Most of the people want to run business in their home countries. However, relocating a company to a country with better economic conditions is a wise decision. To make the most of the financial opportunities in the UAE, you can move business to Dubai.
Planning an overseas company relocation involves navigating various social expectations, legal rules, business regulations, and tax requirements. Thus, you or team member(s) can physically move abroad beforehand to head up the business expansion. It can ensure smooth and efficient transition of company operations to the United Arab Emirates.
The primary business decision is whether to establish a new company, or trade directly under your parent company. So, it is essential to get professional advice for your business relocation to Dubai, UAE. This informative article will help you make an informed decision about moving foreign business to Dubai.
Process of foreign business registration in Dubai
Registering your company is the first step in the business landscape of the UAE. It needs meticulous attention to detail and adherence to regulatory requirements. Whether, you’re a pro entrepreneur, or are starting first venture, this procedure is crucial for establishing your presence in Dubai.
- Choose a name for your company in the UAE
- Finalize the legal jurisdiction of the business from Dubai Mainland, or free zone
- Obtain the initial NOC from Dubai Economic Department (DED) or free zone authority
- Draft the Memorandum of Association (MoA) describing the legal structure
- Notarize the Articles of Association (AoA) detailing the shareholder information
- Prepare the lease agreement after selecting the workplace (if necessary)
- Submit the copies of passport, visa, and legal documents to DED or free trade zone authority
- Attach the registration document of the foreign parent company (in case of branch office setup)
- Pay the application fees and other regulatory dues
- Get the trade/business license after final approval
Considerations while moving your business to Dubai, UAE
These are some key factors that foreign investors need to look into as they move business to Dubai, UAE.
- Business operating areas
- Corporate taxation
- Excise and VAT taxes
- Bilateral investments and double taxation protection
- Staff compensation responsibility
Now, we briefly discuss these important considerations before business relocation to Dubai, UAE.
Business operating areas
Dubai companies can operate as mainland, free zone, or offshore entities depending on their location and business goals. Mainland firms can carry out their activities throughout Dubai, and the broader UAE. Also known as onshore companies, they can conduct work in Dubai, Abu Dhabi and other Emirates with minimal capital requirements.
Whereas, free zone companies can only perform operational tasks within their respective free trade zones. 50+ free zones in the UAE offer special tax, customs, and import regimes for businesses. These free trade zones are exempt from corporate tax, and import/export taxes, but restrict business within their legal jurisdictions.
Also, international businesses can register offshore companies in Dubai to take advantage of its tax neutral environment. Just like mainland businesses, offshore firms operate onshore in the UAE. They can also trade internationally under their parent company.
Corporate taxation
UAE (and thus Dubai) charge 9% corporate tax on taxable income above AED 375,000 (USD $102,100). Whereas, companies that fulfill the criteria of the global minimum corporate tax rate agreement, pay 15% CT. Businesses generating revenue under AED 375,000 are subject to 0% corporate tax.
Foreign banks and financial institutions are subject to 20% flat corporate tax income driven from Dubai and Abu Dhabi. Businesses set up in free zones are exempt from corporate tax if they don’t do business within the UAE mainland. Some qualifying companies under the law are exempt from paying the corporate tax.
Excise and VAT taxes
Since 2018, a flat 5% VAT is applicable on the purchase of the products and services in the UAE. Businesses with VAT exemptions in mainland include international transportation, education, healthcare services, exports, investment-grade precious metals, and residential property construction. However, the majority of businesses setup in free zones are exempt from value added tax for trade within their jurisdictions.
A hefty excise tax is applicable in the UAE from 2017 on some goods. United Arab Emirates imposes 50% excise tax on carbonated drinks, and products with added sweetners. Whereas, 100% excise tax applies on energy drinks and tobacco products, which are harmful to personal health or the environment.
Bilateral investments and double taxation protection
UAE has avoidance of double taxation agreements (DTAs) with 143 countries. United Arab Emirates holds protection of bilateral investment treaties (BITs) with 112 countries. Moreover, the UAE has treaties with investment provisions (TIPs) with 17 and investment related instruments (IRIs) with 22 entities.
Staff compensation responsibility
Businesses in the UAE are responsible for timely compensating the human resources as per local staffing rules and regulations. Also, they are responsible for paying entry visas and travel costs for recruits moving to the UAE. There is no individual income tax withholding regime, and health insurance is a compulsory requirement.
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Regulations for foreign company relocation to Dubai
Foreign companies must adhere to these rules, regulations, and licensing requirements as they move business to Dubai, UAE.
- They can establish a sole proprietorship, LLC company, or branch office in the UAE.
- Foreigners can hold 100% ownership, whether businesses are operating from a free trade zone or Dubai mainland.
- Business owners must have UAE residency visa before applying for business registration in Dubai.
- Opening a bank account in the UAE for commercial purposes is necessary, which takes 2-4 weeks.
- UAE business licensing options include commercial license, professional license, or industrial license.
- Every business operating in the UAE must have a business/trade license depending on its activity.
UAE visa options for business relocation to Dubai
The United Arab Emirates requires a residency visa for foreign entrepreneurs moving to Dubai for business relocation purposes. Subsequently, companies are responsible for organizing and paying for visa of the international staff to Dubai. The standard work visa lasts two years and requires sponsorship from the organization.
This is necessary for individuals to know about these local laws, regulatory requirements, and community expectations in Dubai, UAE.
- Green Visa is for freelancers or self-employed individuals, requiring specialized qualifications and annual income proof.
- Golden Visa enables foreign investors and entrepreneurs to live, work, or study in the UAE for 10 years without sponsorship.
- Also known as Gold Card, the latter option allows immediate family sponsorship.
Benefits of relocating your business to Dubai, UAE
Economic growth of the United Arab Emirates is driven by commerce, travel, and tourism. Likewise, the booming oil industry, abundant investment opportunities, and tourism contribute to the prosperity of Dubai. Accordingly, foreign entrepreneurs get these economic benefits as they move business to the UAE.
- Dubai is a wealthy and economically healthy city with numerous advantages for businesses relocating or starting a new one.
- Serving as a major business, shipping, trade, and commercial hub; Dubai offers a unified environment for business growth.
- Dubai offers numerous entertainment, recreational, dining, and shopping opportunities.
- The matchless architecture of Dubai is a significant source of revenue generation for the UAE.
- Dubai has no personal income taxes on individuals and tax on revenue driven from dividends.
Corporate relocation to the UAE from different countries
This is the series of posts on the foreign business relocation to the UAE for different nations.
- African business relocation to the UAE
- Relocating French business to Dubai
- Shifting to Dubai from Germany
- Transferring a UK business to Dubai
- Rewarding businesses in Dubai for Canadians
- Prospects for Japanese investment in Dubai
- Bringing an Indian business to the UAE
- Moving an Iranian business to Dubai
Conclusion
United Arab Emirates provides numerous rewards to foreign entrepreneurs to move business to Dubai. Consequently, the diversified economy of the UAE includes construction, real estate, financial services, logistics, tourism, and transportation. Dubai’s modern infrastructure and zero-tax regime is attracting global business leaders and startup owners.
UAE and Dubai provide various company registration options including mainland businesses, free zone firms, offshore entities. Dubai is popular for its safe, secure, discreet, and inclusive business environment, with complete privacy through a closed book register. Hence, these benefits make Dubai an attractive destination for businesses seeking to thrive in the MENA region.
Partnering with a professional business consultancy streamlines the company formation procedure in the UAE. Because, expert advisors at KWS ME provide guidance on selecting the most suitable business structure in Dubai. Furthermore, they ensure compliance with regulatory authorities to fulfill local requirements.
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FAQs about the foreign business relocation to the UAE
These are the answers to the common questions about the foreign corporate relocation to the UAE.
Can foreigners move a business to Dubai?
The UAE is an ideal place for the foreign investors looking for the corporate relocation. Either, they can start small, medium-scale, or multinational businesses in Dubai from the scratch. Or, they can relocate their existing business abroad to the UAE for corporate expansion globally.
Why do foreign entrepreneurs relocate to the UAE?
Foreign entrepreneurs find the UAE highly beneficial due to its open business culture. Its tax-friendly environment make it an attractive destination for expatriate investors. Because, the UAE is free from the personal, corporate, and capital gains implications.
Are there obstacles in moving a foreign company to the UAE?
Relocating a foreign business to the UAE is a wise decision for many expatriate entrepreneurs. However, it is crucial to know that there can arise some potential challenges. For example, completing registration process, securing regulatory permits, establishing ownership rights, finding a local nominee shareholder/partner, etc.
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