Offshore vs Onshore Company Incorporation in Dubai
The guidelines for opening an offshore company in Dubai differs significantly from the requirements necessary for incorporating an onshore company. Before setting up an offshore company in Dubai, it is important to take into consideration the following:
- An offshore company does neither have any particular requirements nor limitations regarding the shareholders or the directors of the offshore company in Dubai as opposed to the onshore company which does not allow full foreign ownership of the company and therefore requires a local partner with at least 50% share capital.
For more info on requirements, please see Incorporation of a UAE Onshore Company.
- An offshore company pays 0% corporate tax in Dubai while an onshore company in Dubai is obligated to pay tax and filing requirements per the UAE legislation
- An offshore company cannot operate in Dubai and the entire UAE while the onshore company is designed to carry out business in Dubai and other Emirates
If a foreign investor is not interested in the Dubai market, or the investors clients are not in Dubai and the investor is starting company in Dubai to take advantage of the tax regime, privacy, and offshore banking. Then it is advisable to open an offshore company in Dubai rather than an onshore company.
Setting up a business in another country is always challenging and thus requires comprehensive research. It is also important to seek the services of professionals. The guidelines for the incorporation of a company in Dubai is similar to the procedures in most European and therefore the foreign investor is required by law to have all the required information and documents about the business activity he or she intends to undertake. This means that the foreign investor should know all the business licensing requirements in Dubai.
How to register a company in Dubai
To register a company in Dubai, the Dubai Company Act requires a foreign investor to have a local partner with at least 51% of the share capital although a foreign investor may incorporate fully foreign owned companies Dubai and are in the Dubai free zones. The requirements for company registration in Dubai differs from case to case because of the type of company one chooses to establish in Dubai. The Dubai company law allows foreign investors to set up the following types of companies in Dubai;
- Limited liability companies,
- Private and public joint stock companies,
- Branch offices,
- Free zone limited liability companies,
- Free zone establishments
The sole proprietorship could also be an appropriate choice for the investors seeking to establish a simpler way of doing business in Dubai.
The procedure for registering a company in Dubai relies heavily on the type of company and the trading license associated with the company.
The requirements needed to open a company in Dubai
Foreign investors must consider following when setting up a company in Dubai:
- The minimum shares capital requirements
- The shareholding structure,
- The business licensing requirements
The Commercial Law does not require limited liability companies in Dubai to deposit a minimum share capital before registration. This means that the shareholders or the directors will decide the amount they need to finance the company to help them achieve their goals. For joint stock companies in Dubai, there are different share capital requirements and it also depend on the business they will undertake:
- Public companies in Dubai require 10 million AED as the minimum share capital,
- For insurance and investment companies in Dubai, a minimum share capital of 25 million AED will be required
- Financial institutions require a minimum share capital of 40 million AED.
The Chamber of Commerce and Industry (DCCI) in Dubai issues the following types of business licenses:
- Commercial or trade licenses,
- Industrial licenses,
- Professional licenses.
Our specialists in Quantum Auditing firm in Dubai will assist foreign investors with the application of business license in Dubai.
Other requirements to open a company in Dubai
Other requirements for establishing a company in Dubai include the following:
- Drafting and notarizing the company’s memorandum and articles of association,
- Opening a corporate bank account in Dubai,
- Registering of the native workers with the Ministry of Labor,
- Registering native workers with the social security authorities
Companies are not required to register for Value Added Tax in Dubai as such tax has not yet been implemented.