Company Formation

Company Formation in UAE:

Establishing business in UAE is an excellent way to legitimately book international profits without having to pay any direct tax on income. Besides, there are no capital gains or personal income taxes in UAE.

Businesses prefer UAE for company formation because of its reputation of a global business hub, offering international trading solutions and well -regulated business friendly environment. 

Many businesses choose to establish a Holding or Investment Company, here in the UAE, which is an excellent, long-term option.

The UAE economy is clearly divided between the onshore, and offshore sector. the offshore sector consists of several Free zones.

The onshore until now which was dominated by local business interests, with restrictions on foreign ownership has also been evolving by allowing 100% Foreign Ownership in certain sectors. A change that only demonstrates UAE’s commitment towards ensuring ease of doing business.

The Federal Government regulates economic activity separately in each of the seven emirates. Dubai is one such emirate amongst these seven.

In Dubai, the Authorities have created an environment that is well ordered without being unduly restrictive and offers operating conditions that are among the most liberal and attractive in the region. There are many options available to international companies and the advantages of having a presence in the Middle East are considerable.

The United Arab Emirates has a location advantage that allows global outreach because of being strategically located between Europe, Africa, and Asia.

It is well known now that businessmen and women in the region prefer to deal with people they know and trust. Relationships are far more important in the Arab world than in western regions.

Services we offer include:

• Advisory Report:

Before we undertake any activity, we are always surrounded with many questions and multiple choices to decide from:-

• We understand, it all starts with a simple What to do? Once you have decided on the business that you want to undertake, there are other questions that follow suit:

• How to do?

• Where to go?

• Whom to go to?

• What should I choose Mainland or Free Zone?

• Free Zones, there are 40 plus Free Zones in the UAE, which zone shall be most supportive for growth of my business?

• How much will it cost?

• By When can you start doing the business?

Before, making the big decision to start or expand your business its important to convince yourself, your partners and business associates that it's a viable option.

• Company Formation in:  

• Mainland

• Free Zones, and

• Offshore

• Nominee Directors

• Drafting and Vetting of Legal Agreements for your business:

• Sale / Purchase Agreement,

• Employee Agreement / Contracts,

• Power of Attorney ( General & Specific),

• Non-Disclosure Agreements,

• Rent Agreement for your office and other business premises,

• Agreements with Vendors and Service Providers,

• All other agreements related to ensuring safety and continuance of your business.  

• Industrial Licensing

• PRO Services

• Post Company Formation Compliances:

• Assistance in Conducting Board and Shareholder Meetings:

• Preparing Agenda for the Meetings, Drafting Minutes of the Meeting, Advisory on compliance and ensuring timely filing of documents with the Authorities including renewal of your business licenses.

• Governance Audits and advising on changes to be made to ensure good Corporate Governance practices

• Board Evaluation would include process and individual Board Members Performance Evaluation

• Familiarization Program for your Board of Directors to help them stay abreast with the changes in the legal space and ensure better governance.

• Advisory on the Board and its Committee Formation and Terms of Reference.

• Preparing the Directors Report and assisting with holding the Shareholders Meeting

• Assisting in filing necessary forms and documents with the Authority

• Setting up a Secretarial Department for your entity.

• Advisory on changes in laws and regulations and helping businesses keep pace with the change.

• Registration and Protection of your Intellectual property Rights viz., Trademark, Copyrights, Design

Advantages of setting up your business in UAE:

• No direct taxes on personal income or business profits earned in the mainland.

• No limit on the number of visas, depending on the size & activity of the company.

• Efficient and effective infrastructure.

Legal landscape of the UAE has been evolving, focus on instilling governance has been one of the key reasons behind the introduction of these changes, the intent is to make the economy not only more business friendly but also more investor and stakeholder friendly. The UAE, has recently introduced major changes in laws like:

A) Identification of the Ultimate Beneficial Owner (UBO)

In the UAE, a Beneficial Owner could be defined as any natural person who ultimately owns or controls the Legal Person, whether directly or through a chain of ownership or control or any other indirect means.

In case of a transaction, a natural person on whose behalf the transactions are being conducted or who exercises ultimate control over a legal person and finally owns or controls direct or indirect equity shares or shares of 25% or more are persons who could be identified as a Beneficial Owner.

A question that often ponders in one’s mind is, on its applicability.

We would like to clarify that all companies registered in the UAE, including the Free Zones, are subject to registration procedure with respect to the Beneficial Owner’s data with the exception of Public Shareholding companies and companies 100% owned by federal and local government agencies or affiliated with companies that are 100% owned by the UAE.

Beneficial Owner must be identified and registered for all types of license holders.

Licensed Legal Forms that may not be subjected to the above are:

• Business Forums

• Cooperative

• Government Liaison Office

• International organization

• Public shareholding (excluded)

You still have questions on the applicability and ways to ensure compliance Contact US, we are here to help and support you. 

B) Economic Substance Regulations (ESR):

In response to assessment of the UAE’s tax framework by the European Union Code of Conduct Group on Business Taxation, the UAE, issued the Economic Substance Regulations on April 30, 2019. Guidance on the application of Regulations was issued on September 11, 2019 which was subsequently amended in August, 2020 require UAE onshore and free zone companies and certain other business forms that carry any of the ‘Relevant Activities’ listed below to maintain and demonstrate adequate ‘economic presence’ in the UAE relative to the activities they undertake (‘Economic Substance Tests’). Relevant Activities of business are as under:

• Banking business

• Insurance business

• Investment Fund Management

• Lease Finance

• Headquarters

• Shipping

• Holding Company

• Intellectual Property

• Distribution and Service Centre

The ESR has been made applicable from the Financial Year commencing on or from January 1, 2019. Entities that fall within the scope of the Economic Substance Regulations (ESR) are required to submit an annual notification form to their Regulatory Authority, i.e., an Economic Substance Report (ESR) within 12 months from end of their financial year.

An entity is not required to undertake the Economic Substance Test and submit the Economic Substance Report if:

• It has not earned any income from the relevant activity; or

• If it meets the conditions to be categorized as exempt

But regardless of the above the entity would have to submit Notification.

Effects of non-compliance with the ESR:

Failure to comply with the Regulations, may result in

• Penalties,

• Spontaneous exchange of information with the Foreign Competent Authorities (as defined in Article 1 of the Regulations)

• As well as other administrative sanctions such as suspension, revocation or non-renewal of the entity’s trade license or permit.   

You still have questions on the applicability and ways to ensure compliance Contact US, we are here to help and support you.

Anti-Money Laundering (AML) and Countering the Financial Terrorism (CFT):

Federal Decree No. 20 of 2018 on Anti-Money Laundering and Countering the Financing of Terrorism was issued to develop the legislative and legal structure of the nation to ensure compliance with international standards on anti-money laundering and countering the financing of terrorism.

The law aims to:

• Combat money-laundering practices

• Establish a legal framework that supports the authorities concerned with anti-money laundering and crimes related to money-laundering

• Counter the financing of terrorist operations and suspicious organizations.

UAE Data Protection Law Federal Law No.45 of 2021:

The Data Protection Laws focus would be on personal data of natural persons which shall include:

• Name

• Voice

• Picture

• Identification Number

• Electronic Identifier

• One on one physical, physiological, cultural or social characteristics

Anything done with the personal data could be classified as personal data, it deals with may be termed as processing data it is important to have the adequate protection of the data and natural persons rights. After the publication of the Executive Regulations, every business in the UAE would need to have system in place to be in compliance with the Data Protection Laws, there would be 6 months period provided for ensuring compliance from the date of issue of the Executive Guidelines.

UAE Labour Laws:

The Federal Law No.33 of 2021 would be made effective from February 2, 2022.

Would you like an impact assessment done of your business to check the effect and readiness of your business with the new law. Contact us.