Frequently Asked Questions – FAQ
- Freezone, Mainland & Offshore Company Formation Related Queries
What is the effect of COVID-19 in the business sector of the UAE?
As in the other parts of the world, UAE was also affected by the pandemic though in a lesser scale. UAE, being a country under the visionary and strong leadership of its rulers, was quick to announce stimulus package for the businesses and industries. The stimulus package announced for SME ( Small & Medium Establishments) which constitutes 92% of UAE business, was well received and thereby saved a large sector of business community from the adverse impact of pandemic. Right now, UAE is getting back to almost absolute normal and businesses are gearing up for the preparation of Expo 2020.
What is the Cost of Business Formation in the UAE?
The cost of company incorporation varies across Free zones and the mainland in the UAE. Aurion Business Consultants offers you customized cost-effective business setup solutions in the UAE. Investor can start a company at a minimum cost approx. AED 5,750 (Only Media Activities). Request for a free quote here.
How can the fees be paid for company setup?
Fees can be paid using Paybylink. Invoice will be sent via Paybylink and client can use debit/credit card to make instant payment by clicking the link.
Why should you setup company in UAE?
UAE is the hub of trading activities in the Middle East. With the largest man-made seaport in the region and the busiest Airport of the world, the country is blessed with political stability, safety, security and connectivity to all parts of the world.
A large network of banks with easy bank account opening procedures and online banking support makes it easy for investors worldwide to do their banking operations.
UAE has signed DTAA (Double Taxation Avoidance Agreement) treaty with 117 countries and hence incorporating a company in the UAE and invoicing from this company is a wise method to save taxes in the investor’s home country.
The high-end infrastructure coupled with zero income tax makes it the most attractive destination of investors around the globe.
How can you Transfer the Fees for Company Setup?
You can transfer the fees for Company Setup via the Pay By Link. An invoice will be generated and shared with you via Pay By Link, you can use Debit/Credit Card to do an instant payment by clicking on the link.
Apart from that, we also accept online bank transfer, cheque, Point-of-Sale Machine (@ Our Office Premises), and Cash.
Do You Need to Rent an Office in Dubai for Business Formation?
Renting physical office is not mandatory to setup companies. In the mainland, there are virtual offices available at minimum costs. In Freezones, Virtual offices, sharing desk, physical offices & warehouses are available.
What type of Business License should you choose?
Based on the business activity you can choose three types of licenses – Commercial (For Trading Companies), Professional (For Consultancy Companies), Industrial (For Manufacturing Companies).
What are the steps in Business Formation in the UAE?
Setting up a company starts with choosing the business activity, choosing the business jurisdiction, tradename reservation, submission of required documents, applying for a trade license, applying for residence visa & bank account, obtaining additional clearances (customs registration, chamber of commerce registration, etc.).
Whom should you contact to register company in UAE?
Since several Licensing authorities issue various types of Licenses at different costs, it’s always better to contact a credible Business Consultant like AURION to get the latest information and assistance.
Why should you choose Aurion for Company Formation in the UAE?
Aurion will assist you in choosing the right Free Zone Package from the 40+ Free Zones of UAE. We have a team of legal and business experts to assess your requirements and provide the right advice and solution.
Choosing the right Company Formation package from the various offerings of the Free Zones is quite challenging for foreign investors. We design the right package for you and also provide you with an End-to-End Company Formation & Allied Services Suite that fits all your requirements.
About Free Zone, Mainland & Offshore Business Formation in UAE
What are the type of companies in the UAE?
Broadly there are 3 types of companies in the UAE – 1) Free zone Company 2) Mainland Company 3) Offshore International Business Company (IBC).
What are the main differences between freezone, mainland, and offshore companies?
Freezones are designated areas within the UAE where special rules and regulations of respective Free Zone Authority applies with regard to trade and commerce. Freezone companies are essentially onshore companies that can be 100% owned by expatriates. No import export duty is charged to a Freezone company.
Trading companies in Mainland are registered as LLC (Limited Liability Company) with 51% shareholding for UAE Local Citizen. Offshore IBCs are non-resident companies not eligible for office premises or residence visa quota and it cannot do any business within UAE but can have a Bank Account.
Free Zone Business Setup
What are the advantages of Business Setup in Dubai Free zone?
Company incorporation in the Free zone has numerous advantages the main ones being 100% foreign ownership, 100% repatriation of profits, no tax or import/export duties, no corporate tax, easy company incorporation, world-class infrastructure.
What are the types of Business Entities available in the Free zones of UAE?
The Free zone jurisdiction allows the following business types to set up their base – Free zone Limited Liability Company, Branch of an International Company, Branch of a Company already in operational in Dubai, Free zone Establishment (Single Shareholders), Free zone Company (2 to 5 Shareholders).
How much time will it take to register a Free Zone Company?
Depending on the legal business form, business activity, office type, business license package, free zone jurisdiction, documents submitted, a Free Zone company can be registered within 3-4 hours of the same day of document submission.
How to set up a Trading Company in the UAE Free zone?
Choose the exact trading activity from the list of activities available in the Free Zone list, reserve the tradename, submit an application form with shareholder details, shareholder documents (passport, visa copy), rent an office space, apply for other clearances & documentation (Customs, Chamber of Commerce, ISO Certifications, etc.)
Can a Free Zone Company in UAE do business with the Mainland?
Yes, to trade in the mainland, the Free Zone can appoint a local DED (Department of Economic Department) registered agent for sales & distribution, open a branch in the mainland, start an LLC Company, start a Civil Works Company. Any trade done by freezone company to mainland or vice-versa will be treated as export/import and UAE customs law applies.
Can a Free Zone Company in UAE only Rent an Office within its Jurisdiction?
Yes, the Free Zones in the UAE are governed by various jurisdictions and each has a different policy and regulation. Hence, companies registered under a specific Free zone is granted access to the office space only in the respective free zone.
Is Customs Duty applicable to Free zone businesses?
Free Zone offers 100 % foreign company ownership. Hence, 100% repatriation of capital & profits. Exempted from all import & export duties, no corporate tax. A 5% VAT will be applied for all domestic transactions performed inside UAE by the Free zone company.
Which are the Cheapest Free Zones in the UAE to start a business?
The Cheapest Free Zone License available in the UAE is from International Free Zone Authority. (11,500 AED, No Visa, Virtual License) There are cost-effective options available in Sharjah Media City, Ajman Free Zone, and RAKEZ for start-ups and entrepreneurs to start their business establishments.
Mainland Business Formation
What are the advantages of Mainland Business Formation in the UAE?
Dubai mainland companies have a host of benefits like actively trade in Dubai Mainland, rest of UAE and GCC Countries, expand the presence by opening new branches, hiring more office staff, participate in government tenders & projects, and many more.
How much time will it take to register a Mainland Company in UAE?
Depending on the business activity and pre-approvals required for certain activities the time taken to register the Mainland Company may prolong. In an ideal case, if all documents are in place, you can get a mainland license in 3-4 Working days.
What is the most common Legal Business Form in the Mainland of UAE?
Limited Liability Company (LLC) is the most common legal business form in the Mainland of UAE. LLC Company offers better security and flexibility to expand business in the local UAE market. It requires to have a UAE Local as the partner and have to own majority shares (51%).
Does a Mainland Company require an Office Space on Rent?
Yes, to get a Mainland Company registered you must have a physical office space and tenancy contract in the company name. The same has to be submitted for inspection and review to issue the company license.
Do you require a Local Sponsor in the Mainland for Business Formation?
Yes, to register a mainland company in UAE, there must be a local sponsor who will be owning 51% of shares of the company. There is also a Corporate Sponsorship option available for foreign investors.
What is a Civil Work Company?
Foreign owners can register a Civil Works Company in the Mainland of UAE. All professional services such as Consultancies, legal Advisories, Doctors, Chartered Accountants, etc., can register a Mainland Company. (100% Ownership).
There is no requirement for a Local Sponsor, however, they have to appoint a Local Service Agent (LSA) for a yearly fee to liaise with the Government Department as a Contact Person of the Civil Work Company. The LSA will not be owning any shares or involved in the management activities of the company.
Is VAT applicable to the Mainland Companies in the UAE?
Yes, for all transactions initiated in the Mainland, the company has to pay a 5% VAT to the Federal Tax Authority (FTA). However, there certain Zero Rated items for VAT, such transactions are free of VAT.
What are the Steps in Mainland Business Formation in the UAE?
Mainland business in UAE is formed in 3 phases
Phase 1 – Choosing a business activity and submitting the list of company names choices for approval.
Phase 2 – Once the investor submits all the legal documents (application form, passport copy, educational certificates, business information, financials, etc.), the authorities will assess the investor details and notifies the approval accordingly.
Phase 3 – The authority authenticates the business entity, issues business license, other required clearances, and the investor can proceed to the residency visa application.
How can you close an LLC Company in UAE?
9 Steps in Closing an LLC Company in Dubai
- Appoint a Registered Company Liquidators
- Prepare the Board Resolution for liquidation
- Get the Clearance from the Ministry of Labor and Immigration
- Obtain the Bank Closure Letter
- Clear all Financial Liabilities
- Newspaper Advertisement for No-Objection from Stakeholders
- Conduct an Audit and Obtain Non-Liability Certificate
- Submit the Company Cancellation form, supporting documents, & fees to the Department of Economic Development, Dubai (DED) Authorities
- Obtain the License Cancellation Certificate
Offshore Business Formation
What are the limitations of an Offshore Company Setup?
Offshore Company Formation in UAE has few limitations such as – No provision to issue residency visa, no trade within UAE, no leasing or renting a Local Premise in the UAE.
Can an Offshore Company Open a Bank Account in the UAE?
Yes, an Offshore Company can open a Bank Account in the UAE. The company owner will have to visit the UAE to do the paperwork with the bank. The bank will be assessing business activity, company profile, fund flow, etc. UAE has strict Know-your-Customer (KYC) Norms for Offshore Company Bank Accounts.
How much time will it take to Register an Offshore Company in the UAE?
Offshore Company can be incorporated in less than 2 Working Days. Offshore Company registration is relatively easy by applying through an online registration form along with the right documents. In normal circumstances, the company registration will happen even without the physical presence of the company owner.
Can Offshore Company buy Property in Dubai?
Yes, Offshore Company registered in RAKICC and Jebel Ali Free Zone (JAFZA) are eligible to purchase residential property in the Offshore Company’s name from designated freehold areas in Dubai. However, there are certain restrictions in terms of usage and disposal of the property. Offshore Company is not eligible by UAE Legal Laws to purchase any commercial property in the UAE.
Residence Visa in the UAE
How do I obtain a Residence Visa in the UAE?
Residence Visa in the UAE can be obtained through multiple ways such as applying for a job, purchasing a property, getting sponsored by the spouse, opening a company, and applying for the freelance permit.
What is the Long Term Residence Visa in the UAE?
Long-term Residence Visa was introduced by the Government of UAE for promoting trade, economic activities and invite fresh talents to UAE. For Expats to contribute more actively to the growing economy of UAE, 5-Year and 10-Year Long term visas were introduced for entrepreneurs, academicians, scientists, outstanding students, high-income executives, creative professionals, etc.
Why should you hire a PRO Agent for my company?
There are a whole lot of business support services undertaken by a PRO. It includes Visa Applications (Applying, Cancelling, Renewal); liaison between Government Authorities and client for legal documentation, paperwork for various business activities (Chamber of Commerce, Foreign Affairs, etc.)
How long will it take to process a Residence Visa in the UAE?
Applying for a UAE Residence Visa from being in the Country and submitting all the required documents to the concerned authority in time, it will take less than 4-5 days to receive the e-visa. Then you can proceed with the in-country status change and the visa stamping.
In an ideal case, it will approximately take 8-10 days to complete the whole process of Residence Visa in the UAE.
Corporate Bank Account Opening in the UAE
How to Open a Corporate Bank Account in the UAE?
The Banking Sector in the UAE is very robust and advanced. Corporate Bank Accounts can be opened as soon as you incorporate a company in the UAE.
Banks in UAE have their compliance regulations the investor has to meet. Also, there is a minimum monthly balance the company has to maintain (50,000-200,000 AED) depending on the nature and risk of the business activity.
What are the documents required for opening a Corporate Bank Account in the UAE?
The following are the documents required for opening a Corporate Bank Account in the UAE. Based on the client profile and business activity, the Bank might request additional documents as part of the compliance process.
- Company Trade License, Certification of Registration, Share Certificate
- Board Resolution for Authority Signatory to manage the bank account
- Business Profile, Expected Annual Turnover, Supplier information, Transaction details
- Passport Copies of Shareholders and Authorized Signatories
- Any other documents that the bank may ask for (Company Memorandum & Articles of Association, etc.)
Can a Foreign Company open a Corporate Bank Account in the UAE?
Yes, Foreign Companies are eligible to open a Corporate Bank Account in the UAE but the process is tedious.
It requires document attestation from the UAE embassy in the home country as well as attestation from the UAE Ministry of Foreign Affairs. An easy alternative is to set up a new company/branch of the foreign company in the UAE and apply for a Bank Account.
Should the Authorized Signatory be physically present in the Bank for Account Opening?
For Bank Accounts Opening in UAE, the signatory has to be present during the bank account open with the documents for assessment and review. The shareholders of a company can assign any one of them to be the authorized signatory in the bank via a resolution of the company. And the shareholder appointed as above can visit the bank to open, operate and close the account.