zones. But it is worth noting that offshore companies do not have the right to operate in the United Arab Emirates, and the owners of offshore companies will not be able to obtain a UAE investor visa and resident visas for their family members or company employees.