UAE companies can be divided into two categories, «onshore» and «offshore» companies.

OFFSHORE

There are currently two registries in the UAE offering «Offshore» company registration, Jebel Ali Free Zone Registry and Ras Al Khaimah (RAK) Registry.

Jebel Ali offshore companies are not used as often anymore, after the introduction of the RAK company as not only is the costing of the Jebel Ali more expensive but also the incorporation procedure is more time-consuming. Shareholders of a Jebel Ali Offshore company will either have to attend the registry in person or issue a Power of Attorney (attested at a UAE Embassy) for a third party to attend on their behalf. This is not required for the RAK option. Jebel Ali are also restrictive on the business activity they will allow and will allow trading companies so a company being set up for example as a Holding company will not be permitted at Jebel Ali.

The RAK offshore Company has certainly become a very popular company. There are two types of RAK Offshore company, the «RAK Offshore company» and the «RAK international Company» . Both these companies follow the same regulations but the difference being that the RAK international can choose its jurisdiction of Law for any disputes or claims against the company. It should be noted that «offshore» companies are not permitted to trade with persons or companies situated within the UAE.

In order to incorporate any offshore company we will need the following information and documents on any Director/Shareholder:

1. Proposed company name
2. Intended business activity of the company
3. Certified passport copy
4. Basic C.V
5. Bank reference letter

One advantage using UAE companies is the double taxation treaties [DTT] that UAE has with other countries, please note that in theory it is mandatory for a company to be registered and resident for tax purposes in a particular jurisdiction in order for it to take advantage of any DTT with other countries. Please note that the federal government of the United Arab Emirates has not promulgated any tax laws and according to an extract from the UAE Taxation Laws drafted by a leading law firm in Dubai, the following taxes are not applicable in the UAE:

• Personal income tax
• Capital gain tax
• Value-added tax
• Withholding tax
• Corporate tax

ONSHORE

Onshore companies are designed for people wishing to set up a business with a physical presence in the UAE. Onshore companies consists of two main companies «LLC» and «Free zone» companies, although it is possible to register a branch of a company as both an «LLC» and a «Free Zone»

LLC companies require a Local Investor to hold 51% of shares in the company.  All local companies are required to lease/purchase office space as part of the incorporation process. The required paid up share capital is AED 350,000 (USD 95,000). The average set up time for this type of company is 4-6 weeks and will require the presence of the expatriate partner in Dubai on at least 1-2 occasions. The exact costing is dependent on the business activity but on average this type of incorporation costs USD 30,000 plus the cost of leasing/purchasing office space.

There are currently around 35 free zones in Dubai of which most are business specific. I.e the Company would have to be involved in the business activity the free zone has been set up for. There are however a few free zones that enable a company with any business activity to apply to set up in.

The advantages of the Free Zone is that the expatriate may retain 100% ownership of the company and also Free Zone companies have the guarantee that they will remain tax free for at least another 32 yrs regardless of any changes in UAE law. The required paid up share capital can vary from AED 100,00 to AED 1,000,000 (USD 27,000 to USD 275,000) depending on the free zone. The time scale for registration is similar to that of an LLC. The registration costing is lower than the LLC averaging between USD15,000 — USD 25,000 but office rent can be slightly higher depending on availability in the required Free Zone.