Company Formation in Dubai. Benefits of Company Formation in Dubai.
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What Are Different Companies That You Can Form In Dubai, Registration Process and Requirement
Each and every year, more and more individuals express their interests to form companies in Dubai while a similar number of companies abroad extend their applications to open up branches and extensions in the Emirate. But what does company formation in Dubai require? What are some of the qualifications individuals or companies seeking to register companies in Dubai? These are some of the questions on the minds of almost everyone thinking of establishing a business foothold in the emirate. But as it stands, there are still a lot of factors that one has to consider when thinking of a Dubai company.
For instance, one should first familiarize themselves with the business scene in the economy if they are to reap maximally from trading in Dubai. They should familiarize themselves with the different categories Dubai companies are grouped into and evaluate each one of them to gain a deeper understanding of what they stand to gain from opening such a company. Most importantly, aspiring businessmen and women from the rest of the world seeking company formation in Dubai should orient themselves with the current market situation at the time they are applying for company registration. They should also ensure they are in the know about the trade cycles, and trends in the country as well as understand the significance of their impact on the companies in Dubai. Here is a complete guide on what it takes to register companies in Dubai.
Why should you base your company in Dubai?
Company formation in Dubai is informed by the benefits that the entrepreneurs stand to gain in the event the formation goes through and the company established. It is, therefore, only prudent that you first start by learning the benefits that accrue to both you and your firm for registering your company in Dubai. Firstly, it is important to note how interesting and inviting the Dubai market has remained over the years mainly because of its largely non-aligned economic policy. It, therefore, continually invites tradesmen from all over the world especially Indians, Africans, and Europeans who dominate its foreign owned companies list.
But what makes the Dubai market so interesting and inviting that foreign companies and business professionals are always lining up for the simple recognition as Dubai Company? Firstly, because of its largely non-alignment economic standing, almost all the countries of the world are more than willing to trade with Dubai companies without fear of reprimand from their economic block partners. The companies in Dubai are also open to a large market source for their varied products from the large population both in Dubai and in the rest of the Saudi Arabian Emirates. Additionally, Dubai has some of the most straight forward laws in the world when it comes to company registration. It also has offered foreign investors more incentives than most other countries both regarding policy and administrations and revenue including flexible visas for the workers here as well as well as tax havens and exemptions. These form part of the many factors attracting foreign companies to invest directly in the country in the name of company formation in Dubai. After learning of the various benefits they stand to gain by opening up companies in Dubai, business professionals now have to learn about the various types of licenses and companies they can open here and the complexities involved.
Types of business licenses to apply for before company formation in Dubai
The first step towards company formation in Dubai is the application of a business license. These business licenses in the emirate are divided into three broad categories that include the industrial, the trade and the professional license. The application of either serves as a notification or an expression of interest to the regulatory authorities of your intention to establish a business in their country. It also proves to the authorities that you are well informed of the different types of businesses open to foreigners in the emirate. Here is a breakdown of these specific licenses.
The industrial license: Applicants of this license are primarily the industrial segments wishing to take up manufacturing roles in the country. This includes the conversion of raw material or semi-finished goods into finished products by use of power or any other energy legalized by the state and used in the assembling and packaging as well as the production of the said products.
The trading license: For you to qualify for these type of a license, you must be willing to invest in the state’s general trade areas or in a particular trade that may include conducting either wholesale or retail trade in the country. Other investment fields that call for a trade license include transport, hotels, and general contractors.
The professional license: If you depend more on your skills other than capital investments to carry out your practice, you will then be required to apply for a professional license. Businesses that fall under this category are largely service oriented and include engineering, educational service providers, consultancy companies, medical practitioners and financial services providers.
Nevertheless, after settling on your preferred type of company you would wish to register in Dubai, it is advisable that you seek professional help from company formation experts to advise you on the way forward. They will advise on the type of license to apply for your particular business as well as how to go about the application process such as what governmental departments to approach for different kinds of authorization. Most importantly, you need an expert and reliable company formation in Dubai expert for advice on the type of company to open after being granted the respective business license.
Types of companies you can open up in Dubai
There only exist three types of companies you can open in Dubai. You can opt to settle for an offshore company, an onshore company or a free zone company. Each of these companies has a set of regulations and requirements for formation. Each also comes with its fair share of advantages.
The process if opening up an offshore company in Dubai is much simpler compared to any other Dubai company. The requirements for the formation of the company are also quite cheap, and only a few legal restrictions are followed. For instance, the company though formed in Dubai isn’t required to have an operating license in Dubai. It is also exempt from the corporation tax commonly charged on the revenues of the company. Additionally, it isn’t a legal requirement for an incorporated offshore company in Dubai to have a physical address, warehouse or physical office. A virtual office that is regularly maintained or administered from any part of the emirate is always considered enough representation for an offshore company by the Dubai authorities.
For the formation of the company, anyone can be a shareholder, a director or a promoter. This implies that unlike other types of companies, the offshore company despite being formed in Dubai can be wholly owned by foreign nationals and still get to enjoy all these benefits. The offshore Dubai Company is however not allowed to activate its business operations in the emirate. This means that the offshore company cannot conduct businesses within Dubai’s borders. If it so wishes to promote its products in the country, it is required to liaise with an onshore registered wholesaler or distributor. Nevertheless, it remains the easiest Dubai Company to form and also the least costly.
The onshore company is the complete opposite of the offshore company with only a few variations regarding its formation and operations. For instance, the onshore company is formed with the sole of purpose of conducting its business operations internally and within the constraints of the Dubai borders. It has full authority to deal directly with the local consumers including retailers without necessary employing the services of the wholesalers. Most onshore companies in Dubai will, however, still heavily utilize the services of the wholesalers and other middlemen such as the distributors to make their products are quickly absorbed into the market.
The onshore companies, unlike their offshore counterparts, aren’t tax exempt. They are liable to the payment of corporations tax to the respective authority depending on the field of production they are engaged in and as directed by other relevant legislative bodies. When it comes to formation and shareholding for onshore companies in Dubai, the membership is also not restricted and both foreigners, as well as Dubai nationals, can initiate the process of company formation in Dubai. It is, however, a requirement by the Dubai legislations regarding company formation that onshore companies not be wholly owned by foreign nationals or having a controlling stake in such institutions. The shareholding limit for foreign nationals on onshore companies is set at 49 percent regardless of the field of operation.
Given the several requirements it must fulfill before it is allowed to operate legally within the country’s borders, the process of registering an onshore company is complex and tedious of all business registrations and incorporations. Nevertheless, there are several professional company formations in Dubai providing company registration services. They will take you through the rigors associated with the registration process and if need be to register on your behalf. These companies are experienced in dealing in registering different companies and are therefore the right bet if you want to get a smooth process and get it right the first time round.
Free Zone Company
Dubai is no doubt one of the world’s leading free zone hubs. It has several free zones all of which are offering stellar developmental conditions for different startups, especially in the industrial, technological, and automobile fields. The process of company formation in Dubai for free zones is also less complicated than that of an onshore company and even more inviting than many others free zones in the world. Additionally, each of the free zones provide competitive and favorable business environments for new startups that leave most of them spoilt for choice.
Despite there being several free zones in Dubai, most sought after and one every start up is seeking registration under is the Jebel Ali Free Zone that provides investors with multiple advantages. Some of the benefits that free zone operatives under JAFZA and other equally friendly free zones in Dubai offer startups include:
- 100 percent profit repatriation rights
- 100 percent foreign ownership by either an individual investor or a group of like-minded investors
- Zero charges on corporation tax
- Rights to liquidate or dispose of the startup anytime
- Right to perform multiple activities with the startup including international businesses as well as owning property legally without the need for a proxy
These benefits are quite enticing but to achieve them you must have met the minimum requirements for registration of a Dubai company. By opting to undertake the registration process all by yourself, you will be bracing yourself to learning inside out the legal hurdles set by the Dubai government for registration of companies in Dubai, but you also face the risk of delays and missing on important steps in the process that will always get you back to the drawing board. Nonetheless, you can avoid all this by and still get a chance to learn it all if you hire an experienced company formation expert.