Popular Types of Companies in the UAE

Pauline Familara
Pauline Familara
10 January 2024
Popular Types of Companies in the UAE

Suppose you’re seeking to conduct business in a politically stable state with a developed banking system and a rapidly growing economy while aiming to optimize tax payments, increase income, and secure additional resources for your development. In that case, opening a company in the UAE is wise and sound. To attract foreign capital into its economy, the Emirates has created ideal conditions for non-resident business operations. We’ve analyzed the opportunities the UAE provides to foreign investors and decided to give a detailed account of the types of companies in the UAE you can register.

Popular Types of Companies in the UAE

For business in the Emirates, individuals from other countries can establish companies of three main types:

  • Local companies are situated on the mainland.
  • Onshore companies located in free zones.
  • Offshore firms.

Registering any company type without visiting the country through a licensed registrar, such as Dynasty Business Adviser, is possible. Your physical presence will only be required when opening a bank account, while our specialists will assist in addressing all other matters remotely, keeping in contact with you.

Each company type has specifics that should be considered when choosing the location for incorporating your business.

Mainland Company

A local company can be registered in any emirate of the country outside of the Free Economic Zones (Free Zone). Its main features are the following:

  • 100% ownership by foreign investors for most types of activities. Suppose you plan to work in the banking, insurance, or hotel business. In that case, registering a mainland company will require a local partner (either an individual or a legal entity, a resident of the UAE) to own 51% of the shares.
  • The ability to operate directly on the country’s main territory without intermediaries is not available to other types of companies in the UAE and abroad.
  • A wide choice of business activities — more than 2000. They are divided into groups (commercial, manufacturing, professional, and others). Several directions of the company’s work can be chosen within one group.
  • Access to participate in government tenders, the possibility of receiving a government order.
  • The right to issue a renewable resident visa for founders for 1-10 years (depending on the share capital size) and 2 years for employees.
  • The possibility of obtaining the status of a tax resident of the UAE allows for avoiding double taxation.
  • Quick opening of a corporate account and favorable service conditions.
  • The ability to conduct business with any counterparties.
  • Mandatory presence of a physical office.
  • Higher registration costs and ongoing expenses than other popular types of companies in the UAE.

A local company is the best choice if you want to sell goods and provide services throughout the country.

Free Zone Company

An onshore company in a free zone can only be registered within the special economic zones — currently, 45 such zones are functioning across the 7 emirates of the country. The features of this type of firm include the following:

  • 100% foreign ownership, regardless of the kind of activity.
  • The ability to conduct international trade and business activities within the zone where the company is registered. It can only be done through a local distributor to sell products in the UAE market outside of its free zone.
  • A choice of business activities from a list provided by the government of the Special Economic Zone — there are fewer options than for local companies, as each zone caters to specific business directions.
  • Issuance of resident visas for shareholders and employees for two years with the option of renewal. The number of visas depends on the free zone, the activity type, and the leased space size (work or office).
  • Eligibility for UAE tax residency status allows one to avoid taxes in one’s country.
  • Flexibility in choosing the type of office — a workstation, Flexi Desk office space, or an actual office (rented or owned).
  • Minimal financial audit requirements.

Offshore Company

Registering an offshore firm in the Emirates is possible only within three free zones: JAFZA (Dubai), Ajman Free Zone (Ajman), and RAK Investment Authority (Ras Al Khaimah). This is the most popular type of company in the UAE for foreign investors planning to conduct international business. Offshore companies:

  • Are 100% owned by foreign investors.
  • They cannot conduct business within the country or even within the free zone in which they are registered.
  • Are completely exempt from all taxes.
  • Cannot lease office space.
  • Are exempt from submitting financial reports and undergoing audits.

Registering an offshore company in the UAE is much faster and cheaper than forming a firm of any other type. However, its owners cannot apply for resident visas.

Opening an offshore company is chosen for the following purposes:

  • International trade.
  • Management of maritime vessels.
  • Provision of consultancy services.
  • Establishment of a holding company.
  • Ownership of real estate and shares in other companies.

An offshore firm can be the founder of other companies within and outside the UAE.

Forms of Ownership and Management of Companies in the UAE

Different types of companies in the UAE vary in their legal and organizational forms. For onshore firms registered either on the mainland or in a free zone, the following management forms are provided:

  • Limited Liability Company (LLC): The number of founders in an LLC can be up to 50 people, and their liability depends on the share of capital invested in the company. The statutory money for such companies is set at 300,000 AED for Dubai and 150,000 AED for other Emirates. This is the most popular legal form for local companies.
  • Sole Proprietorship: This type has a single owner who bears full responsibility for all obligations and is exempt from corporate tax, as it is equated to individual entrepreneurship.
  • Company in a Free Economic Zone: This can be of two types:
    • Free Zone Establishment (FZE): with a single founder.
    • Free Zone Company (FZC): with multiple owners.
  • Branch of a Foreign Company: Registered on the mainland, it has the same rights as a local company.
  • Branch of a Freezone Company: Registered with the UAE Ministry of Economy and Department of Economic Development, it is one of the forms of a Mainland Company.

All offshore companies in the UAE are registered as International Business Companies (IBC).

This article is for informational purposes only and does not constitute professional advice. For experienced legal consultation regarding the choice of company type and suitable legal and organizational form for starting your business in the United Arab Emirates, you can contact the managers of Dynasty Business Adviser.

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