Cheapest Company formation UAE for the year 2020 will be all about starting a new business in the United Arab Emirates.
And different types of company formation and the procedures to start will be discussed. And this article will be a guide to establish a brand new company in the UAE.
There are three types of company formation in UAE namely mainland, offshore, and freezone company formation.
Cheapest Company Formation UAE discusses the fees and costs. Finally, the company formation cost may vary with different consultancy. Also they will be changed by the government regularly. And you will be updated here.
Benefits of Company Formation in UAE
Starting a brand new company in the UAE is the best idea for the year 2020. Since the country is striving in every way to the best, many foreign investors are attracted each day.
Finally, you get to know why foreign investors are getting attracted to the UAE. Read the following points to know the reason.
UAE is the best destination for all foreign investments in the middle east.
Since the UAE has been ranked best for various reasons, this country becomes the ultimate choice of investors.
- UEA is the 17th best in the world for the Global Competitiveness Index
- It ranks 1st in the Arab World for the best business environment and infrastructure
- The UAE has 2nd largest economy in the Arab world.
- The GDP of the country has grown 231 times since 1971
Dubai and Abu Dhabi are the two major financial centers that offer offshore facilities. - UAE is not blacklisted as a tax haven by any organizations
Dubai Expo 2020 is expected to grow the country’s economy.
Tax Advantages
Although the tax system of the UAE is very attractive, there are some more reasons to choose the UAE for business.
- With proper structuring, a UAE company can benefit the booking of international profit without paying any local corporate taxes
- Both the Employees working in UAE and the foreign entrepreneurs residing in the UAE are exempted from income tax
- In addition, there is a simplified financial reporting system which does not require annual auditing
- Finally, you are exempted from the capital gains tax and VAT (Value Added Tax) or Withholding Tax
Freezone Benefits
Freezone has been considered the best destination of any kind of business in the UAE. Know more from below.
- 100% Ownership
- Tax Exempted on import and export
- Corporate Tax exempted for up to 50 years
- No restriction or exchange control on the repatriation of the capital and profit abroad
- A readymade office, warehouse or factory available
- Assitance for recruitment of labor and support services.
Offshore Benefits
In addition to other benefits, the owner gets the maximum benefit from an offshore company. Read the following to know more about offshore benefits.
- 100% foreign ownership. The director must not be a UAE resident
- 100% Tax exemption
- No Auditing is required
- High Privacy standard
- Documents can be provided in English
- Offshore company formation is fast and easy
Other Benefits
Finally, although there are many reasons to choose UAE for starting a company, here are some ideal reasons.
- High demand for foreign goods and services. Hence providing high per capita income
- UAE economic diversification for industrial zones. They prioritize Petrochemicals, building materials, chemical industries, metal industries, food industries, transportation, and oil gas services.
- UAE is the most cost-effective
- It is easy to recruit foreign employees from all over the world. As it has liberal labor policies
- UAE allows foreign ownership of properties.
- It has perfectly organized infrastructures
- The UAE has minimum crime rates. Hence making it the safest country to start a business
Pro Immigrant and business-friendly economy
And the UAE economy is one of the most favorable parts of company formation in the country. Know why.
- An unlimited number of employment visas available.
- Along with this, the recruitment process is simple and hustle free
- Easy license for a large number of business activities
- Supportive and advanced service sectors that aid the growth of international trade through merchant accounts and other financial instruments
- Custom duties are 5% of the cost, insurance, and freight (CIF) value of most of the products
- Finally office space available with flexible rents
Uses of Company Formation in UAE
Although there are many benefits to establishing a new business in the UAE, there are some uses too. Get to know about the uses before starting the company.
UAE is the gateway to the middle east and Africa
Finally know why UAE is the gateway for doing any business in the Middle East and Africa.
- Foreign entrepreneurs can tap into the lucrative markets of the Middle East and Africa (MEA) regions via UAE incorporation
- Dubai and Sharjah has highly developed infrastructures which makes them a perfect distribution center for trading companies
- Also, Dubai and Abu Dhabi are the business-friendly regions of MEA
- In addition to the world-class infrastructures and business-friendly regulations as well as politically stable and open economy, these cities have no quotas or barriers that can discourage foreign investments.
- They are highly liberal to trading policies
- Furthermore, The companies formed in these cities have high reputation and image across the globe
Regional Headquarters
Above all regional headquarters are the main reason for choosing the UAE for business start-ups. So it is important to know what is so beneficial about it.
- Tax-free company for all foreign investors
- You can collect proceeds from your subsidiaries incorporated inside the MEA region
- UAE is the safest and livable country in the Middle East
- The Laws are liberal and offer first-class work and residential infrastructures
- Low taxes have made the country highly attractive for foreign businesses
- Finally, according to the World Economic Forum’s 2017- 2018 Global Competitiveness Ranking, UAE is the 4th best in infrastructure, 7th best in the macroeconomic environment. And overall
- It is the 3rd best in the world for the goods market.
Hence UAE company can serve as regional distribution headquarters
3 Types of Company In UAE
There are three main types of company formation in the United Arab Emirates. But there are also some other special types of company which will be discussed later. So go through the three main companies, their formation steps and documents required.
Since these three are the main types of company in the UAE, foreign investors choose from these three. In addition to this UAE has the best infrastructures that attracts investors from different countries.
Mainland Company
Mainland Company formation in UAE is the easiest way to start a new company.
If you hold a commercial license, you must have a 51% local citizen partnership. And if you hold a professional license, you can own 100% of the company.
Dubai Economic Development (DED) has designated an ideal area in Dubai Mainland for Commercial Business Operations.
It provides great opportunities to all private business bodies and their spokespersons. Start your business with high-quality standards.
Mainland Company Benefits
Dubai Mainland Company formation has many benefits. And they are not much familiar with new business persons.
Foreigners can have much success with these benefits. And you get a corporate sponsorship with 49% of company shares. You can win 100% of the profit.
The benefits of starting a company in Mainland.
- You get UAE National Sponsor
- No need to pay personal or business Tax
- No Corporate Tax for you
- Mainland Company can trade with any other company in any part of the UAE.
- There are a number of options for business activities.
- There are many more scopes of diversity for Mainland Company in UAE.
- Mainland Company can establish the business anywhere in UAE.
- You have the freedom to trade with all markets.
- You can have more branches of your company to enhance the company’s existence in the UAE.
- It gives you the right to take on Governmental work.
- You can easily offer more number of employees ‘work visa’.
- An individual or corporation can be your business partner.
- 100% repatriation of capital and profits.
- Yearly Audit free and easy.
- Nuisance free registration process.
- No Minimum Capital required
- Access to prestigious business centers
- Flexi Desk Office, Meeting Rooms
Mainland Company Registration
To start a business activity in UAE you will need a local sponsor and a valid license. There are certain rules and regulations for each type of license you will hold for the business.
Well experienced people aid in UAE Visa and Business registration. Some business categories require prior approvals.
Most importantly choose the best platform for starting a company in the mainland. And making it a successful entity in the UAE.
You will need an authorized agent who is a professional in company registration. The professionals will guide you from the registration process to a fully functional business.
Requirements for Cheapest Company Formation UAE Setup in Mainland
All the documents required to start a company in UAE Mainland are mentioned below. In addition to these you may also need some documents depending on the office space and license you choose.
- Application form & 1 colored passport size photo
- Passport copy of all partners/shareholders
- Six proposed company names.
- No objection certificate from the current sponsor, if the applicant is UAE resident as employee
License For Mainland Company Formation
For starting a new company in the mainland you will need a license. There are two types of Licenses for doing any kind of business in the mainland.
1.Mainland Professional License
Mainland Professional License is for the individuals who have skills, talent, specifications, and experiences. The shareholders must have a certain degree of educational qualification.
The professional license allows 100% foreign ownership, expatriate ownership, and sole proprietorship.
In addition, a UAE National and a local service agent will be required to get a professional license. You will have to pay your annual Sponsorship fees to the UAE National.
At last, an individual is provided with a professional license. He must have intellectual abilities and academic achievements.
Business Under Professional License: Consultants, lawyers, and auditors, professional engineering license UAE, professional lawyer license, professional consultant license, Dubai healthcare city professional license, Dubai economy professional license, etc.
Benefits of Mainland Professional License
- 100% expatriate Shareholder ownership
- UAE National will not be a shareholder
- Pay the UAE National yearly
- No need to share capital
And you can get your professional license from the government agency, Department of Economic Development.
Steps For Professional License
Further, get a professional license in UAE with these simple steps.
- Register Trade name with DED (Department of Economic Development)
- Get approval of Department of Economic Development . (You will have to pay Dh110 Fees directly to DED for the approval)
- From Municipality get approval for Tenancy Contract
- The cost of the UAE Professional license is Dh260 in total.
Documents Required for Mainland Professional License
Firstly, before starting any company you must have all the documents required. Secondly, the documents must be attested and verified with proper government officials.
- A Form filled by an individual
- Partners’ Passport Copies
- Local Partner’s Copy of Naturalization book
- No Objection Letter from the sponsor for expatriate partners
- The municipality, RTA, National Media Council, etc. need initial approval from concerned departments
- Get (BR1) form
- Trade Name Reservation Certificate
- Get Initial Approval
- Tenancy Contract and EJARI Registration Certificate
- Submit the attested Agreement, Passport copies of owner/partners, and NOC for expatriate owner/partners (if any).
2.Mainland Commercial License
Mainland Commercial License is provided for commercial trade-related activities.
The company must do trading in goods and services. There are two types of traders in UAE: the general traders and the specialized traders.
And the general and specialized traders are eligible for mainland commercial license.
With this type of license your company reserve some protection rights. Some general trading business includes retail and real estate business.
Benefits of Mainland Commercial License
There is a remarkable number of benefits that come along the commercial license.
- You can do 10 business activity with just one commercial license
- You can choose multiple types of companies
- One commercial license incorporates various business activities.
- A DED registered company is highly secure for its business engagements.
- This license helps in opening a corporate bank account.
- No Income Taxation
- Financial reporting is easy and simple
- Cheap renewal of the license
Other Licenses included in Mainland Are as follows.
- Industrial License
- Commercial License
- Consultancy License
- Logistics, Cargo or Transportation Business License
- Private Educational Institutes License
- Tech License
- Media License
- Tourism Business License
- Retailer License
- Medical License
- Freelancer license
Offshore Company
An Offshore company is located out of the national boundary. Offshore business activities are their objectives.
The jurisdiction incorporates the company that comes under International Business Companies (IBC). There is no permission for local economic service.
In addition, offshore business is best for securing your assets and elevating funds by international trading.
Finally, doing business in offshore protects your assets from lawsuits and gives benefits of low taxation. And you get growing investments in offshore companies.
Offshore Company Benefits
There are many advantages and benefits. Offshore company benefits listed here. In addition to all other benef
- No taxation in the company’s home jurisdiction
- Designed for flexible business activities
- Lighter rules and regulations for business activities
- Take advantage of local and international laws in terms of taxation
- Operation costs are lower
- It improves the productivity of the company
- Number of favorable Government Policies for Offshore companies
- Provides greater control to the company for closer physical collaboration
- Confidentiality and privacy
- Legal security and protection benefit
- Own a bank account
- Invoice and trade your product internationally
Offshore Company Registration
Registering an offshore company in the UAE is not hard or strenuous. You will need an expert who is a professional.
They will guide you in the registration process. It will depend on the type of license you choose for your offshore company.
Requirements For Company Setup In Offshore
Documents required for setting up an offshore company depends on three things. The type of business activity, business partnership, and the site.
Typically a person will require some documents for offshore companies set up in UAE. They are as follows:
- Passport Copy
- A clear attested copy of passport
- Documents for Proof of Address like a utility bill or tenancy agreement which shows the address of current residence is mandatory.
- A reference letter from a bank or some professional
- Curriculum Vitae with professional history
- Bank statement. Above all, it must be dated within the last 3 months
- Directors and Shareholder
FreeZone Company
The first-ever apparent UAE company emerged in 1985. UAE FreeZone gives access to the highest advanced infrastructure, demonstrative sites, telecommunications, very affordable resources and many more.
Hence this is the best place to invest in a successful business in the UAE.
The concept of freezone was to promote, grow and develop new business in UAE. The international business community appreciates the concept of freezone.
And they give the best trade and export options. Freezone has now opened its doors for multiple industries.
UAE has three major categories of freezone.
They are seaport free zones, airport free zones, and mainland free zones. And each emirate has a number of freezone for each of them.
In addition, the freezone offers tax concessions and custom duty benefits. This objective attracts a number of foreign investors. Globally the best freezone is DMCC.
Freezone Company Benefits
There are a number of benefits and advantages of the Freezone company. Here are the benefits in the cheapest company formation UAE.
- 100% Ownership
- No Taxation
- No UAE citizen sponsorship is required
- Duty-free imports and exports
- Business partners or shareholders and employees can have UAE residency visas
- Very affordable workforce availability
- Free Zone company can operate its functions 24 hours
- No personal income tax, capital gain tax, and corporate tax
- Restriction free money transaction
- Easiest and fastest procedure to register a business or company
- Setting up a business at low cost is possible
- Employees visas process is easy and restrictions free
- Clear and Secure rules regulations
- Affordable and skilled professionals availability
- A complete infrastructure with the unquestionable communication system
- Business support and other additional services available
- Best working locations and perfect working environments
Freezone Company Registration
Further, to start a freezone company today one must get registered. So here are few steps you will need to follow. Therefore please go through this quick steps.
- Register Online for E-Channel services. This is the first step for the visa process. The government supervises the process.
- Registration fees will be an amount of DH2500 and a refundable amount of Dh 5000. Pay this to your agent and get notified.
- Apply for Entry Permit or employment visa. This visa will be valid for 60 days. Most importantly activate your entry permit. Change your status.
- Do a medical test (a blood test for infection and a chest X-Ray for fitness). You will get the results in 3 days
- After the medical test Emirates ID Card is provided. This will aid you in opening a bank account and other official uses.
- Residence Visa Stamping is the actual visa sticker in your passport. The stamping procedure takes 15 days. After this process, you can apply for employees, dependent or family visas.
- UAE Freezone Residence visa is valid for 3 years. Renewing is easy. The total time taken for the issue of this visa is 100 days.
Requirements For Cheapest Company Formation UAE Setup In Freezone
Typically, the required documents to form your company in UAE are as follows:
- Copy of the Passport
- It must be a clear color copy (not black and white one).
- One Photograph with white background
- Copy of UAE Entry Stamp or UAE residency visa
Note: Documents like birth certificate, educational degree, bank letter, etc can be asked for verification
License for Freezone Cheapest Company formation UAE
You will have to submit the documents.
- Mother Company License attested by notary
- A Copy of Mother Company MOA attested by notary
- Copy of Mother company board resolution attested by notary
- A copy of the Director’s Passport
- Director’s photograph with white background
- Copy of director’s latest UAE entry permit stamp or copy of UAE residency visa
Note: – Authorities can ask you for additional documents like birth certificate, educational degree, bank letter, etc.
Difference Between Mainland, Freezone, and Offshore Company
Although there are not many similarities between the three companies, there are some major differences. So to find the difference between the cheapest company formation UAE read the difference to get a clear idea about the company you want to start.
Mainland Company
- Ownership-Own 49% of the company share and 51% will be owned by the local sponsor
- Office space- 200 sq ft mandatory
- Business Scope- Anywhere in UAE (also in freezones)
- Audit- Must prepare audit at the end of the year
- Visas- A Residence visa is provided depending on the office/work premises
- Capital required-Depends on the legal form of business
- Privacy/Secrecy- Details of the company is available to the general public on request
- Government Authorities For Company Setup- Need to get permission from Authorities
- Cost of Company Setup- High
Freezone Company
- Ownership- 100% ownership
- Office space- Not required
- Business Scope- Only in freezone
- Audit- Only FZCO and FZE require an audit
- Visas- same as mainland
- Capital required- Depends on the Emirate it belongs to
- Privacy/Secrecy- Same as Mainland
- Government Authorities For Company Setup- Do not need approval from outside of freezone
- Cost of Company Setup- Medium
Offshore Company
- Ownership- 100% ownership
- Office space- No office allowed
- Business Scope- Only outside the UAE
- Audit- Not mandatory
- Visas- No residency visa
- Capital required- Not required
- Privacy/Secrecy- Nothing is public
- Government Authorities For Company Setup- Only Ras Al Khaimah (RAK) and the Jebel Ali Free Zone (JAFZA) offers offshore formation. The free zone authorities of that jurisdiction look after their approval
- Cost of Company Setup- Low
Do’s and Dont’s of Cheapest Company formation in UAE
UAE is the best place for starting a company for achieving long term goals. But there are certain points you must keep in mind in order to achieve your goal.
Do’s for Company formation in UAE
- Choose a local UAE National sponsor carefully
- Opt for freezone if you want 100% ownership
- Select a location that optimizes suitability, convenience, and costs
- Confirm your visa eligibility and requirements
- Hire a business consultant after a good research
Don’ts for Company Formation in UAE
- Do not register your company in a freezone without checking out your office size and preconditions
- Don’t make any firm plan based on the published information
- Never choose a license category without going through if it allows your business model
- Before opening a bank account, confirm the extra bank charges
- Get a written legal agreement from the local sponsor before signing the sponsorship
Total Time Period For Company Formation
Since the time required depends on the type of company and license you to choose, the time may vary. Therefore the time required for the cheapest company formation UAE. each category will differ. So go through this basic time requirement for all the company types.
Engagement Planning (2 weeks)
- Preparing a project plan
- Confirmation of the corporates structure
- Collecting due diligence
Company Incorporation (8 weeks)
- Corporate bank account approval (5 weeks)
- The signing of the corporate bank account opening form
- Preparing a business plan
- Consultant visits the bank for an interview
- Reviewing and approving of banking application by the bank’s legal and compliance department
- Corporate bank account sent via email from the bank
Corporate Internet Banking Approval (3 weeks)
- Bank sents username and password via email
Engagement Completion (1 Week)
UAE Company Formation Cost
At last, the cost is the most important thing for a new businessman to start a company. Therefor for the cheapest company formation UAE, some average costs are mentioned below in the form of a table. So kindly go through to get a rough idea of the company formation cost.
Problems of Company Formation UAE
Although there a ton of reasons to start a company in the UAE, there are some problems too. Since the UAE is the best destination for any foreign investor, there are few problems. Therefore for establishing the cheapest company formation, UAE read the problems before starting a company in the UAE regions.
In addition to the huge benefits and advantages, there are some bothering problems for which you must be ready in advance. So go through the problems and be ready to face them.
Rules To Follow
The following freezone and onshore companies will have to employ local staff. Also, a physical office must be on the lease for the cheapest company formation UAE.
- Holding Company
- Banking Business
- Distribution and Service center
- Finance and Leasing
- Fund management
- Headquarters Business
- Insurance
- Intellectual property holding
- Shipping
Some Challenges
- Company formation in UAE is time-consuming and has complex laws for each emirate and freezones
- A Mainland company cannot be owned by 100%. You must share 51% with the local sponsor
- Also forming a company in UAE is Costly as it has high business setup and rents
- Dispute with the shareholders can result in serious issues
Some Limitations
- Freezone company can operate only inside the freezone area
- And no transaction can be done outside the freezone
- Freezone trading company must employ a local agent or distributor who will trade the product in the country
- Furthermore, a freezone company must have a locally appointed audit firm before starting any business activity
- Finally, there is a minimum requirement for office space or warehouse space. And the number of employment visa depends on the space
- Highly complicated national laws, emirates laws, and freezone laws must comply
- Only the UAE nationals can sponsor the majority of the visas and licenses on behalf of the company
- An Offshore company can not trade products or provide any service inside the country. Also, they can not rent any local premises
- You must deposit the share capital before starting the business registration process is completed
- Some Emirates and business activity can take up to 6 months for registration and license process to be complete
Education and Health
- UAE has low quality of human capital
- It has a poor primary and tertiary level of education
- And poor health service facilities for the workers
- 87% of the UAE nationals are working in the government and semi-government organizations only
- 2018 Global Competitiveness Index for competitiveness in health and primary education is 38 out of 140 countries.
- And for competitiveness in higher education and training, UAE is ranked 37th.
Final Words
Finally, for starting a company in the UAE region you must be well known of the companies. And all the rules, documents, and other requirements. After reading this article you must be familiar with the types, benefits, and problems.
So, for getting personalized and customized quotation chat with us or send us your email ID or contact number. And for the cheapest company formation UAE you will be provided the details according to your choice.
Also, do comment on your thoughts and let us know your particular requirements to start a company in the UAE
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