Establishing a Company in United Arab Emirates

Establishing a Company in United Arab Emirates

The United Arab Emirates (UAE) is a Muslim-Arab Federation located in the Persian Gulf and consists of seven Emirates. The wealthiest and most well-known are Dubai and Abu Dhabi, while the other five Emirates include: Ras Al Khaimah, Ajman, Fujairah, Sharjah and Umm Al Quwain. Each of the Emirates has its own laws and internal policy, however they share joint foreign and defense policies. The country's total population numbers roughly 10 million residents, of whom nearly 90% are foreign workers, and only a minority are UAE citizens. The Federation gained its independence in 1971, and it has been gradually extending its international relations since that time. The UAE's acceptance of The West over the past few decades has positioned the country as a leading regional center for commerce, transportation, finance and investments.

Types of companies

In the UAE, the area in which a company is incorportaed defines its classification in terms such as structure and taxation. The three most common types of companies are:

Mainland companies – these companies are allowed to operate both in the UAE as well as in ither jurisdictions with no limitations. Recently, the legal requirement for 51% of the company’s shares to he held by a local resident has been canceled for most types of activities. 

Free Zone Companies – Free Zones are financial areas in which one can provides services and engage in commodity trading while enjoying relatively convenient tax and custom rates. Incorporating a company in one of the UAE's Free Zones allows it to operate within the UAE (B2B) as well as in other jurisdictions. Another advantage which makes the UAE's Free Zones attractive to foreign investors in the fact there is no legal requirement for local ownership. A few of the more known Free Zones are:

• International Free Zone Authority (IFZA)
• Jebel Ali Free Zone Authority (JAFZA)
• Dubai Multi Commodities Center (DMCC)
• Fujairah Creative City Free Zone (CCFFZ)
• Sharjah Media City Zones (Shams) 

Offshore Companies – an Offshore company is not considered a local company which means it can operate only outside the UEA.    

The Leading Emirates

Abu Dhabi: The largest, most heavily populated and wealthiest of the 7 Emirates, Abu Dhabi spans roughly 90% of the UAE's territory and is responsible for two thirds of the country's oil production. Its capital is the city of Abu Dhabi, which is also the national capital.

Dubai: The UAE's second largest Emirate. While Abu Dhabi revolves around an oil economy, Dubai is the country's largest business and tourism center. Extensive development efforts, legislation that is supportive of business and free trade zones attract massive foreign investment to the Emirate, estimated at approximately $130 billion a year. Dubai is widely known for grandiose infrastructure and tourism projects that include one of the world's busiest airports, artificial islands, super deluxe hotels and some of the planet's tallest buildings.

Jebel Ali: Dubai's free trade zone is considered a paradise for investors owing to substantial regulatory concessions that allow for 100% foreign company ownership and provide for very low to 0% tax rates. Thousands of companies operate within the trade zone and it constitutes Dubai's primary source of income.

Ras Al Khaimah: Situated in the northern region of the Arabian Peninsula, Ras Al Khaimah borders the Strait of Hormuz and is the fourth largest Emirate. No oil was discovered in this Emirate and its economy is based on real estate, tourism, industry and mining. Over 15,000 international businesses operate within the Emirate, in over 50 different sectors. "The Khaimah Economic Zone", launched in 2017, is today one of the Gulf's largest economic zones, offering financial incentives and well-developed infrastructure.