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Business all inclusive in the UAE

Taxes, banks, business registration, tax residency
Bank account opening, UAE, Taxes, Company registration, Residency

 

As we know, the main criteria for opening a business abroad are a favorable tax climate, stability of the jurisdiction, the ability to choose both the desired type of activity, and the most successful organizational-legal form. The UAE can offer all these conditions, so it is worth taking a closer look at the advantages and features of this country for your business.

 

  • First, the UAE is a striking example of how a state with a low standard of living has become one of the richest in the world for several decades. This is evidenced by the developed economy and infrastructure, which attracts wealthy people worldwide.
  • Secondly, the number of immigrants far exceeds the native population, so the language barriers do not create any discomfort in everyday life because English is used there along with Arabic.

 

As for the nuances, in any case, it is necessary to remember: the UAE is a Muslim country where they value business etiquette and politeness. When interacting with officials of state structures, one should not be rude or demand quick administrative services because you will not get a positive result from such actions.

 

Legal specifics of business in the UAE

 

Initially, it should be understood that the UAE jurisdiction is not cheap, and you can do business here only with a considerable sum of money on your personal account. That is why it is not suitable for small businesses, focusing only on medium and large businesses.

 

Let’s move on to taxes and, by the way, the biggest advantages for registering the company in the UAE.

 

So, the legislation of the Emirates does not provide any corporate charges, no tax on repatriation (the so-called tax “at source”). That is the income of legal entities, and individuals are not subject to taxation!

 

And this is not an “offshore” way of doing business, but absolutely legal, as economic activities can be carried out both outside the UAE and on its territory. As of 2018, the government has introduced a VAT of 5%. The emergence of this tax best characterizes the stability of the legal system of the Emirates, as the legislative preparations for its introduction continued for a long time, and the business entities covered by it were ready for the new tax obligations. That is why, when registering a company in the UAE, you can count on a 0% rate and be confident that the system will not change tomorrow.

 

Registering a company in the UAE

 

The company registration process is fast and does not require your presence in the country, as it can be done either remotely or by power of attorney. However, to open a bank account, not only physical presence is required but also a resident visa (a document entitling a foreigner to freely live, conduct business, or study in the UAE).

 

Process of visa registration depends on its type:

 

  • investor’s vis;
  • family member visa (dependant’s visa);
  • work visa.

 

The first two only require compliance with immigration procedures, while the latter requires interaction with MOHRE (Ministry of Human Resources & Emiratisation). The nuance of the work visa is also the need for a legalized diploma with a translation into Arabic (except for low-skilled professionals).

 

In addition, there is a new type of visa in the UAE – a remote work visa, which is issued to individuals for 1 year, subject to proof of available income of at least 5,000 USD per month. Depending on the method of immigration, you can legally stay in the emirates for 1, 2, 3, 5, or 10 years.

Organizational types of companies

Companies in the UAE are divided into two types: local and in free economic zones:

 

  • A local company can operate in the territory of the emirate of registration and outside the country, and the list of activities, in this case, is very wide. If you choose the legal form LCC, the allowed share of participation will be 100%. For such forms as Public / Private JSC, it is allowed to own only 49% of the share. That is, you need to involve a local agent. Choosing local companies is more reliable from the banks’ point of view and makes opening an account much easier.
  • Business registration in free economic zones is a special tool to attract foreign investment, as the investor can own 100% of the shares. A company can carry out its activities on the territory of the free economic zones as well as outside the UAE. There are several dozens of SEZs in the emirates, each with its own special rules and conditions (JAFZA – Dubai: more logistics companies because there is a port).

 

Company registration takes 1 day and minimum effort on your part (3 names, type of activity, scans of required documents). Once the registration is complete, the process of drawing up a company immigration card (establishment card), necessary for opening visas and connecting to E-Channel to start the visa process directly. The final step is to open a bank account.

Opening a bank account

As noted above, opening a bank account is done only with a personal visit.

 

First of all, it is necessary to choose a specific bank for a specific type of activity and the manager who will actually open the account. It is recommended to apply the principle of Know Your Banker because the manager who opens your account can be your main contact person in the bank in the future.

 

It is important for the client to clearly and logically explain to the banker their business model so that the latter understands everything correctly and carries their message to the bank. It is also not worth embellishing or understating the calculation of their potential income.

 

For example, if the bank was stated the amount of income for six months of 500,000 USD, and the company received 2,000 USD for the first 2 months, there may be questions. Remember, the bank evaluates each case in terms of the balance of benefit and risk.

 

But one crucial question remains: how to take full advantage of the UAE jurisdiction? We will tell you about this below.

Tax residency

Of course, to obtain the tax residency of the country. Such an opportunity is available to a natural person of any nationality with an Emirates ID (identity card validity period = validity period of visa) and a legal entity established, managed, and controlled from the Emirates. Thanks to the tax residency status in the UAE, you can come to the country every 180 days, open bank accounts, rent homes for personal and business purposes, use the tax system, and so on.

 

To avoid double taxation, Federal Tax Authority issues a Tax Certificate. This certificate gives the right not to pay taxes in the country of residence if the UAE and this state have signed an agreement on avoidance of double taxation (the Emirates have signed about 90 treaties, including one with Ukraine). But it should be noted that in terms of the country of citizenship, the UAE resident status does not automatically override the resident status of the country of origin. Therefore, for the Ukrainian tax authorities Tax Certificate is not a 100% basis for non-payment of taxes. It is necessary to prove that your center of vital interests is located in the UAE.

 

Finevolution specialists will analyze the details of your case and find the best options for its implementation in the UAE.

(Українська) Як розпочати бізнес в Польщі

Poland. Business Harbour

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