Investments to the United Arab Emirates
In the United Arab Emirates, the government helps with the development of business and investments including those associated with real estate purchase by foreign citizens. In the conditions of the world’s economic crisis, low prices for real estate allow to buy real estate and to get a guaranteed stable income of its use.
Advantages of investments and real estate purchase in the United Arab Emirates:
- right of full ownership of real estate;
- no taxes;
- stable investment income and growth of investments;
- high standard of living;
- safety and stability;
- unique warm climate throughout the year;
- reasonable prices and a transparency of conditions of transactions;
- interest-free installments of payments;
- developed social, tourist, financial and business infrastructure.
For example, a real estate owner in Dubai has a right to:
- get a residential visa, close relatives can also get visas;
- open an account in any bank of the United Arab Emirates, incomes are not taxed
- register your own company in one of free economic zones of the United Arab Emirates. At this practically no taxation, possibility of free transfer of money and goods in/from the United Arab Emirates
Company registration in the United Arab Emirates
The main document confirming the fact of existence and registration of any company in the United Arab Emirates and reflecting its legal status is the licence issued by Municipality of Emirate for registration of the legal person or by administration of the Free Economic Zone (if company is registered in FEZ). The licence confirms the fact that the company has a permission for any kind of activity in the concrete Emirate.
The companies in the United Arab Emirates are subdivided into following types:
Depending on the kind of activity:
Depending on registration place
- registered in the United Arab Emirates (out of free economic zones);
- registered in free economic zones.
Each Emirate has its own register of companies and its own registration procedures. At the same time, the basic feature of those companies is a necessity of presence (in any form) of a local partner, a citizen of the United Arab Emirates.
The federal Law of the United Arab Emirates allows to establish enterprises of various organizational-legal forms, such as: partnership, limited partnership, joint activity, public joint-stock company, private joint-stock company, limited liability company, a partnership limited by investments.
For foreign investors such companies can be of interest as:
- limited liability company
- open joint-stock company
- open joint-stock company
Except for the enterprises registered in free economic zones of the United Arab Emirates, the foreigners have no right to own more than 49 % of the capital in the enterprises registered in the UAE, and some kinds of economic activities in general are forbidden for foreign investors (partnership).
Limited liability company (with foreign investors) in the United Arab Emirates has a right to be in any business, except bank, insurance and investment activity, it can be established by minimum two shareholders and is characterized as follows:
- maximum number of shareholders is 50;
- minimum authorized capital for establishment of the company in the majority of the Emirates is 150 000 dirham (about 41 thousand US dollars). Minimum authorized capital of the company established in Dubai should be not less than 300 000 dirham (about 82 thousand US dollars) for obtaining of the General trading license the amount of the authorized capital should be not less than 3 000 000 dirham (about 820 thousand US dollars);
- authorized capital is paid up during registration;
- company shares are indivisible and cannot be on sale at a stock exchange;
- the company can be managed by director but if the Board of directors was selected for management it can consist only of individuals (maximum of 5 members), majority of those should be the citizens of the United Arab Emirates. Directors may not be the shareholders of the company.
This organizational-legal form has a number of advantages and is one of the most acceptable forms of the organization of business, both for local citizens, and for foreign investors.
Why foreign investor chooses this form of the company
Our recommendations to choose the given form of company are based on the following attractive points:
- responsibility of the company under obligations to the third parties is limited by its capital value;
- responsibility of partners is limited by their investments;
- profit distribution is not limited by a percentage parity of shares of local and foreign partners in the company capital;
- management of the company can be handed over to foreign partner appointed by the company Charter/
Open joint-stock company can be in any business in the United Arab Emirates, established by minimum ten shareholders and is characterized as follows:
- if the local or federal government of the United Arab Emirates takes part in the company the number of the founders can be less;
- minimum authorized capital for company establishment in the majority of the Emirates equals to 10 000 000 dirham (about 2 740 000 US dollars);
- 25 % of the capital is paid up during registration;
- writing out of each share (shares should be of the same face-value from 1 to 100 dirham) is entered into the register of shares of the company;
- at least 55 % of the company shares should be offered on open sale;
- Board of directors consisting of three to 15 individuals manages the company. The Chairman of Board of directors and the majority of members of Council should be citizens of the UAE.
Partnership in the United Arab Emirates can be founded by two and more partners both with unlimited responsibility (general partnership) and limited liability.
All enterprises without any exception have to obtain a license for business before the beginning of the economic activities in the Emirates, and also keep accounting and submit annually the financial reporting properly witnessed by the licensed auditor in the United Arab Emirates.
About 27 free economic zones (FEZ) act in the United Arab Emirates. Some of them are as follows:
- Jebel Ali Free Zone (JAFZ)
- Dubai Airport Free Zone
- Dubai Gold and Diamond Park
- Dubai Internet City
- Dubai Media City
- Dubai Internet City
- Dubai Silicon Oasis
- Fujairah Free Zone
- Hamriyah Free Zone
- Ral Al Khaimah Free Zone
- Sharjah Airport International Free Zone, etc.
Each free economic zone is regulated by separate state body, which registers the enterprises and grants them licenses in the United Arab Emirates.
Free economic zones permit the following advantages to enterprises with foreign shareholders comparing to registration in other United Arab Emirates:
- foreigners are permitted 100 % possession by enterprises registered in FEZ;
- import and export of services and production of enterprises registered in FEZ are exempted from taxes in the United Arab Emirates;
- repatriation of all profit and capital is guaranteed to the enterprises;
- enterprises registered in FEZ are exempted from corporate taxes for 15 years. The law also provides possibility to prolong this mode for the following 15 years term;
- employees of such enterprises are exempted from all personal income taxes.
Free economic zones suppose registration of legal bodies of various kinds, but in general, the potential investor in the enterprise of one of FEZ in the United Arab Emirates should remember the following:
- authorized capital of the enterprise varies within the limits from 15 000 US dollars to 250 000 US dollars. All sum of the capital is paid up during registration and is deposited in local bank until termination of all registration formalities;
- from one to five shareholders are required for enterprise, individuals or legal bodies;
- minimum number of directors (individuals or legal bodies) varies in different FEZ;
- appointment of a secretary (individual or legal body) can be required;
- enterprise should have an office, in some FEZ it is permitted to occupy one office by several companies, so called Shared Office.
All enterprises established in free economic zones have to obtain a licence for doing business before the beginning of the economic activities. Cost varies in different FEZ depending on activity.
Registration of limited liability company
Process of registration of limited liability company is rather labour-consuming and supposes preparation of all documents in Arabian and repeated visiting of the Department on economic development and Commercial and industrial chamber.
Registration term is from 3 weeks to 3 months.
Stages of company registration:
- 1 stage - getting of the permission for company registration
- 2 stage - getting of the permission for company name
- 3 stage - preparation of constituent documents
- 4 stage - rent of workroom
- 5 stage - opening of the account and the capital deposit
- 6 stage - appointment of auditors
- 7 stage - preparation of a package of documents and its representation for registration
- 8 stage - obtaining of licenses.
Company registration is considered to be completed upon receipt of three documents:
- commercial license
- certificate of registration in the Commercial register
- certificate of registration in Commercial and industrial chamber.
Only having all above-listed documents, the company has a right to begin economic activities.
During last years, the United Arab Emirates attract foreign investors with large investments in this country in several directions: investments into the United Arab Emirates can be in business, trade, building, as well as widespread are the investments into real estate, tourism and hotel business. Objects worth investors\' attention in the field of real estate with the highest profitableness are offices, trading areas and exclusive real estate.
If investments into the United Arab Emirates, whether it is building, trade, business or real estate, are included into your plans, experts of our company can render you qualified help. We will promote you in operations with real estate, protection of your investments, support of transactions, we will help to resolve conflict situations if necessary, to develop the investment project, business plan and to render consultation on taxation of enterprise wok in the United Arab Emirates. We will also help you to register the enterprise and to obtain a license for business doing.