Type of Companies in Dubai. There are seven Emirates in the UAE and each of them has its own procedures to start business. Even though there are federal laws which, clearly, have the power along all UAE, different Emirates have different additional rules and regulations to be applied. Thus, for example, the procedure and requirements to start business in Dubai and in Abu Dhabi are often different.
In each Emirate there are many options for the setting up of a company formation – as the Free Trade Zone onshore or offshore company as well as the Non-Free Trade Zone Company with the local sponsor or local agent in Dubai or other Emirate.
For a new born company it is important to set up the appropriate business vehicles in order to meet the company needs.
Type of Companies in Dubai: limited liability company (LLC)
A LLC is the most common form business in UAE.
This entity can be formed with a minimum of two and a maximum of 50 persons whose liability is limited to their shares in the company’s capital. Companies with expatriate partners typically opt for this kind of solution. The voting rights in the company may not exceed 49 percent, profit and loss distribution, and the share in allocation of liquidation proceeds can be mutually agreed upon. Thanks to a LLC, it is possible to make commercial operations within UAE and outside too.
Type of Companies in Dubai: LLC advantages
- Protected assets: LLCs provide limited liability protection to their owners who are typically not personally responsible for the business debts and liabilities of the LLC.
- Pass-through taxation: LLCs typically do not pay taxes at the business level. Any business income or loss is “passed-through” to owners and reported on their personal income tax returns. Any tax due is paid at the individual level.
- Heightened credibility
- Flexible management structure: LLCs are free to establish any organizational structure agreed upon by the company owners.
- Few restrictions
If the scope of the activities in the UAE is limited, a branch or representative office can be considered but in this case a local sponsor is required. In this case the sponsor does not gain any voting rights and the role is limited to dealing with local and federal government requirements.
Type of Companies in Dubai: Free Zones Entities (FZEs)
If there is no need to sell goods directly to the local market, but office space and local staff are required, then setting up in a free zone is often more attractive than using a local company. Free zone companies also meet the growing necessity in international tax planning.
There are a lot of advantages of setting up a free zone company, as reported in our previous article.
Each free -zones has its own free zone authority, being profit making entities. Their main source of income derives from renting office space, collecting license fees, and providing services to the companies operating in the free zone.
In all free zones, financial statements need to be annually submitted.