Shuraa

Category: Expert Columns

  • UAE Designated Free Zones 2026: Complete List, Corporate Tax & VAT Rules

    UAE Designated Free Zones 2026: Complete List, Corporate Tax & VAT Rules

    Confused about Designated Zones and Free Zones? Not sure whether your zone, such as DMCC or IFZA, qualifies for Corporate Tax benefits? This complete 2026 guide explains the official lists, the key differences, and how to use these zones to save on VAT and Corporate Tax.

    We share the official UAE Cabinet list of Designated Zones, explain the main differences between VAT and Corporate Tax, and answer the most common questions about zones such as DMCC, RAKEZ, and IFZA.

    Quick Answer: A Designated Zone is a secured geographic area treated as ‘outside the UAE’ for VAT purposes but may be ‘inside the UAE’ for Corporate Tax purposes if it meets the separate ‘Qualifying Free Zone’ criteria. The lists for VAT and Corporate Tax are different.

    What Are Designated Zones in the UAE?

    The term “Designated Zone” has a specific legal meaning in UAE tax law, primarily in relation to Value Added Tax (VAT). However, since the introduction of the Federal Corporate Tax in June 2023, the terminology requires careful clarification.

    A UAE VAT Designated Zone is an area that, according to Cabinet Decision No. (59) of 2017, is treated as outside the UAE for VAT rules. This special status provides certain VAT benefits for the movement and storage of goods.

    To be a Designated Zone for VAT, the area must meet certain rules:

    • Fenced Area: The zone must be separated by a physical barrier.
    • Security and Customs Checks: There must be entry and exit points monitored by the Federal Tax Authority (FTA) and customs officials.
    • Internal Procedures: The zone operator must have procedures for managing, storing, and handling goods within the zone.

    For Corporate Tax, the Ministry of Finance uses the idea of a “Qualifying Free Zone.” A Qualifying Free Zone can get a 0% Corporate Tax rate on “Qualifying Income.” Not all VAT Designated Zones are also Qualifying Free Zones, and the official lists are different.

    VAT Treatment in Designated Zones: A 2026 Guide

    VAT started on January 1, 2018, as a 5% tax on spending in the UAE. Designated Zones have special rules for goods, but not for services.

    Key VAT Principles for Designated Zones:

    • Goods transferred between different Designated Zones are not subject to VAT, provided specific conditions are met.
    • Goods imported into or exported from a Designated Zone to destinations outside the UAE are generally VAT-exempt (subject to controls).
    • Services supplied within or from a Designated Zone are subject to the standard 5% VAT, as services are harder to track physically.

    VAT on Goods Movement: Visual Guide

    Important Notes:

    • Moving goods from the Mainland to a Designated Zone is taxed at the usual 5% VAT.
    • Moving goods from a Designated Zone to the Mainland is treated as an import. The mainland business pays VAT using the reverse charge method.
    • Services are always taxable at 5% where consumed in the UAE, regardless of the zone.

    VAT Registration Requirements for Businesses

    Businesses operating in Designated Zones must follow the same UAE-wide VAT registration thresholds.

    Registration TypeThreshold (Taxable Supplies & Expenses in past 12 months)Requirement
    Mandatory RegistrationExceeds AED 375,000You MUST register for VAT.
    Voluntary RegistrationExceeds AED 187,500You CAN choose to register.
    Non-ResidentAny value if making taxable supplies in UAEMust register, regardless of threshold.

    Note: A business operating exclusively within a single Designated Zone with no transactions with the UAE mainland may have unique circumstances. Professional advice from a registered tax agent in Dubai is recommended.

    Official List of UAE Designated Zones (2026 FTA & Cabinet Reference)

    Important Note: The following is the list of zones designated for VAT purposes as per Cabinet Decision No. (59) of 2017. This is NOT the same as the list of ‘Qualifying Free Zones’ for the 0% Corporate Tax regime. See the next section for Corporate Tax details.

    You can download the official Cabinet Decision document from the UAE Government portal or the Federal Tax Authority (FTA) website.

    Designated Zones Abu Dhabi:

    • Free Trade Zone of Khalifa Port
    • Abu Dhabi Airport Free Zone
    • Khalifa Industrial Zone (KIZAD)
    • Al Ain International Airport Free Zone
    • Al Butain International Airport Free Zone

    Designated Zones Dubai:

    • Jebel Ali Free Zone (North-South)
    • Dubai Cars and Automotive Zone (DUCAMZ)
    • Dubai Textile City
    • Free Zone area in Al Quoz
    • Free Zone Area in Al Qusais
    • Dubai Aviation City
    • Dubai Airport Free Zone (DAFZA)
    • International Humanitarian City – Jebel Ali
    • Dubai CommerCity

    Designated Zones Sharjah:

    • Hamriyah Free Zone
    • Sharjah Airport International Free Zone (SAIF Zone)

    Designated Zones Ajman:

    • Ajman Free Zone

    Designated Zones Umm Al Quwain:

    • Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port
    • Umm Al Quwain Free Trade Zone on Sheikh Mohamed Bin Zayed Road

    Designated Zones Ras Al Khaimah:

    • RAK Free Trade Zone (RAK FTZ)
    • RAK Maritime City Free Zone
    • RAK Airport Free Zone
    • Al Hamra Industrial Zone
    • Al Ghail Industrial Zone – Free Zone
    • Al Hulaila Industrial Zone – Free Zone

    (Note: RAKEZ may operate in some of these designated areas)

    Designated Zones Fujairah:

    • Fujairah Free Zone
    • Fujairah Oil Industry Zone (FOIZ)

    Are These Popular Zones Designated for VAT? (Quick Reference)

    Free Zone NameIs it a VAT Designated Zone?Notes
    DMCC✅ YesLocated within the “Free Zone area in Al Quoz” on the Cabinet list.
    IFZA (Dubai)✅ YesLocated within the “Free Zone Area in Al Qusais” on the Cabinet list.
    RAKEZ⚠️ PartiallySpecific premises within RAK FTZ, Maritime City, or Airport FTZ may be designated. Status depends on exact location.
    Abu Dhabi Global Market (ADGM)❌ NoIt is a financial free zone on Al Maryah Island, not a VAT Designated Zone.
    Meydan Free Zone❌ NoNot included in the Cabinet Decision list.
    Ajman Free Zone✅ YesListed explicitly.
    SAIF Zone (Sharjah)✅ YesThis is the “Sharjah Airport International Free Zone”.
    JAFZA✅ YesListed as “Jebel Ali Free Zone”.

    Corporate Tax in Designated & Qualifying Free Zones (0% Regime)

    This update is important for 2026. The UAE Corporate Tax (CT) regime will apply a 0% tax rate to Qualifying Free Zone Persons on their Qualifying Income.

    Key Concepts:

    • Standard CT Rate: 9% on taxable income exceeding AED 375,000.
    • Qualifying Free Zone Regime: 0% tax on Qualifying Income; 9% tax applies to non-qualifying income.
    • Qualifying Income: Includes transactions with other Free Zone persons, overseas transactions, and certain domestic activities, provided economic substance requirements are met.

    The Terminology Confusion:

    The term “Designated Zone” is commonly used in CT discussions, but the law (Ministerial Decision No. 265 of 2023) specifically refers to “Qualifying Free Zones.”

    It is important to note that the list of more than 20 Qualifying Free Zones for CT is separate from the VAT Designated Zones list. While many zones appear on both lists, not all do.

    • Examples of Qualifying Free Zones where 0% CT may apply include DMCC, IFZA, DAFZA, JAFZA, RAKEZ (in designated areas), Abu Dhabi Airport Free Zone, Khalifa Industrial Zone, Hamriyah Free Zone, and Fujairah Free Zone.
    • Examples not on the Qualifying List and therefore subject to 9% CT include Dubai Airport Free Zone (DAFZ), which is designated for VAT but not on the initial Ministry of Finance Qualifying Free Zone list. Always verify the latest official status for Corporate Tax.

    Action Required: Do not assume that VAT designation provides CT benefits. You must check the Ministry of Finance list and ensure compliance with all Qualifying Income and Substance requirements.

    Benefits of Setting Up in a Designated/Qualifying Zone

    1. VAT Benefits (For Designated Zones):

    • VAT Suspension: No VAT on goods moving between Designated Zones.
    • Cash Flow Advantage: Deferral of VAT payments on imports into the zone.
    • Efficient Logistics: Simplified customs and VAT procedures for international trade.

    2. Corporate Tax Benefits (For Qualifying Free Zones):

    • 0% Tax Rate: A significant financial incentive applies to qualifying income.
    • Long-term Certainty: The 0% tax rate is guaranteed for a 50-year compliance period.
    • Attractive for Holding Companies and Headquarters: These zones are ideal for regional headquarters, holding companies, and global supply chain management.

    3. General Free Zone Advantages:

    • 100% foreign ownership.
    • 100% repatriation of capital and profits.
    • Exemption from import/export duties.
    • Streamlined licensing and administration.

    FAQs: UAE Designated Zones, VAT & Corporate Tax

    1. What is the meaning of a designated zone?

    In the UAE, a “Designated Zone” is a specific area officially considered outside the UAE for VAT purposes on goods. This status, granted by Cabinet Decision, suspends VAT on the movement and storage of goods within and between these zones if they meet security and customs control requirements.

    2. What is the difference between a free zone and a designated zone?

    A free zone is a special economic area that offers benefits for company formation and foreign ownership. In contrast, a designated zone is defined specifically for VAT purposes. Only certain fenced zones that meet strict criteria are treated as outside the UAE VAT territory. Not all free zones qualify as designated zones.

    3. Is there VAT on services in a designated zone?

    Yes. The VAT exemption in Designated Zones applies only to goods. Taxable services supplied within or from a Designated Zone are subject to the standard 5% UAE VAT rate if consumed in the UAE.

    4. Is free zone companies exempt from VAT in the UAE?

    No, there is no blanket VAT exemption. VAT registration depends on a company’s annual taxable turnover. Free zone companies providing taxable services in the UAE must register and charge VAT at 5% if their supplies exceed the mandatory threshold (AED 375,000). Special VAT treatment applies only to goods moving in or out of Designated Zones.

    5. Where can I find the official UAE VAT-designated zones list (FTA PDF)?

    The official source is Cabinet Decision No. (59) of 2017. You can find the document on the UAE Government’s official legislation portal, or it is referenced in guides on the Federal Tax Authority (FTA) website.

    6. What is a non-designated free zone in the UAE?

    A non-designated free zone is any free zone not listed in the official Cabinet Decision for VAT purposes. In these zones, movement of goods to and from the UAE mainland is treated as a standard domestic transaction and subject to the normal 5% VAT. These zones may or may not qualify as “Qualifying Free Zones” for Corporate Tax.

    7. Is a VAT Designated Zone the same as a Qualifying Free Zone for Corporate Tax?

    No, these are separate concepts with separate lists. A zone must appear on the Ministry of Finance’s list of Qualifying Free Zones to benefit from the 0% Corporate Tax on qualifying income. Many zones are on both lists, but this is not automatic. Always check the official MoF list for Corporate Tax status.

    8. Is DMCC a designated free zone?

    Yes, for VAT purposes. DMCC is within the “Free Zone area in Al Quoz,” an official VAT Designated Zone. It is also a Qualifying Free Zone for Corporate Tax.

    9. Is DIFC a designated free zone?

    No. The Dubai International Financial Centre (DIFC) is a financial free zone, but is not on the Cabinet list of VAT Designated Zones.

    10. Is RAKEZ a designated zone?

    This depends on the specific location. RAKEZ operates across several areas in Ras Al Khaimah. Premises within the RAK Free Trade Zone, RAK Maritime City Free Zone, and RAK Airport Free Zone are VAT Designated Zones. For Corporate Tax, RAKEZ is generally a Qualifying Free Zone.

    11. Is IFZA a designated zone?

    Yes. IFZA in Dubai is located within the “Free Zone Area in Al Qusais,” an official VAT Designated Zone. It is also a Qualifying Free Zone for Corporate Tax.

    12. Is Meydan Free Zone a designated zone?

    No. Meydan Free Zone is not included in the UAE Cabinet list of VAT Designated Zones.

    13. Is Ajman Free Zone a designated zone?

    Yes. Ajman Free Zone is explicitly listed as a VAT Designated Zone and is generally a Qualifying Free Zone for Corporate Tax.

    14. Is the SAIF Zone a designated zone?

    Yes. SAIF Zone is the official name for “Sharjah Airport International Free Zone” on the VAT Designated Zones list. It is also a Qualifying Free Zone for Corporate Tax.

    15. Which free zone is the cheapest in the UAE?

    While costs vary by activity and package, free zones in the Northern Emirates, such as Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah, are generally known for offering the most cost-effective setup packages compared to major Dubai and Abu Dhabi zones.

    Conclusion & Key Takeaways

    1. Dual Tax Systems: Understand that “Designated Zone” has distinct meanings for VAT (goods movement) and Corporate Tax (0% regime).
    2. Check Both Lists: Always verify your zone’s status against both the FTA/Cabinet VAT list and the Ministry of Finance Corporate Tax list.
    3. Professional Advice is Key: How your zone, your business type, and the rules governing real business activity all work together can be complicated. Working with experts is important to get the best tax results.

    Establish Your Business with Complete Tax Transparency in 2026

    Understanding the relationship between VAT Designated Zones and Corporate Tax Qualifying Free Zones requires current expertise.

    Shuraa Business Setup offers comprehensive support:

    • Free Zone Analysis: We assist in selecting the most suitable free zone for your business, taking into account both VAT and corporate tax implications.
    • Corporate Tax Advisory & Registration: We help ensure compliance and develop strategies to maximize benefits from the 0% regime where applicable.
    • VAT Registration & Compliance: We support accurate management of VAT obligations within Designated Zones.

    Contact Our Experts Today for a Free Consultation!

    For detailed tax guidance, please visit our dedicated page: UAE Tax Services & VAT Consultants.

    Disclaimer: This guide is for general information only and does not provide legal, tax, or financial advice. Although we aim to keep the content accurate and up to date as of 2026, UAE tax laws and designated zone regulations may change. Businesses should verify the latest status of free zones and consult a qualified legal or tax advisor from Shuraa Business Setup or a registered UAE tax agent before making decisions. We are not liable for actions taken based on this information.

  • Did you know? You require additional approval for business

    Did you know? You require additional approval for business

    The Department of Economic Development (DED) in Dubai issues trade licenses for more than 2,300 types of commercial activities. The recent roll-out of economic reforms and constitutional amendments reflect the government’s bid to facilitate ease of business in the city. However, quite a few economic activities require additional approval for business from authorities concerned.

    This column will explore the requirements for obtaining special approval for business activities and the authorities involved. Moreover, we will also learn which civic bodies are involved in granting additional approval for business.

    Seven common economic activities for which you need to obtain special permits

    1. Restaurants / cafeterias / coffee shops

    A home to about nine million expats from across the globe, the UAE has huge demands for global cuisines. Therefore, those in the culinary business are bound to thrive. Due to the rise in cloud kitchens, the license can be issued within a day. However, the relevant authorities have to undertake inspections to ensure you have met their standards and thus issue no-objection certificate (NOC), before you begin operations.

    License type

    Professional

    Requirement

    For restaurants / cafeterias / coffee shops, there are two categories of additional approval for business:

    Location

    • ­The area should more than 200 sqft
    • Sufficient space for cooking equipment
    • Waste disposal provision
    • Smoke management system
    • Storage areas
    • Washroom
    • Non-absorbent, washable, and fireproof walls, floors, and roof
    • No pests
    • Separate wash basins for vegetables, meat, and utensils
    • Blueprint of the restaurant/cafeteria, including floorplan specifying where the food will be stored and processed; where the windows, entry and exit are located

    Food safety

    • Consignment release license
    • Permit for vehicles that will be used for transporting food products
    • Additional permits for handling and serving non-halal items such as pork or alcohol

    Approvals

    • Dubai Municipality (DM) ­– Food safety and public safety departments
    • Dubai Tourism and Commerce Marketing (DTCM) – This special approval for business is required if your restaurant or cafe is in a hotel

    2. Electronic cigarettes (e-cigarette) and accessories trading

    Electronic devices that contain liquid mixed with some amount of nicotine to produce vapour when inhaled have become popular in the last few years. Majority of smokers choose to vape assuming it is less harmful than traditional cigarettes, and also, in a bid to gradually quit smoking. E-cigarettes or vapes are available in several flavours and can be accessorised. Thus, the demand for vapes is fairly high.

    License type

    Commercial license

    Requirement

    • In lieu of public safety, the traders must issue health warnings similar to that for tobacco and regular cigarettes
    • Ejari is mandatory. The owners may set up shop in either malls or stand-alone buildings.

    Approvals

    • Emirates Standardization and Meteorology Authority (ESMA)
    • Dubai Municipality – Narcotics Department
    • DED – NOC from relevant official

    3. Selling or serving of non-halal products

    Two of the major items that top the list of prohibited items in the Middle Eastern countries include alcohol and pork. The UAE, however, respects and cares about all its residents regardless of their personal, lifestyle choices and religious belief. However, strict regulations have been laid out for the trading and handling non-halal goods.

    License type

    Supermarkets require a commercial license with special approval for dealing with pork products, while a liquor trading license needs to be procured depending on the nature of activities involving alcohol you wish to carry out.

    These can be importing, selling to third parties, and serve in a hotel, restaurant, or club.

    Requirement

    • Supermarkets selling pork meat and other products containing pork must have a separate section of at least 232 sqm away from regular products
    • They should also appoint designated staffers to handle pork products and control the freezer temperature
    • Restaurants serving pork must clearly specify the dishes in a sperate menu page in both English and Arabic
    • Alcohol can only be served in restaurants located in four- or five- star hotels
    • Refrain from advertising about the sale of liquor

    Approvals

    • Dubai Municipality (DM) ­– Food safety and public safety departments. Permit from Department of Economic Development (DED)
    • Dubai Police General Headquarter (DPGH) ­– For those selling liquor

    4. Wireless telecommunications equipment trading and wired & wireless communication systems installation

    Technology is a crucial aspect of fast-paced cities like Dubai and its urban population. This leads to high demands for seamless connectivity possible through wireless systems. At the same time wireless communications are sensitive, and thus, require to be monitored closely.

    License type

    • Commercial for trading of equipment that helps in transmission of voice, data, text, audio, and video via mobile phones and other devices
    • Professional for installation services

    Requirement

    • Imported equipment should not interfere with or cause any damage to the networks
    • Devices must meet specified technical standards

    Approvals

    • “Type approval” from Telecommunication Regulatory Authority (TRA)
    • Commercial space (shop or office) is mandatory

    5. Jewellery / luxury goods trading

    The presence of world-famous franchises and brands in Dubai itself proves that the city is a heaven for international shoppers who splurge in luxurious products. Be it precious jewellery or high-worth antiques, there’s no dearth of buyers.

    License type

    Commercial

    Requirement

    • The store should be at least 150 sqft to 200 sqft
    • Owners need to install surveillance cameras, security alarm, and a video guard

    Approvals

    Security Industry Regulatory Authority (SIRA)

    6. Women / gents haircutting & hairdressing salons

    The pandemic may have led people to “fix” their looks at home for a few months but the business of making people look good did not suffer too long. Moreover, the UAE’s beauty industry is slated to have a market share of USD 3 billion by 2025.

    License type

    Professional

    Requirement

    • The outlet should have a minimum space of 200 sqft

    Approvals

    • Dubai Municipality (DM) ­– Health & Public safety department
    • DED – Commercial compliance & consumer protection sector

    7. Educational services / support services

    Several activities can be covered under this business activity, including, training tutors, assisting students with university application, and preparing them for examinations. Private tutoring, however, is illegal in the UAE.

    License type

    Professional

    Requirement

    • Provide list of services
    • Template of certification (if any will be provided to individuals)
    • Proof of affiliation to local or foreign institutes

    Approvals

    Knowledge and Human Development Authority (KHDA) issues various types of additional approval for business. Moreover, this authority is quite through with permits when it comes to educational businesses.

    — Nima Jameel Jabri, Legal Corporate Advisor & Sales Team Lead

  • A detailed guide on obtaining a free zone industrial license

    A detailed guide on obtaining a free zone industrial license

    Obtaining a free zone industrial license is a great way to enter the booming industrial sector in Dubai. Dubai has adopted various innovative methods to boost its economic growth. As each day progresses, the city takes 10 steps further, breaking new grounds in its economic sector. This is just one of the few reasons why starting a business in Dubai is an exemplary choice for both, budding entrepreneurs and established ones.

    Furthermore, company formation in free zones makes for a very ingenious choice. This is because the owner not only gets 100% ownership of their business but can do so at a cost-effective amount. 

    This blog will enlighten you on everything you need to know about obtaining your free zone industrial license in Dubai.

    All you need to know about free zone industrial license

    Let us begin with what a free zone industrial license actually is. Entrepreneurs who opt for a commercial activity that is of an industrial nature can obtain this license. For instance, any company that involves the use of factory equipment such as manufacturing chocolates on a commercial level will need an industrial license.

    Another example is a company would require an industrial license is when it is involved in the production or refinement of chemicals on a large scale.

    It is also important to note that the rules and regulations for obtaining industrial license may vary depending on the emirate your factory is based in. Such as in the case of Dubai, there is a requirement to have both, a physical office as well as a warehouse facility.

    The following are some sectors that require an industrial license:

    • Manufacturing of food and beverages
    • Manufacturing of textiles
    • Oil refineries
    • Chemical facility

    There are also various prerequisites that an investor needs to accomplish in order to apply for a Dubai free zone industrial license. These are listed below:

    • Office Space: You will require to have a physical warehouse and an office space in Dubai. A virtual office will not be acceptable in this case.
    • Number of employees: In an industrial space, you will require to have a certain number of employees in your company depending on where you set up.
    • Electricity & Water: Depending on which area your facility is located in, you will have to contact Dubai Electricity and Water Authority (DEWA) to upgrade the supply of water and electricity voltage for your facility.
    • Transport: If your factory is located on the outskirts of Dubai, it may increase the amount spent on transportation of the raw materials and products. Fortunately, most free zones in the UAE are strategically located near seaports and airports, aiding in any transportation needs.

    You can always renew your industrial license as long as your company’s lease agreement is valid.

    Advantages of obtaining a free zone industrial license

    • Full ownership of business: Free zones permit foreign investors to get 100% ownership of their business. 
    • Full profit repatriation: Free zone companies can repatriate all their profits to their home country. This gives them the freedom to transfer 100% of their capital to their place of origin without any requirements. 
    • 0% corporate tax: The UAE laws state that companies do not require to pay corporate tax out of their business revenue, thereby allowing you to keep all your profits.  
    • 0% import or export tax: Unlike mainland, free zones are exempt from all customs duties.
    • Strategic location: Dubai has world-class telecommunication, trailblazing financial intercessions, ultramodern industrial infrastructure, e-governance system, and service sectors. The location of the free zones make for highly cost-effective living.
    • Global Connectivity: Dubai has a multi-national community and provides opportunities for you to connect with a global business community.
    • Range of business activities: Free zones give you the freedom to undertake a range of business activities that fall under industrial license and more.
    • Time-efficient process: The entire process of obtaining an industrial license is fairly swift and easy.
    • Convenient Registration: Dubai gives you the ability to register from the comfort of your home. You can send all the required documents to the free zone without being physically present for submission.

    Steps involved in acquiring an industrial license

    • Submission of the application with the business plan. 
    • Finalization of the preferred warehouse in line with the business activity. 
    • Environmental approval
    • Application of the license
    • Application for visa

    Documents needed to apply for Dubai free zone industrial license:

    • Business plan
    • Passport copy
    • Visa copy
    • Investor’s profile (depending on the activity)

    Obtain your free zone industrial license now with Shuraa

    Shuraa ensures that the entire process of obtaining your free zone industrial license runs smoothly. Our business setup consultants will guide you through the entire process from regulatory requirements, understanding free zone license cost, all the way up to the process of obtaining approvals from the authorities. 

    Contact our expert consultants at +97144081900 or send a WhatsApp message on +971507775554 to get started. You can also drop in an email at info@shuraa.com and get your queries answered in no time.

  • Tax-friendly countries for business: Entrepreneurs target Dubai

    Tax-friendly countries for business: Entrepreneurs target Dubai

    The onset of the pandemic early last year, without a doubt, unleashed tough times on businesses across the world. However, the health crisis hit Europe’s economy with more severity than its global counterparts. Therefore, several European business giants are not only looking for business avenues in Dubai, but a good number of them are also shifting their entire business operations to the Middle Eastern city. One of the prime reasons being the UAE is among of the top tax-friendly countries for business.

    The following column will explore what about Dubai is luring European entrepreneurs.

    1. Strategic Location

    Besides proving an easy global connectivity through one of the world’s busiest airport, Dubai offers close proximity with suppliers in the Middle Eastern, Asian as well as African subcontinents.

    European manufacturers across most industries, including automobile, have been witnessing major supply disruptions due to the on and off lockdowns.

    2. 100% expat ownership

    Among thousands of business activities allowed in Dubai, majority of them can be solely owned by expats. Therefore, businessowners can have full control over their company’s operational and financial aspects. Furthermore, they can also become residents of the UAE and sponsor their family members as well as staffers.

    With recent amendments to the UAE’s commercial companies law (CCL), not only the professional service providers, but also commercial and industrial businessowners can enjoy 100% ownership.

    3. One of the most tax-friendly countries for business

    One of the primary reasons that lures European entrepreneurs to Dubai is the fact that the city is situated in one of the most tax-friendly countries for business.

    In the past two years, the economies in the European Union (EU) have shrunken relatively more than their global counterparts. Although, the levels of their economic recovery vary based on severity of impact, the extent of rebound is slow due to continued or renewed restrictions due to surge in cases. But a major drawback for businesses in EU is the corporate tax levied on business profits.

    According to the Tax Foundation, the average corporate tax levied in the Eurozone, comprising 19 member states, is 21.7%, with a low of 12.5% in Ireland and high of 31.5% in Portugal.

    In the UAE, however, corporate tax does not exist. Moreover, income tax and sales tax are also not charged. This stark difference in figures is quite enough to explain why more and more European entrepreneurs are looking for tax-friendly countries for business and landing in Dubai.

    4. Open for business. Open for tourists

    With all safety measures in place, Dubai commendably opened itself for business and tourists within a few months of imposing restrictions. And this worked in its favour as people cooped up in their homes for months due to lockdowns in different parts of the world flocked to Dubai for a getaway. This further led people to believe that the city is conducive for business growth, now more than ever, compared to European cities that continue to reel under what the BBC terms as a “double-dip” recession.

    Most recently, the UAE also became the country with the most vaccinated population, having administered more than 21 million doses. This asserts the fact that the UAE is taking all measures to pacify the local business community.

    5. Technology & innovation

    The young emirate has internationally branded itself as the city of the future. Thanks to its visionary leadership that invests and believes in promoting the latest technological tools across sectors. From implementing artificial intelligence and virtual reality to exploring crypto-currency, Dubai is heading towards making futuristic advancements. Moreover, the pandemic pushed economies in front of a bus, making them realise that digitalisation was no longer a luxury or something to consider later but an unavoidable necessity.

    6. Quality of life

    Voted one the safest cities in the world to live and work in, Dubai life spells convenience for people from all walks of life. Home to about 10 million people from across the globe, 80% of the UAE residents are expats. There are multiple factors that help Dubai retain its residents — its world class infrastructure, ease of commute, well-organised bureaucracy, affordable lifestyle, and provisions for entertainment.

    European expats often call Dubai a luxurious destination offering endless summers they seek. However, those who have never visited may have reservations about living in a Middle Eastern city often portrayed as hot, crowded, unorganised, and basically “unfit” for people residing in the developed nations of the West. Blame the mainstream cinemas that portray the continent in that light. But the quality of life here is no lesser! From the presence of places of worship for all religions to the variety of international brands and options for sports, adventures and wellbeing events, Dubai HAS IT ALL.

    In fact, Dubai government’s ‘2040 Urban Master Plan’ aims at boosting a sustainable urban development of the emirate. Therefore, in the next 20 years, the government will seek to advance its residents’ happiness and quality of life to reinforce Dubai as a destination for people from around the globe.

    World-class expertise in one of the tax-friendly companies for business

    With a smart government in place and a team comprising lawyers, certified accountants, tax consultants, translators, well-connected public relation officers and legal corporate advisors with extensive knowledge of the UAE’s operational framework, Shuraa Business Setup has been helping entrepreneurs start their Dubai journey since 2001.

    The one-stop solution provider for all company formation requirements has been receiving about 200 calls every month from Europe based entrepreneurs looking to set up shop in tax-friendly countries for business.

    Considering European entrepreneurs might not be able to travel to Dubai for the completion of documentation and procedures regarding their Dubai company formation, Shuraa is taking its expertise and services closer to Europe. Through Shuraa’s new London branch welcoming clients from June 1, aspiring entrepreneurs as well as those seeking to shift base or expand their businesses to Dubai can start their business from the comfort of their homes.

    Author
    Shahid Shakeel
    Managing Partner, Shuraa Group

  • Why Dubai LLC structure in free zone is ideal for company setup

    Why Dubai LLC structure in free zone is ideal for company setup

    UAE has made a name for itself amongst all of the Middle East to be one of the countries with a large number of free zones for conducting businesses. With an abundance of opportunities and benefits, UAE has without a doubt attracted investors and entrepreneurs from all over the globe. 

    One of the most desirable factors of setting up a company in the UAE is the various structures of companies and benefits that come with it, particularly Free Zone Limited Liability Companies (FZ LLC). In this blog, we will explore what an LLC business structure is, its benefits all the way up to the differences between mainland and free zone to set up your company with the LLC structure in a free zone in Dubai and other emirates.

    What is a limited liability company in a free zone?

    A free zone establishment (FZE) or free zone company (FZC) is a limited liability company that is formed and governed by the rules and regulations of the free zone in which it is established. 

    There are two company structures for free zones businesses: Free zone establishment limited liability company (FZE LLC) and free zone company limited liability company (FZCO LLC). The feature of FZ LLC is that it has a single shareholder (single member LLC), unlike FZCO LLC where one can have multiple shareholders.

    Benefits of LLC structure in a free zone:

    One of the main benefits of having an LLC company structure is that it allows the shareholder of the company to be protected from personal liability, debt and more that may occur with the operations of the company.

    An LLC structure in a free zone in Dubai and other Emirates would also mean that you could only suffer losses up to the amount you have invested in your company and not any more than that. Therefore, LLC is a business that offers flexible ways to manage your profits and losses without being personally liable for the entire gains/losses. There are various other benefits of having an LLC business structure in a free zone including:

    • 100% foreign ownership: Foreign entrepreneurs can benefit from having complete ownership of their company with no local partner. However, you will need a local sponsor to whom you will be required to pay a mutually agreed annual fee.
    • Full repatriation of capitals and profits: Free zone companies can repatriate all their profits to their home country. Giving them the freedom to transfer 100% of their capital to their place of origin without any requirements.
    • No personal, corporate or income tax
    • Exemption from all import and export duty
    • Convenient recruitment and cost – effective workforce
    • Range of business activities: Free zones support a range of business activities. This makes it easy for individuals to connect and network.
    • Numerous options of facilities: There are various options for facilities you can choose for your business setup. This includes flexi-desk facilities, standard offices all the way to warehouse facilities.
    • UAE residence visa for 3 years 

    LLC company formation and licenses offered:

    When considering LLC structure in a free zone in the UAE, unlike mainland, it enables you to opt for an LLC structure regardless of the type of license you have. You will still have the protection of having a limited liability company LLC structure and not suffer any setbacks in terms of liabilities, unlike when you have a sole proprietorship where you could suffer 100% loss. The types of licenses you can have with LLC structure include:

    A free zone LLC structure is suitable for clients looking to provide services or obtain a professional license. Professional license in a free zone enables you to conduct business in local markets without the concern of debts or liabilities that could carry forward with your business.

    There are about 45 free zones that offer a structure of LLC in Dubai and other emirates.  The free zone that is most suitable for LLC structure for your company would depend upon the nature of your company such as the business activities, nature of the facility, number of visas and more. 

    LLC formation on mainland and on free zone:

    LLC company formations are usually formed on the mainland. Mainland companies with LLC structure would require 51% ownership to be given to a local sponsor while 49% is owned by the foreign expat.

    This is however not the case with free zones LLC company structure where the expat has the opportunity to have 100% ownership of the company without the need of a local sponsor. If you choose to have more partners in an LLC structure in a free zone, you are given the choice to choose how your shares are divided and do not need any other individuals in your business that you do not require.

    The similarities between a mainland LLC company and a free zone limited liability company is that you will still have the same protection of the LLC structure that would enable you to have. However, not all free zones have LLC structures.

    What’s the Difference between LLC and FZE in the UAE?

    Limited liability companies and free zone establishments have their set of benefits and limitations. Here, we compare them on various grounds to make it easier for you:

    1. Business Scope

    A key difference between LLC and FZE is that each has authorities that have its own set of rules and protocols. One common restriction imposed on businesses is that they’re only permitted to have an operating agreement within their designated free zone. It mainly refers to commercial licensing. Professional licenses can still work in the local market if they want to. 

    LLCs are free to trade independently with the local marketplace, any free zone, or even outside the UAE. The same applies to all commercial and professional business licenses.

    2. Office Space

    A free zone limited liability company license can be applied for with or without a physical address. For a minimum of 5 hours per week, administrations authorize the use of flexi desks or smart office spaces. Business Bay, Media City, and JLT are all good places to look for offices. 

    A minimum of 200 square feet of office space must be leased out yearly to qualify for an LLC license. Upon registration, the certified tenancy contract must be given to the Department of Economic Development (DED). The DED will then grant the LLC license.

    3. Authority Approvals

    A free zone limited liability company is managed by the authority in charge of it. By presenting the required documentation, you must obtain the necessary authorization from relevant departments. External approvals are usually not required unless a specific activity necessitates them. Standard permits from agencies such as the Department of Economic Development, the Ministry of Labor, and the Ministry of Immigration (MOI) are required for an LLC license. 

    Individual and corporate shareholders may have different documentation. It is occasionally necessary to obtain approval from external authorities. Education-related licenses, for example, are to be approved by the Knowledge and Human Development Authority (KHDA).

    4. Visa Eligibility

    Another vital aspect of free zone vs. LLC Dubai is visa eligibility. The number of visas available to free zone enterprises is limited. They are usually limited to one to six visa packages. If a corporation requires more, they must rent a physical area within their designated free zone. 

    The Ministry of Labor (MOL) issues LLCs a digital quota for visa candidacy. The quota is determined by the size of the office. One visa is granted for every 80 square feet of office space, with the number of visas available growing as the size of the office grows. Companies might request a separate quota for employees who don’t work in the office. 

    Get started in the world of business with Shuraa

    Getting your company formed all by yourself can be quite taxing and time-consuming. When starting a business in the UAE, there are various factors and steps that are involved in the process of business setup. For more in-depth information about the business structure of free zone LLC in Dubai, contact Shuraa Business Setup – one of the leading providers of company formation solutions.

    Our free zone specialists at Shuraa will guide you through the entire process and get you started with setting up your company in the UAE. You can get in touch with our specialists by contacting us on +971 44081900 or drop a WhatsApp message on +971 507775554. You can also email your query to info@shuraa.com.


    Author
    Seema Sasidharan
    Corporate Advisor | Free Zone Specialist

  • Detailed Guide to UAE VAT Registration Services in Dubai

    Detailed Guide to UAE VAT Registration Services in Dubai

    Dubai is known the world over as one of the foremost business hubs of the Middle East. Its stellar reputation as an entrepreneur- and investor-friendly city is the reason why, even during the pandemic, thousands of new companies are being formed regularly each month. This is because the UAE government has done, and continues to do, an excellent job at containing the pandemic to ensure the safety of all those residing in, and visiting, the UAE. The government also introduced several extensive stimulus packages to support UAE businesses impacted by the pandemic.

    If you are a new entrepreneur seeking UAE VAT registration services in Dubai, it is important that you learn whether your business is eligible or required to apply for VAT in the UAE. You must also understand the different types of VAT registration services in the UAE. The Federal Tax Authority is the government body responsible for implementing VAT. It has specified certain eligibility criteria that new businesses must satisfy to apply for VAT registration services in Dubai.

    VAT in the UAE

    VAT or Value Added Tax is an indirect tax imposed on the sale of goods and services. One of the most common types of consumption tax, VAT has been adopted by over 150 countries across the globe. In the VAT collection process, it is the final consumer in the supply chain that usually bears the VAT cost.

    In the UAE, VAT was introduced on January 1, 2018 and is also levied on imports of goods and services. Once you complete your VAT registration process in UAE, you will act as the tax collector on behalf of the Federal Tax Authority (FTA), collect the tax from your end consumers, and pay it to the government. Your business can also claim a refund from the government for the tax you have paid to your suppliers.

    VAT for UAE Businesses

    Businesses in the UAE that deal in taxable goods and services must register for VAT. Whether your company engages in trade on UAE mainland (onshore) or in UAE free zones, you will have to apply for VAT registration services in UAE, if you meet the eligibility criteria set by the FTA.
    As per the Federal Tax Authority, ‘A VAT registration covers ALL of the business activities undertaken by the registered person.’

    It is mandatory for your Dubai business to have a Tax Registration Number (TRN) to comply with the UAE VAT laws, if the UAE business qualifies for VAT mandatory registration threshold. A Tax Registration Number is a unique 15-digit number assigned to a vendor or business, by the Federal Tax Authority, that registers for tax purposes in the UAE. The TRN is issued once you complete your UAE VAT registration process. The TRN is important because it –

    • acts as a proof of your established and operative business status
    • allows you to claim input VAT on your business expenses and apply for VAT refunds
    • facilitates VAT returns filing
    • allows the business to collect UAE VAT on sales and pay to the UAE government
    • is as per UAE VAT laws and regulations

    Types of UAE VAT Registration Services in Dubai

    The Federal Tax Authority’s VAT eligibility criteria are dependent on a company’s annual revenue and annual taxable expenses.
    There are two types of VAT registration services in the UAE:

    1. Mandatory VAT Registration
    2. Voluntary VAT Registration

    Mandatory VAT Registration in UAE

    It is applicable on individuals or companies that have an annual turnover of AED 375,000 or more. If your business falls in this category, you are required to get a Tax Registration Number (TRN) to conduct your business in the UAE. You can then implement VAT on your supplies and collect VAT on behalf of the FTA.

    You are eligible to apply for Mandatory VAT Registration if you satisfy either of the following criteria:

    • Your business turnover and imports were more than AED 375,000 during the last 12 months
      OR
    • You anticipate that your business turnover and imports in the next 30 days will be more than AED 375,000

    Voluntary VAT Registration in UAE

    It can be applied by individuals or companies that have an annual turnover of more than AED 187,500 but less than AED 375,000. If your business falls in this category, you may apply for VAT registration and get a TRN, voluntarily. Should you choose to not register for VAT, you will not be fined, nor will you face any legal issues.

    You are eligible to apply for Voluntary VAT Registration if you satisfy either of the following criteria:

    Your business turnover or taxable business expenses or imports were more than AED 187,500 in the last 12 months
    OR

    • You anticipate that your business turnover or taxable expenses or imports in the next 30 days will be more than AED 187,500

    Here is a quick comparison between the two types of VAT registration services in UAE that are based on annual turnover.

    MANDATORY VAT REGISTRATIONVOLUNTARY VAT REGISTRATION
    Registration threshold is AED 375,000Registration threshold is more than AED 187,500 but less than AED 375,000
    It is mandatoryIt is optional
    Applicable if last 12 months’ turnover or imports were or exceeded AED 375,000Applicable if last 12 months’ turnover or taxable expenses or imports exceeded AED 187,500
    Applicable if your turnover in the next 30 days is expected to be more than AED 375,000Applicable if your turnover in the next 30 days is expected to be more than AED 187,500
    Non-registration within stipulated time will result in payment of fineNo fine or penalty associated with non-registration

    VAT Fines in UAE for Non-Registration

    UAE VAT Law requires that any business eligible for mandatory VAT registration must get themselves registered within the time frame specified by the FTA. Failure to do so will result in fine for non-compliance of procedure.

    If your business meets or exceeds the mandatory VAT registration threshold, you have 30 days from reaching the turnover limit, to register for VAT and obtain a Tax Registration Number. If you fail to register within these 30 days, your business will have to pay a late registration fine of AED 20,000.

    VAT Registration in UAE for International Companies

    If you are a non-resident of the UAE, that is, if you do not have a place of establishment or fixed establishment in the UAE, and your company is based outside the UAE, your business is categorised as an international company or foreign or non-resident business.

    As an international company, if you sell or expect to sell your goods or services in the UAE, and there is no other person who accounts for the VAT due in the UAE on your behalf, then you are required to register for VAT and get a Tax Registration Number.

    VAT Registration for Amazon Sellers in UAE

    If you are a vendor or a business located outside the UAE and want to sell your products or services in the UAE through e-commerce platforms such as Amazon and Noon, you must register your company with the FTA before you start selling online in the UAE.

    As a vendor on Amazon or Noon, you can start selling only after completing your VAT registration process in UAE and getting your TRN. If you register your business after making sales, your business will incur a hefty penalty. Also, the condition of a minimum turnover does not apply to these platforms.

    Conclusion

    When starting a new business in Dubai, there are many factors to consider before applying for VAT registration services. For in-depth discussion about how to register your company for VAT in UAE, what are the exemptions for UAE VAT registration, or to learn how Shuraa can help you with your VAT registration requirements in UAE, VAT compliance, and VAT refund processing connect with us today. Start today! Book your FREE VAT consultation with our VAT & tax experts.

    Since 2001, Shuraa Group has helped over 35,000 local and foreign entrepreneurs with customised Dubai company formation solutions, specific to their business needs. In addition to UAE company registration and VAT & accounting services, we also offer business centre and office solutions, Dubai bank account opening assistance, and reliable corporate sponsorship, among many other services.

    You can get in touch with us on +97144081900, +971506923280. You can also send us an email at info@shuraatax.com with your enquiry about UAE VAT registration services in Dubai.

    Author
    Hassan Sheikh
    UAE VAT Expert/Tax Consultant

  • Decoding the AED 5,750 company formation package

    Decoding the AED 5,750 company formation package

    Even for a young nation, the UAE has placed itself as the economic hub of the Middle East. And for a good reason. There are several contributing factors which attract a huge influx of investors and entrepreneurs annually. One of the primary reasons is low cost free zone business setup in UAE.

    Entrepreneurs can begin their business ventures for just AED 5,750. How? By choosing the Sharjah free zone business setup package. However, it is important to understand what the package entails. Whom is it suitable for? How can one avail it? What are its benefits?

    The following column explains in detail the cheapest free zone license in UAE. 

    What does the AED 5,750 package constitute?  

    Rolled out by Sharjah Media City (SHAMS), the AED 5,750 package is designed for the formation of media companies. The offer, however, is only valid for Sharjah free zone business setup. The media license is a professional / service type of trade license issued by SHAMS. But, the package does not include any visa.  

    Entrepreneurs can engage in any one of the 13 activities allowed under the media license:

    • Advertising
    • Digital marketing  
    • Programming and consultancy  
    • Media production  
    • Photography  
    • Web portal
    • Printing  
    • Market research  
    • Graphic design  
    • Fashion design  
    • Interior design
    • Publishing  
    • Translation services  

     To add more activities under your trade license, you need to pay AED 1,000 per activity.

    Whom is the SHAMS package suitable for?

    As the AED 5,750 package is promoted as the cheapest free zone license in UAE, it is most favourable for startups. However, it is open for all, including non-residents.  

    Below are some of the businesses for which getting a media license in the Sharjah free zone business set up is advisable and an evaluation of why the SHAMS package is recommended:

    Residents of the UAE

    One of the primary reasons for company formation is to avail resident visas for one’s family as well as employee visas. Although the package can be availed by foreign investors, the purpose of setting up a business in the UAE is not served. Why? It does not include any visas, which is one of the perquisites for opening a bank account in Dubai. Therefore, it makes more sense for people with UAE residency visas to apply for the SHAMS media license.  

    Entrepreneurs who are employed and owners of other existing businesses  

    To apply for a media license in SHAMS, you do not need to obtain a No Objection Certificate (NOC) from your current sponsor. Therefore, people who are have a job can also start their own business ventures by availing the Sharjah free zone business setup package. 

    Benefits of availing the SHAMS business setup package in UAE  

    Not only is the SHAMS media package a gateway to low cost free zone business setup in UAE, but it also has other benefits:  

    100% foreign ownership with a Limited Liability corporate structure  

    Usually on the mainland, businesses with professional / service licenses do not prefer an LLC structure as this would require them to partner with a local sponsor who would mandatorily own 51% of the company shares. In SHAMS, however, your media company can have a limited liability corporate structure along with 100% expat ownership. The main advantage of having a limited liability structure is that in case of any untoward future event, your personal assets would remain safe as the company’s liabilities would suffice to deal with the situation.   

    Low cost free zone business setup in UAE  

    For aspiring media entrepreneurs, the package serves as a reasonable means of getting their own legal business with low investments and gaining hands-on experience. Therefore, startups can certainly consider getting the SHAMS media license.  

    Hassle-free company formation

    The documentation for acquiring a SHAMS media license is quite simple. You just have to submit a copy of your passport, visa, Emirates ID and photograph. Also, you can get the license without being physically present in the Emirate. Furthermore, you can upgrade your license according to your convenience to apply for any number of visas.

    To learn more about low cost free zone business setup in UAE or apply for a SHAMS media license, get in touch with Shuraa Business Setup. The free zone specialists at Shuraa will help you explore all possible options so that you can avail the cheapest free zone license in UAE. For enquiry, call on +97144081900 or drop a WhatsApp message to +971507775554 or simply send an email at info@shuraa.com.

    Author
    Neha Tyagi
    Corporate Advisor | Free Zone Specialist

  • Why form a Holding Company in Dubai Mainland?

    Without a doubt, Dubai attracts investors and entrepreneurs from all over the world seeking to expand their businesses in the commercial hub of the Middle East. Whether these are startups or corporate offices and branch offices of MNCs or family-owned businesses, the city is a hotspot for economic activities. In this blog we will explore why is it wiser to form a holding company in Dubai.

    Suppose you have a wellness clinic and with time, you want to set up a retail store for dietary supplements and publish a fitness magazine as well. Though the three business verticals are complementary, one license would not cover all the activities and services you plan to offer. Therefore, for running a clinic, you not only require a professional license from the UAE Department of Economic Development (DED), but your company also needs to be an LLC approved by the Dubai Health Authority (DHA). For trading, you need to get a commercial license. And for the printing press, an industrial license must be obtained.

    While you are free to choose the operational structure for each of your ventures, it is wiser to form a holding company in Dubai Mainland.  

    What is a holding company?

    In basic terms, a holding company is an LLC or a corporation which owns and controls subsidiary business entities. This parent company by itself does not provide any service or product or engage in manufacturing. Nor does it look after any operations. It mainly owns the stocks and controls the operating companies which do the actual carrying out of operations and activities. The holding company may either own 100% stocks or just enough to have undisputed control over its subsidiary firm. Each of the subsidiaries also have their own management to see to the daily operations.

    Five benefits of forming a holding company

    You might be wondering, why form a holding company in Dubai Mainland when an entrepreneur does have an option of investing in more than one business under multiple licenses? Therefore, listed below are some of the key benefits of incorporating a holding structure:

    1. Easy asset management – The parent company’s trademarks such as name, logo, real estate and equipment can be utilized by the subsidiaries as well.
    2. Legal Structure – Any legal change in the operational company can be simplified by making changes in the holding itself.
    3. Privacy of ultimate beneficiary – The information regarding shareholders need not be disclosed outside the holding.
    4. Investment in multiple ventures – You can have subsidiaries as branches or franchises. Via a holding, you can own numerous international franchises. At the same time, you can have branches in varied sectors. For instance, usually, the branch of a restaurant is another restaurant. But under a holding model, you can invest in retail, real estate as well as hospitality.
    5. Movement of employees – The human resource function becomes easier as the workers can be deployed from one organization to another to best utilize their skills.

    Costs involved

    If you are considering forming a holding company in Dubai Mainland, you have to process it via DED. Below is the general process along with approximate cost break up:

    • Obtaining initial approval: AED 120/-
    • Getting name approval: AED 620/-
    • Drafting Memorandum of Association (MoA): AED 1,500 onwards
    • Getting an office space
    • Local sponsor: Partner will have 51% of the shares
    • Activity fees: AED 15,000/-
    • License fees: AED 10,000/-

    To learn more about how to form a holding company in Dubai Mainland, get in touch with one of the leading providers of company formation solutions – Shuraa Business Setup. Call us on +971 44081900 or drop a WhatsApp message on +971 507775554. You can also email your query to info@shuraa.com.

    Author
    Saima Khan
    Corporate Legal Advisor | Holding Company & Investment Specialist

  • Special Purpose Vehicle: Restructuring LLC Company for Investor Protection

    Are you a foreign national entrepreneur wanting to secure complete ownership of your Dubai mainland company? How is it possible to do so when the UAE law states that you must partner with a local sponsor who will own 51% shares of your LLC company? This is where company restructuring via Special Purpose Vehicle (SPV) or Special Purpose Company (SPC) comes in the picture.

    Dubai is renowned globally as the business hub of the Middle East. Entrepreneurs from all around the world turn to Dubai to either start their entrepreneurial journey or to expand their existing business to a new region. With the freedom to set up your business in either the mainland or one of the many free zones in Dubai, there is no dearth of opportunities for you to explore the UAE market and to capitalise on its favourable international reputation.

    Based on the legal business structures outlined by the UAE government, a foreign national can form a Limited Liability Company (LLC) in mainland Dubai, albeit as a partnership. Mainland company incorporation in Dubai mandates you to partner with a local sponsor. A local sponsor, by definition, can only be either a UAE national individual (Emirati) or a company fully owned by an Emirati. As per UAE commercial law, the local sponsor must hold 51% shares in your company while you, along with any other foreign national partners in your business, will own the remaining 49%. In most cases, the UAE national is a silent partner without any operational authority in your company. However, legally, both the parties are liable up to the declared share capital of the company owned by each shareholder.

    Oftentimes, a foreign investor and a local sponsor get into a side agreement. This agreement acts as a written consent whereby the UAE national declares himself/herself as a silent partner who holds no shares in the company. However, this is not a notarised agreement. The legality of the agreement is of a civil suit. It will not supersede the legally notarised Memorandum of Association (MoA), which is as per the UAE company law.

    While a side agreement is based on trust and goodwill, should a situation arise where a dispute requires the intervention of the judicial system, the government will only take into consideration the terms stipulated by the law of the land. Thus, to safeguard the ownership of the foreign investor, there is a need to restructure the company by establishing the presence of Special Purpose Vehicle (SPV).

    What are Special Purpose Vehicles (SPV)

    Special Purpose Vehicles are subsidiary companies established to help you gain complete ownership of your mainland LLC company. High net-worth entities or companies with substantial investment and high-risk operations may have reservations about registering their company with a 51% local shareholding structure. Therefore, the creation of SPV is best suited for their needs as it will allow them complete control of their business, without having to conform to a shareholding structure.

    Recent changes made to the Foreign Direct Investment (FDI) law by the UAE Federal Government has widened the scope of activities through which foreign nationals can have 100% ownership in an LLC structure. Though they have included more than 122 activities to the list, a majority of these are related to service, construction, or project-oriented businesses. Since the initial investment required for these activities is very high, it is not a viable option for SMEs. Company restructuring via SPV will be a more economical solution.

    Special purpose companies can only be registered in a free zone governed by the English Common Law. Currently, there are only two free zones in the UAE that offer company registration under Common Law – Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM).

    What is the process of Company Restructuring via Special Purpose Vehicle?

    Restructuring the LLC is a 2-stage process and includes the involvement of both parties – UAE national sponsor and expat partner(s).

    Stage 1 – Company restructuring in free zone

    This stage involves registering either one or two separate entities as Special Purpose Vehicles (SPV) or Special Purpose Companies (SPC).

    When incorporating 1 SPV

    • The SPV will be registered as a 100% UAE national-owned entity.
    • The registered SPV can then pledge all its shares to any individual(s) who will directly become the shareholder(s) of the mainland LLC company. This transfer of shares is carried out under the Call Option Agreement, as per the English Common Law.

    When incorporating 2 SPVs

    • The first company, known as SPV A, will be registered as a 100% UAE national-owned entity.
    • The second company, known as SPV B, will be registered as a 100% expat partner(s)-owned entity.
    • Once the two entities are registered, SPV A will pledge all its shares to SPV B under the Call Option.

    Stage 2 – New company registration in UAE mainland

    The final step of completing your company restructuring process is to incorporate a new LLC company in the mainland. As per the UAE Commercial Law, this company will have two shareholders: the Emirati-owned SPV and the foreign national individual or the expat-owned SPV. Since the Emirati-owned shares were pledged off in Stage 1, the expat investor(s)thus becomes the 100% owner of the LLC.

    What are the requirements for incorporating a Special Purpose Vehicle?

    The documents required are dependent on the purpose for which the company is undergoing restructuring. However, the basic requirements are as follows:

    • Business plan of the company, including the objective of the company
    • Copy of passport information of each shareholder
    • UAE visa page copy of shareholders who are residents of the UAE
    • Copy of UAE visit visa page of non-resident shareholders
    • Copy of Emirates ID of shareholders who are residents of the UAE

    For in-depth information about Special Purpose Vehicles, or to discuss how Shuraa Business Setup can help you restructure your LLC company and secure your ownership, book your FREE consultation with our corporate legal advisors today.

    Connect with them on +97144081900 or WhatsApp them on +971507775554. You can also drop us an email at info@shuraa.com with your enquiry about business setup in Dubai or anywhere across the UAE.

    Abdul Muqeeth, Corporate Legal Advisor/Company Restructuring Specialist, Shuraa Business Setup

  • Starting a Financial Consultancy Company in Dubai Free Zone

    Starting a Financial Consultancy Company in Dubai Free Zone

    The UAE has become the go-to location for investors to set up a business. One of the noticeably booming businesses in the country is financial consultancy.

    Especially in Dubai, there is a high demand for aid in financial advisory. The demand is due to the increase in the businesses being established in the emirate. This inevitably leads to the need for additional support to ease the process of running a company. Hence, a lot of corporations turn to the aid of professionals in this industry.

    If you’re interested in starting your own company, continue reading to find out how you can obtain a financial consultancy license in Dubai free zone.

    Benefits of starting a financial consultancy company in a free zone

    • Full foreign ownership of business
    • Full profit repatriation
    • Strategic location
    • Global connectivity
    • Range of business activities
    • Time-efficient process
    • Convenient registration
    • No Currency restrictions

    Financial consultancy 101

    Financial consultancy services are those that are provided by certified financial consultants to individual clients, small and large scale corporations, as well as government agencies.

    Corporations and individuals who require expertise in accounting, debt management, insurance, fundraising and other aspects of finance would require the aid of financial consultants in Dubai.

    Activities permitted under the license

    The following activities are permitted under this professional license:

    • Financial statements and performance analysis
    • Market research, price trends, analysis, and future forecasts
    • Arrange feasibility studies
    • Operate consulting on securities, commodities, and related contracts
    • Investment portfolio modelling
    • Investment consulting services

    The cost for a financial consultancy license in Dubai is approximately AED 17,000. This price is with the inclusion of visa.

    Procedure to start a financial consultancy business in Dubai

    Setting up a financial consultancy business in a free zone is an easy procedure. These jurisdictions do not require plenty of paperwork and can be completed fairly quickly. The process is as follows:

    • Selecting the preferred free zone

    The first step in starting your company is to select the most suitable jurisdiction to fit your business needs. There are numerous free zone options. You can pick one depending on which available activities are the most fitting for your business.

    • Submit application forms and required documents

    The next step is to submit your application form. During this process you will also have to finalise the location of where your company will be based.

    • Start the process of visa application

    Upon submitting all the required documents, you can start the process of visa application. If you want to sponsor dependents, you can also register to do so during this stage. Based on the chosen free zone and activities, you will have a certain visa eligibility. However, exceeding that limit would require you to pay additional charges.

    • Open a bank account

    Having a free zone bank account is necessary to ease the process of running a business. This would help the investor keep track of their company’s finances such as expenses. This would also help to calculate tax liabilities smoothly and regulate cash flow more successfully. Moreover, having a corporate bank account is key to ensure you don’t need to complicate your business finances. It can be a one-stop solution for all your business’ financial needs.

    Documents required to start a financial consultancy in a free zone

    • Passport copy of the investor
    • Visa copy of the investor
    • 2 coloured passport sized photographs
    • Business plan

    Taking the chosen free zone into consideration, you may have to submit additional documents.

    Connect with Shuraa and start your company

    Free zone company setup in Dubai is undeniably one of the most opted choices for foreign investors. This is because the UAE free zones offer several benefits to entrepreneurs looking to venture into the world of business in the country.

    Shuraa is one of the top business setup companies in the UAE. Active for over 26 years, we have been aiding investors from around the globe to maintain their business. We guarantee that the entire procedure of setting up your company in the country is easy and quick.

    Get in touch with our free zone business experts and find out more about setting up a company in Dubai, UAE. Call us at +97144081900 or send a WhatsApp message on +971507775554. You also have the option to drop us an email at info@shuraa.com and get your queries answered in no time.