Introduction
Inaugurating a stockpile concern in Dubai is a strategically propitious resolution for myriad cosmopolitan speculators and innovators endeavoring to broaden their enterprise and refine their fiscal obligations. Enlistment of a stockpile concern in Dubai garners notice owing to a plethora of momentous perks that this demesne proffers. Primarily, it is noteworthy to accentuate the affable fiscal protocol, which mandates diminished fiscal rates and absolves corporate revenue levies for enterprises enlisted in particular economic precincts, rendering Dubai conspicuously captivating for expansive international stockpile concerns.
Henceforth, the inauguration of a conglomerate in Dubai proffers extraneous stakeholders abundant prospects for proliferation and advancement of their enterprise in a global milieu, whilst affording superlative circumstances for fiscal optimization and pecuniary steadfastness.
Main steps in establishing a holding company
Selecting the appropriate legal form of the company
Opening a holding business in Dubai requires careful selection of the legal form of the company, as tax liabilities, requirements for founders, authorised capital and other important aspects of running a business depend on this choice.
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Type of legal entity |
Features |
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Public Joint Stock Company (PJSC) |
Minimum authorised capital is approximately $2.72 million. Requires a minimum of 10 shareholders. Designed for large businesses with the possibility of entering public markets. |
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Private Joint Stock Company (PJSC) |
Authorised capital of approximately $544,500. Minimum of 3 shareholders. Used for a more closed and controlled business. |
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Limited Liability Company (LLC) |
It is possible to establish without authorised capital. From 2 to 50 founders. Limited liability for debts. A popular choice for medium-sized businesses. |
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Limited partnership |
No requirement for the amount of authorised capital. Requires a minimum of two partners, one of whom must be liable. |
Opening a holding business in Dubai depends largely on the objectives of the business, its scale and scope of operations. For example, for a large international holding company planning large-scale operations, the form of a PJSC or PEO may be suitable, providing opportunities to raise capital through the public markets.
Registering a company and obtaining a licence
Forming a holding company in Dubai involves several key steps, from incorporation to obtaining the necessary licences to operate. These processes require adherence to local legislation and liaising with the relevant regulatory authorities.
Choosing a company name and legal form
The first step in the holding company registration process in Dubai is to choose a name for your company, which should be unique and not contain any prohibited words or expressions. It is also at this stage that you need to decide on the legal form of the company that best suits your business objectives and strategy.
Lease office space
Establishing a holding company in Dubai requires a physical office. The size and location of the office should match your business needs and licensing requirements. Depending on the location chosen for your business (mainland or free economic zone), different office space rules and requirements may apply.
Filing for company registration
In order to formalise a conglomerate, a compendium of manuscripts must be tendered to the pertinent Dubai enrollment authority. This compendium may encompass the Memorandum of Association, Articles of Association, replicas of passports of the originators and stewards, and sundry manuscripts necessitated contingent on the juridical configuration elected and the ambit of the company's pursuits.
Obtaining a licence
Upon the authentication of your enterprise registration, the subsequent measure is to procure a mercantile patent, which enables you to execute a specific genre of commerce. There exist sundry categories of patents in Dubai, encompassing mercantile, erudite, and manufactural, with the selection contingent upon the essence of your enterprise.
Opening a bank account
Initially, opening a bank account in Dubai requires the submission of a set of documents which includes the company's corporate documents such as the memorandum of association, the resolution appointing the directors and managing directors, and proof of identity of the founders and directors. It is important to note that most banks in Dubai require the personal presence of the account holder at the time of account opening, although some banks may offer the option of starting the procedure online followed by the need for a personal visit to complete the process.
In addition, establishing a holding company in Dubai and opening a bank account involves a know-your-customer (KYC) procedure on the part of the bank, which includes verification of the documents provided, the company's sources of income and business model. This requirement is subject to international anti-money laundering and anti-financing of criminal organisations standards.
Lease or purchase office space
In the process of registering a holding company in Dubai, one of the key steps is the lease or purchase of office space, which is not only a requirement for obtaining a licence, but also a factor affecting the number of possible visas for employees.
Clerical expanse requisites may fluctuate contingent on the particulars of the enterprise and the elected jurisdiction within Dubai. For instance, myriad unshackled economic precincts proffer adaptable Flexi-desk workspace resolutions commencing at AED 16,000 annually, signifying the superlative preference for diminutive enterprises or enterprises seeking utmost versatility sans necessitating to lease an entire bureau.
The election amidst leasing and acquiring office domicile should be grounded on strategic delineation and the protracted-dated aspirations of your enterprise. Recollect that opting for the apt office domicile not solely facilitates your firm to operate with efficiency, but can additionally sway the manner it is discerned by patrons, associates, and benefactors.
Legal aspects
Principles of regulation of holding companies in Dubai
The legislative framework for the establishment of holding companies in Dubai includes many regulations that provide legal support for the organisation and management of companies. Of particular relevance in this aspect is Federal Law No. 32 of 2021 relating to commercial companies. This law is applicable to economic agents engaged in a variety of economic activities on the mainland, including commercial, financial, industrial, agricultural activities, property management and others.
As a result, launching a holding business in Dubai requires careful consideration of a number of legal and regulatory requirements, including selecting the appropriate jurisdiction and form of company organisation, obtaining the necessary licences, and complying with corporate governance and economic presence regulations.
Protection of foreign investors' rights
Holding companies incorporated in Dubai are characterised by a special focus on protecting the interests of overseas investors, making this jurisdiction particularly attractive for international business. The city provides a wide range of legal and regulatory frameworks that ensure safety and efficiency for overseas investors.
Late legislative modifications, encompassing Federal Edict No. 26/2020 and Federal Statute No. 32/2021, have enacted noteworthy enhancements aimed at augmenting directorial adaptability and streamlining methodologies for alien stakeholders. Especially, these modifications afford alien stakeholders with the potentiality of possessing 100 percent of the equity of indigenous enterprises, which hitherto was proscribed. Appendages have likewise been instated to proffer more supple regulations for corporate statutes, embracing an assortment of contention arbitration mechanisms and regulations overseeing capital augmentations to forestall corporate insolvency or to diminish the ratio of stakeholders who do not contribute supplementary capital.
Companies operating in Dubai may incorporate in either the main territory or free economic zones, with companies in the main territory gaining unrestricted access to the UAE market and being subject to the laws and regulations of local and federal UAE authorities. In contrast, companies in free economic zones are mainly regulated by their own legal framework, but they are also subject to many federal laws.
Taxation system for holding organisations in Dubai
General principles of taxation
Dubai, like the rest of the UAE, has a special taxation system for holding companies. This system provides for the absence of traditional corporate income taxes, which makes the region attractive for international holding companies.
- Value Added Tax: VAT in the UAE is 5%. However, holding companies engaged solely in investing in shares of other companies without the right to manage these companies may be exempted from the obligation to register as VAT taxpayers.
- Corporate Income Tax: in the Arab Emirates the CIT rate is 9%, however for companies whose income does not exceed 375000AED this rate will be 0%.
- Double taxation treaties: The UAE has entered into numerous double taxation treaties with various countries, which provides additional tax benefits for holding companies with international operations.
Tax exemption system in special economic zones
The taxation system for holding organisations in the Arab Emirates offers significant tax benefits and advantages, making the region attractive to international investors and holding companies. Betwixt the supremely paramount boons lie the dearth of corporation toll and importation/exportation levies, which markedly diminishes the expense of conducting commerce and augments the yield on investment.
To avail oneself of these boons, a firm must fulfill specific criteria to be acknowledged as an accredited liberate area entity:
- Economic presence in the UAE: a sufficient level of in-country business activity must be demonstrated.
- Qualifying income: income, holding companies with registration in the UAE EEZ, must fulfil the conditions set by the government. These include:
- Proceeds from dealings within an autonomous precinct (excepting specific pursuits).
- Earnings from transactions with individuals beyond the autonomous precinct that do not meet the criteria for absolution.
- Proceeds from the administration of cerebral holdings.
- Alternative earnings that meet the fundamental prerequisites.
- Omitted pursuits: particular industries, like pecuniary amenities, assurance and reassurance, pursuits linked to land beyond autonomous precincts, and commerce in specific commodities, do not meet the criteria for favored handling.
- Transfer pricing rules: it is necessary to comply with the established rules in transactions with affiliated structures.
- The company should not opt for the general taxation system.
- Control of non-qualified income: such income must not exceed 5 per cent of total income or UAE AED 5 million, whichever is less.
- Holding companies registered in the UAE free zone must provide audited financial statements that can confirm that the company's financial position complies with the legal requirements.
- Compliance with specific conditions imposed by the Ministry for certain activities or additional regulatory obligations.
- Qualifying income is taxed at 0%, while income that does not meet the conditions or exceeds the minimum threshold is subject to a 9% rate. Failure to meet the qualification criteria disqualifies a company from being a qualifying entity for five tax periods and such a company will be subject to corporate tax at the general rate.
The absence of corporate tax creates significant incentives for those wishing to formalise a holding company in UAE free zones, allowing them to use these FEZs as a platform for international trade and business expansion. This corporate level income tax exemption allows companies to reinvest the majority of their profits into business development, research and development, and expansion into new markets.
It is imperative to comprehend that in order to uphold accredited entity status and relish the tax advantages, a corporation must meticulously adhere to all instituted regulations and prerequisites. Breach of these stipulations may culminate in the forfeiture of preferential status and the imposition of corporate tax at the standard rate for five tax epochs, encompassing the year of transgression. For a comprehensive grasp of all facets of taxation and adherence to the regulatory milieu, we advocate a consultation with our adept specialists.
Visa processing for overseas employees of a Dubai holding company
Registration of a holding business in Dubai and subsequent visa application for overseas employees of the holding company involves several steps and compliance with certain requirements. The main types of visas available to employees include the Standard Working Visa, the Green Visa, which is designed for skilled professionals, freelancers, investors and entrepreneurs, and the Gold Visa, which offers long-term stay without a sponsor to certain high net worth individuals.
The UAE visa maneuver initiates with the sanction of the ingress visa allocation from the Ministry of Labour (MOL), subsequent to which an avocation covenant is dispatched to the employer for ratification. Upon the covenant's ratification and the labor warrant is endorsed by the MOT, the laborer is conferred an ingress visa and labor warrant, authorizing him or her to ingress the UAE and advance with the medicinal scrutiny and other requisites obligatory to procure a denizen visa.
In order to petition for an Arab Emirates visa and subsequently secure a domicile license, a plethora of manuscripts are necessitated, encompassing a bona fide passport, daguerreotypes, an inked engagement covenant, medical scrutiny findings, and assurance. Significantly, proprietors are compelled to furnish healthcare assurance for their laborers pursuant to UAE jurisprudence.
Upon ingress to the UAE, the laborer undergoes a nosocomial scrutiny for transmissible ailments and solicits an Emirates Identifier. The master thereafter solicits a domiciliary visa within the 60-day viability epoch of the ingress authorization. Subsequently the solicitation is sanctioned, the laborer can officially commence employment and residency in the UAE.
During the process of registering a holding business in Dubai and hiring employees, it is crucial to follow all the requirements and procedures stipulated by the local laws to ensure that you can operate legally and successfully in the country.
Conclusion
The UAE proffers singular openings for commerce augmentation and escalating owing to its pivotal locale, cultivated infrastructure, and steadfast fiscal regimen. Enrolling a harborage corporation in Dubai not solely furnishes ingress to the global marketplace but also proffers chances to allure international investment and aptitude. By adhering to our counsel and adhering to all imperative protocols, you shall be capable of optimally harnessing the potency of Dubai to nurture your enterprise.
Inaugurating a tenancy corporation in Dubai necessitates a meticulous comprehension of indigenous statutes and ordinances, alongside judicious scheming and a stratagem approach. Since the juridical structure and commercial prerequisites are ceaselessly evolving, we encourage you to solicit succor from our adept professionals.
