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The United Arab Emirates (UAE) a monarchy on the Arabian Peninsula on the Persian Gulf established in 1971. Its simple name is “Emirates”. It is bordered by Saudi Arabia on the south, Oman on the east, Iran on the north, and Qatar on the west. The estimated population is 9.3 million where only 1.5 million are UAE citizens and 7.9 million are foreign expats.
The UAE’s legal system follows both the Islamic Shari’a Law and a civil code with a Constitution, federal laws and regulations.
UAE corporations are regulated by the UAE Commercial Agencies Law of 1981. “Commercial agency” is defined as any agreement where a foreign company is represented by an agent to sell, distribute, provide or offer goods or services for profit or a commission in the UAE.
UAE corporations have many benefits including:
• No Corporate or Income Taxes: UAE corporations only need to pay income tax if their industry is foreign banks, oil and gas. Otherwise, corporations are exempt from taxation. However, U.S. citizens and those residing in countries who tax worldwide income must report all income to their tax authorities.
• No Capital Gains Tax: The UAE does not tax capital gains, which is good for real estate investors and others normally subject to this tax.
• No VAT or Sales Tax: There is no Value Added Tax (VAT) or any sales taxes in the UAE.
• Free Trade Zones: The UAE has several Free Trade Zones that can allow 100% foreign ownership and in a zero taxation regime
• English widely Spoken: Doing business in the UAE is easier when English is so popular.
• One Shareholder: Only a minimum of one shareholder is required for incorporation.
• Strategic Location: The UAE offers a close access point to other Gulf countries, and can work as an entry point to other Gulf Cooperation Council (GCC) countries. Dubai is a local hub of business for the Middle East and North Africa.
• Ease of doing Business: The World Bank’s “Ease of Doing Business” Report ranked the UAE 31st in the world, and first in the Middle East and North Africa.
• Skilled Labor Force: The UAE offers a large population of skilled labor that would provide an excellent potential workforce for any company choosing to incorporate there.
• Political and Economic Stability: There is a strong banking system and a stable political system present in the UAE. The UAE’s gas and oil reserves rank it as tenth largest on the globe.
UAE corporations must pick a unique name that is not similar to already existing corporation names. Typically, three versions of the business name are submitted with the hope that one of them will be approved.
Registering a company name requires a company to get preliminary approvals from the Licensing Section of the Dubai Department of Economic Development (DED) on the company’s activities, trade name, and various ownership identities. Once this is completed, the corporation can check the availability of the name, reserve the name, and even make payment to reserve the name online at the DED’s website.
Office Address and Local Agent
UAE corporations must have a local registered agent and a local office address. This address will be used for process service requests and official notices.
UAE corporations must have at least one shareholder.
Directors and Officers
UAE corporations must have at least two officers, one executive director and one secretary.
The minimum capital requirements vary from Emirate to Emirate jurisdiction (e.g. Dubai is AED 300,000, while Abu Dhabi only requires AED150,000).
UAE corporations only need to pay income tax if their industry is oil and gas or a foreign bank. Otherwise, corporations are exempt from taxes. Also, there is no capital gains tax.
Direct personal taxation does not exist in the UAE. However, most Emirates do levy municipal taxes, or taxes through various fees.
UAE corporations can expect to pay annual renewal fees of AED 2,000.
UAE corporations are able to use nominee directors and shareholders for increased privacy.
Annual financial and taxation statements are filed with the Securities and Commodities Authority and published on their website.
Accounting and Audit Requirements
Auditors must be appointed if a corporation is joint stock or a limited liability. UAE corporate entities must file their audited financial statements with the Ministry of Economy, and have their trade licenses renewed (if applicable).
The UAE does not allow for any exceptions as far as the appointment of auditors is concerned, nor are there restrictions. However, certain corporations, especially banks, need to be audited by the Big Four auditing firms.
Corporations must prepare annual accounts, and banks must prepare their accounts and follow the requirements of the Central Bank of the UAE.
All listed corporations must file both quarterly reviewed and audited financial statements in English and Arabic with the Securities and Commodities Authority, which publishes these annual statements on its website.
Annual General Meeting
An annual general meeting is required of UAE corporations, but these meetings do not need to be held in the UAE. Meetings for UAE corporations can be held anywhere in the world.
Time Required for Incorporation
UAE corporations can expect the entire process to take from 8 – 20 days. The completion time depends on the approval the corporate name, as well as, how accurately the applicant completes the registration documents.
UAE corporations can use shelf corporations for faster incorporation.
Form a United Arab Emirates Corporation Conclusion
UAE corporations have several benefits including: no corporate, income, capital gains, or VAT taxes; English is widely spoken, the access to Free Trade Zones, strategic location to the Mideast, Gulf countries, and North Africa; political and economic stability, ease of doing business, and only one shareholder required to incorporate.