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Company formation in UAE : FAQ's

Author: Gayathri Nair
by Gayathri Nair
Posted: Mar 29, 2020

1. Why to choose the UAE to incorporate company?

Dubai is the center location between Africa, Asia and Europe which make It a prime destination form many industries. With best practices operating and zero rates for corporate and personal taxes, company formation in UAE

is the desired choice of majority. Dubai provide no currency restrictions and 100% capital repatriation. And most of the developed business environments like Dubai lack this level of financial freedom. Also, UAE provide a wide range of opportunities in various sector. Some other reasons are:

  • Proper education system suitable for all languages and cultures
  • Well serviced by local and international financial institutions
  • Liberal economy

2. What types of company structure are available in the UAE?

a. Free zone entities:

For a particular number of years, exempt from corporate and personal taxes and 100% foreign ownership. Not licensed for businesses outside the free zone and suitable for service related companies.

b. In the name of foreigner, professional license allows allocation of 100% of shares. Local sponsors are the designated local service agents.

c. For incorporator, representative office license are also available which permits the company to take part in marketing and collecting information according to the parent company or on behalf of them. Here there is no commitment to be a shareholder and require a local service agent.

3. Does the UAE have an offshore corporate structure?

Yes, UAE has offshore structures. They are:

a. RAK: Pure offshore structure.

b. JAFZA: Permits property ownership in Dubai and require one shareholder and two directors.

4. Do Dubai have proper accounting system?

Dubai has got a very accurate accounting system and a proper accounting system is mandatory to deal with VAT compliance in UAE. And many firms provide quality accounting services in Dubai which help the businesses to maintain a proper financial report.

To prepare the financial statements, generally, accountants use the financial records compiled by bookkeepers and perform financial analysis. Accounting ensures statutory compliance, track income, and expenditure, and provides financial information for management, government and investors to make business decisions.

5. How do I register a company in the UAE?

Registering a company in UAE involves several steps and anyone can register a company in UAE. So now, let’s discuss the steps required to get your business registered and licensed in UAE. Whatever may be the category, every business must have a ‘trade’ license in Dubai. The trade license and permission requirement can vary according to the category of your business. Unlike general trading business, businesses such as health services, food trading, financial services require more clearances. 3 categories of license issued are:

  1. Commercial License – For any kind of trading activity.
  2. Professional License – For service providers, craftsmen, artisans, and professionals.
  3. Industrial License – For manufacturing or any industrial activities.

The Department of Economic Development in Dubai issues the Local Dubai company licenses and operates from several locations to provide licensing services.

6. How to apply VAT in UAE?

Applying VAT in UAE is mandatory for every business with revenue AED 187,000 or more and refusing to pay VAT results in penalties.

For registering VAT, you can get proper assistance from any VAT consultants and at a rate of 5 percent, UAE imposes VAT on all tax-registered businesses. Applying for VAT involves two steps and they are:

  1. e-Service account creation
  2. Online VAT registration

Before online registration of VAT, you need to create an account with Federal Tax Authority. You can create an online account in FTA just like creating an online account in yahoo, Gmail, etc

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Author: Gayathri Nair

Gayathri Nair

Member since: Jun 08, 2019
Published articles: 2

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