A UAE owns the 8th largest crude oil reserves, most of which are in Abu Dhabi. Just recently, a UAE government announced, that a country will develop new projects in the oil sector, providing interested investors with the opportunity to register an oil company in the Emirates.
It is necessary to study all details of the Constitution of the Emirates. There are federal laws, that allow “concessions”. So, a government of each emirate regulates an oil production and sales in its region.
Since, a description of all emirates is not appropriate for framework of this article, further we will consider the most popular one - the Emirate of Dubai.
The mineral extraction in Dubai is regulated by the government of Dubai. In 2009, the Dubai Supreme Energy Council was established. It was created to control the energy sector of the emirate, as well as to introduce various incentives for investors. This is another reason for opening an oil business in the UAE.
The production and sale of petroleum products in Dubai is approved by the government on the basis of concession agreements. State-controlled holding companies in Dubai are called “concession companies”, they are registered for unhindered cooperation with international firms.
Emirates are characterized by friendly policies. Nevertheless, since the UAE remains dependent on income from mining, this industry is tightly regulated, companies from FZs are not allowed to conduct mining/trading oil business of the Emirates.
Approval of an application for registration is issued by the Supreme Council. To establish an oil enterprise in the UAE, you must go through the following steps:
- Define/select 3-4 names for your enterprise. A corporate name should not contain offensive or indecent words, as well as words, indicating a connection with the government;
- Define the activities of a future company, as well as its legal form;
- Check whether the name is free, and obtain approval from the authorities;
- Choose an office, draw up documents for a purchase or rental;
- Prepare a package of documents in accordance with all instructions of authorities;
- Obtain (if required) permissions from other regulatory authorities;
- Submit documents to a competent authority for obtaining a trade license in the UAE;
- Then you must open a corporate bank account in the UAE;
- Register at the Department of Immigration and Labor;
- Find a staff, get work visas.
Enterprises from FZs cannot receive an approval of a High Council, it is necessary to register an oil enterprise in the UAE in the form of LLC or a foreign branch. Companies must also have a local partner.
To register an LLC in Dubai, it is required, that a local partner own at least 51% of all shares. A foreign investor cannot own more than 49% of the UAE business.
A local agent is still required to register a branch in the Emirates, but a branch may be 100% owned by a foreign company.
A taxation in the UAE
A corporate tax rate for oil companies in the UAE varies from 10 to 55%, depending on income. For companies, that operate on the basis of concession agreements, a government independently sets tax liabilities. 5% VAT is applied, when importing goods/services.
Speaking about how to obtain a license for an oil company in the UAE, it must be said right away, that the process can be long and complicated. In order to speed up the process, it is better to ask for professional advice on licensing oil activities in the UAE from YB Case specialists.
It is also worth noting, that a simplified licensing is available for the international trade in petroleum products, tobacco products, precious metals, medicines, industrial equipment and aircraft in the UAE.
You will need the following package of documents:
- A Certificate of registration in the UAE;
- A MOA;
- A license for trading activities in the UAE;
- A decree, permitting an officer of the enterprise to open an account in the UAE;
- Copies of passports of all founders.
A final list of documents depends on the particular bank. When opening a corporate account in the Emirates, it must be borne in mind, that a bank may request additional supporting documents. Foreign companies must certify all of their documents.
Registering an oil business in the Emirates requires accurate planning and painstaking work, and in this case, a reliable support is definitely required.
Please note, that this article is published for informational purposes and cannot be construed as advice. Any questions, related to opening an oil business in the Emirates, you can settle with YB Case experts.
Moreover, we recall, that experts of our company provide support in registering an oil business in the Emirates, are ready to help to obtain a license for oil production in Dubai.
To request for advice on oil activities in the UAE or to find out more details about the range of services of our company, please contact us directly in any convenient way, using the contacts indicated in the form below.