FAQ

Being a trustworthy and professional business consultant, we ensure fast and reliable business setup in UAE free zones. Usually, it takes around 3 to 10 days to setup your free zone company; it may differ according to the selected free zone. We make sure that all your documents are legal and concerned authorities have attested them.

If you’re not consulting a business consultant, it will take up to few weeks and it’s becomes difficult to clear all the legal procedures. So, consider AAAM Management Consultancies LLC for your free zone business setup!

This depends on your needs, as well as the needs of your business. You could set up your company as a Sole Establishment (this is the same as a Sole Proprietorship),as Limited Liability Partnership, a Limited Liability Company, a Private Limited Company, or a Professional Services Company.

You also have the option of setting up your company on the mainland, in a free zone (only limited liability company structures are permitted here), or offshore.

A physical presence is mandatory for companies established on the mainland and in free zones. However, an offshore company is not permitted to lease office space in the UAE.

The good news is that there is affordable office space for everyone. If you want to keep your initial costs down, you could look at renting an office or any number of dedicated desks in a co-working space on the mainland. These are all fully furnished and ready to move in in a free zone, you need to rent at least a desk in a shared office space. The added advantage is the some free zones allow you rent a flexi-desk, that is a desk you will be using for say, ten hours in a week. You still get your dedicated PO Box so that you have a unique address.

There are four types of Business License or Trade Licenses in the UAE, Commercial License-issued to a company engaged in any kind of trading activity, Industrial License-issued to a company engaged any king of manufacturing or industrial activity, Professional License issued to service providers, artisans, professionals and craftsmen and the last one is Tourism License-issued to travel, tourism and hospitality companies in the UAE.

Setting up a business in Dubai involves several steps but can be streamlined with careful planning and adherence to local regulations.

• Research and Planning : Start by researching the market, identifying your target audience, and understanding the legal requirements for your business type.
• Choose a Business Structure : Decide on the most suitable business structure, such as a sole proprietorship, partnership, limited liability company (LLC), or setting up in a free zone.
• Register Your Business : Register your business with the Department of Economic Development (DED) if you’re operating on the mainland or with the relevant free zone authority if you’re setting up in a free zone.
• Obtain Necessary Permits and Licenses : Depending on your business activity, you may need specific permits and licenses from various government authorities. Ensure compliance with all regulatory requirements.
• Secure Premises : Find suitable office space or commercial premises for your business operations, keeping in mind location, size, and budget considerations.
• Open a Corporate Bank Account : Choose a reputable bank and open a corporate bank account to manage your business finances efficiently.
• Visa and Sponsorship : Arrange visas and sponsorship for yourself and any employees, if necessary, to legally reside and work in Dubai.
• Comply with Taxation Requirements : Familiarize yourself with Dubai’s taxation system and ensure timely compliance with all tax obligations.

The necessary documents for Company formation in Dubai are as follows:

• Application of Pre-approval form (It can be done online)
• Notarized Passport copies of shareholders and the directors of the company
• Dubai Resident permit (residence visa)
• Copy of Emirates’ ID (if necessary)
• Proof of residential address (electricity bill or bank statement)
• Copies of parent company documents: (Required if a subsidiary company is being established in Dubai)
• Approvals of Third-party (for certain regulated business activities)
• MOA/AOA of the company

To renew your trade license, you need to provide a certificate of authenticity for the lease contract issued from the Real Estate Regulatory Agency as well as a new Memorandum of Association, with the necessary modifications.

Value Added Tax (VAT) was introduced in the UAE on 1 January 2018. The rate of VAT is 5 per cent. Value Added Tax or VAT is a tax on the consumption or use of goods and services. A business must register for VAT if its taxable supplies and imports exceed AED 375,000 per annum. It is optional for businesses to register whose supplies and imports exceed AED 187,500 per annum. A monthly or quarterly VAT return must be filed by the companies and VAT payment as required to be timely done to the tax authorities.

Setting up a business in the UAE involves several compliance requirements. These can vary depending on the type of business, location, and industry. Here are the key compliance types:

1. Legal Structure and Licensing

• Business Structure : Decide whether your business will be a Mainland, Free Zone, or Offshore company.
• Trade License : Obtain the appropriate trade license (commercial, industrial, professional) from the relevant authority.
• Name Approval : Ensure the business name complies with UAE naming conventions and obtain approval.

2. Local Sponsorship and Ownership

• Mainland Companies : Require a local sponsor (UAE national) who holds 51% ownership, unless 100% foreign ownership is permitted under certain conditions or for specific industries.
• Free Zone Companies : Allow 100% foreign ownership but require physical office space within the Free Zone.
• Offshore Companies : Allow 100% foreign ownership and offer flexibility in terms of business operations and taxation.

3. Documentation and Approvals

• Initial Approval : Obtain initial approval from the Department of Economic Development (DED) or relevant Free Zone authority.
• Memorandum of Association (MoA) : Draft and notarize the MoA, outlining the business structure and shareholder responsibilities.
• Office Lease Agreement : Secure and register an office lease agreement.

4. Visas and Work Permits

• Employment Visas : Apply for employment visas for expatriate employees.
• Residency Visas : Obtain residency visas for business owners and their dependents.
• Labour Cards : Register employees with the Ministry of Human Resources and Emiratisation (MOHRE) and obtain labour cards.

5. Banking and Financial Compliance

• Corporate Bank Account : Open a corporate bank account with a UAE bank.
• Minimum Capital Requirement : Fulfill the minimum capital requirement, if applicable, for certain types of businesses.
• Accounting and Auditing : Maintain proper accounting records and conduct annual audits if required.

6. Regulatory and Industry-Specific Compliance

• Industry Regulations : Adhere to specific regulations for industries such as healthcare, education, finance, etc.
• Health and Safety Standards : Comply with occupational health and safety regulations.
• Environmental Regulations : Follow environmental guidelines and sustainability practices, if applicable.

7. Tax Compliance

• VAT Registration : Register for Value Added Tax (VAT) if your annual turnover exceeds the threshold.
• Tax Filing : File regular VAT returns and maintain compliance with tax regulations.

8. Ongoing Compliance

• License Renewal : Renew trade licenses annually.
• Regulatory Filings : Submit periodic filings and reports to relevant authorities.
• Employee Contracts : Update and maintain employee contracts in compliance with UAE labour laws.

There are separate requirements for Mainland companies and Free zone companies:

✓  Mainland Companies : Under the UAE Commercial Companies law, all companies in the mainland are required to have their financial accounts be audited by a licensed auditor. These companies have to keep their financial records for at least five years. Companies in mainland are onshore companies with their licenses issued by the Department of Economic Development (DED) or any related department in other Emirates.

✓  Free Zone Companies : Various free zone authorities in UAE also mandate the submission of audited financial statements. Business registered with free zones might be required to submit their audit report within 3 or 6 months from the end of the financial year. Some free zones require businesses to submit the audit report at the time of renewal of license.

The Economic Substance Regulations (ESR) is in line with UAE’s commitment to the international tax cooperation and transparency. The regulations require UAE’S onshore and free zone companies and other business forms that carry out any of the ‘Relevant Activities’ listed in the regulations’ framework to maintain an adequate ‘economic presence’ in the UAE relative to the activities they undertake.

Following is the list of relevant activities covered in ESR scope:

1.  Banking Business
2.  Insurance Business
3.  Investment Fund management Business
4.  Lease Finance Business
5.  Headquarters Business
6.  Shipping Business
7.  Holding Company Business
8.  Intellectual property Business (“IP”)
9.  Distribution and Service Centre Business

Business doing relevant activity are required to meet “Economic Substance Test:

1. Directed and Managed Test
2. Core Income Generating activities (“CIGA”) test
3. Adequacy test

ESR is an annual compliance to be done by the companies. Companies, which conduct any of the relevant activities, are required to submit ESR notification within 6 months of financial year and if applicable ESR report also to be submitted within 12 months of financial year.

UAE cabinet had issued the regulation No. 58/2020 dated 28 August 2020 to regulate and document beneficial ownership of company incorporated in UAE. The regulations are applicable for companies registered in mainland UAE or in a UAE free zone.

Companies are required to maintain below registers at their premises:

• Shareholder’s register.
• Register of beneficial owners.
• Register of Nominee directors.
• And copy of important documents and UBO forms submitted to authorities.

Companies are also required to file this information with the respective regulator/licensing authority. Also, companies must notify the relevant registrar of any change or amendment to the information provided within 15 days of such change or amendment.

There are four types of Business License or Trade Licenses in the UAE, Commercial License-issued to a company engaged in any kind of trading activity, Industrial License-issued to a company engaged any king of manufacturing or industrial activity, Professional License issued to service providers, artisans, professionals and craftsmen and the last one is Tourism License-issued to travel, tourism and hospitality companies in the UAE.

✓  UAE issued Federal Decree Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organizations (“AML Law”). AML law imposes compliance obligations on DNFBPs as well as financial institutions. Following businesses are included in DNFBPs:
✓  Real Estate
✓  Dealers in precious metals and precious stones
✓  Lawyers, notaries, and other independent legal professionals and independent accountants
✓  Corporate Services providers and trusts

Country by Country (CBC) Reporting is part of Action 13 of the Base Erosion and Profit Shifting (BEPS) initiative led by the Organisation for Economic Co-operation and Development (OECD) and the Group of Twenty (G20) industrialised nations. BEPS Action 13 requires large Multinational Groups of Entities (MNEs) to file a CbC Report that should provide a breakdown of the Multinational Group’s global revenue, profit before tax, income tax accrued, and some other indicators of economic activities for each jurisdiction in which the MNE operates.

The purpose of CBC Reporting is to eliminate any gap in information between the taxpayers and tax administrations with regard to information on where the economic value is generated within the MNE Group and whether it matches where profits are allocated and taxes are paid on a global level. In the UAE, CBCR requirements are applicable to the UAE-headquartered MNE Groups with ‘financial reporting years starting on or after January 1st, 2019. The ultimate parent entity of MNE headquartered groups in UAE (with consolidated group revenue of more than AED 3.15 billion in the previous year) must file the CbC report and notification in UAE for years begininnig on or after 1 January 2019. As per the revised law, there are no longer compliance requirements for UAE constituent entities of non-UAE head- quartered MNE groups.

To renew your trade license, you need to provide a certificate of authenticity for the lease contract issued from the Real Estate Regulatory Agency as well as a new Memorandum of Association, with the necessary modifications.

• Trade License :
  – A valid trade license issued by the relevant authority in the UAE is paramount.
  This document serves as proof of your legal business operation within the country.
  – Ensure your trade license is up-to-date and not expired before proceeding with registration.
• Memorandum of Association (MOA) or Articles of Association (AOA):
  – This foundational document outlines your company’s objectives, legal structure, and internal         rules. It essentially defines your business blueprint.
  – The MOA or AOA provides crucial information to the FTA regarding your company’s purpose and framework.
• Passport Copies of Owners/Partners/Shareholders:
  –  Copies of passports for all company owners, partners, or shareholders are required.
  –  If applicable, include copies of Emirates ID alongside passport copies for verification purposes.
  –  These documents confirm the identities of individuals holding ownership or partnership rights        in the company.
• Contact Information:
  – Provide accurate and up-to-date contact details for your company and a designated contact person. This includes:

1. Company phone number(s)
2. Email address(es)
3. Contact person’s name and contact information