Dubai company formation and costs in 2024!
Introduction- United Arab Emirates company types
- Benefits of starting a business in Dubai
- Factors affecting the cost of starting a business in Dubai
- The process of setting up a company in Dubai
- Dubai company formation costs
- Summary
1. Introduction
Dubai start-ups are one of the fastest growing business centres in the world, with significant growth and innovation in recent decades. The city is home to a number of multinational companies and businesses, offering excellent opportunities for business development and growth.
In the United Arab Emirates low from taxes level, and a favourable economic and legal environment is which supports business. The city is home to office buildings that meet international standards and offer high quality services to the business sector. Dubai also makes access to international markets easier, helping businesses to successfully expand in global markets.
2. Types of companies in the United Arab Emirates
Freezone company - FZE, FZC
Freezone companies in the UAE are special economic zones created by the government to boost the economy. Freezone companies are free to operate and the goods and services they produce are exempt under certain conditions. A in a free trade zone the establishment of companies relatively simple and fast process, the owners in 100% may be foreigners.
The UAE government has also established several Free Zone centres, such as Dubai, Abu Dhabi, Sharjah and Ras Al Khaimah. The advantages of a Free Zone include low tax rates, an easy business environment and excellent infrastructure. Freezone companies registered in Dubai can operate in a variety of industries such as energy, consulting, retail, IT and tourism. Freezone company owners and employees are entitled to apply for a visa.
Mainland
Mainland LLCs are companies that can operate without any territorial restrictions, unlike free zone companies. The tax conditions for Dubai companies are the same, regardless of the form in which they are incorporated. Taxes are only paid by oil companies and foreign banks until 2023. From 2024, new tax rules came into force.
The activities of the companies are regulated by the operating licence. Such a company is liable for VAT on the supply of goods and services. The VAT rate is 5%. No other tax is charged to the company. A residence permit is required for its foreign employees.
Offshore company - Ltd
There are some free trade zones where offshore companies are allowed to be established. These include Ras Al Khaimah (RAK) and Ajman. For a long time, these companies were very popular because they could have local bank accounts in the country for a low annual maintenance fee. As the bank account facility has been removed for these companies, their main advantage has been lost. RAK offshore company, on the other hand, is free to acquire real estate property in the UAE, while other business opportunities in the country are prohibited for the offshore company.
3. The benefits of starting a business in Dubai
Basically, in 95% we can take advantage of the full range of opportunities in the country with free zone companies:
- 100% Foreign-owned company, without local owner or sponsor
- a company registered in a free trade zone can carry out local activities in the country.
- obtain a permanent residence permit, possibly creating a personal tax exemption.
- a stable legal environment
- double taxation treaties with several countries, which you can take advantage of as a Hungarian resident living in Hungary. The double tax treaty between Hungary and the United Arab Emirates you can read it here.
- From a tax point of view, world first: 0% personal income tax, 0% corporate tax, 0% dividend tax, 5% VAT (over 100k usd and only after local sales)
- tax on rental income from immovable property 0%
- Discreet ownership of real estate: no public land registry
- Discreet banking: banks are now required to share the financial details of foreign bank account holders with the tax authorities of the country where they hold their accounts. In this case, their financial data will not be transferred.
- The share capital of a company registered in a free trade zone does not need to be paid up
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enter and leave the country without a passport check.
Taxation of Dubai companies
In June 2023, the UAE government announced new tax rules. In effect, they want to become a higher financial and business centre. The corporate tax now being introduced will support this.
For most businesses, this will mean changes from 2024 onwards, because accounting will be required, so the administrative obligations have increased, although in most parts of the world this is already an existing obligation for entrepreneurs.
The new corporation tax rate is 9%, payable on profits above AED 375,000, but small businesses can remain tax exempt until the end of 2026. The tax is set at About the United Arab Emirates tax system in this article you can find out.
4. Factors affecting the cost of starting a business in Dubai
- the scope of activity: each activity can be subject to a different levy
- each free trade zone offers its services at different prices.
- may depend on the nationality of the owners
- the number of visas applied for: the more visas a company wants to apply for, the higher the government fees it will have to pay and the higher the office rental contract
- how much time you have to complete the whole process. In the next section, we explain the process of registering a company and the steps to obtain a permanent establishment permit. It usually takes 2 months to complete the necessary procedures.
5. The process of setting up a company in Dubai
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Consultation, data request - 1 working day
After an in-person or online meeting, if you decide to set up an offshore structure, we will ask for a copy of your passport (scan) and billing address. We will then issue the invoice and, upon receipt of the fee, we will start the approval of the company name.
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company registration - 1 week
Once the company name has been approved, the drawing up company formation documents, signed by the customer. The authority will then issue the company's operating licence, certify the memorandum and articles of association and thereby the company is registered, so you can sign up with your partners.
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Preparation of visa application - 2 weeks
The company your immigration card ("Establishment card") is the next step, after which we will issue our Client's your entry permit ("Entry Permit"), which is required to start the process of obtaining a visa. The first 3 steps do not require a personal presence in Dubai.
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Immigration administration - 4-5 days - Dubai
On arrival in Dubai you will need the printed "entry permit"-which you can use to passport control when stamping the authority. The next morning our Hungarian colleague picks up our client at his hotel, then a 2-3 hour programme: medical examination (blood test, lung screening, "eye scan").
We can then make an appointment in emirateok to apply for an identity card, which is usually a 2 week wait or we can reduce this to 1-2 days with local help. Our service includes full personal assistance with interpretation from start to finish.
Emergency visa issuance up to Can be done in 2 days the process. The local identity card (emirates ID) is approx. 2 weeks after the visa is issued. This will be mailed to the client. On this trip, you can start opening a bank account, more information here you can read.
About Dubai Visa options available in 2024 here read more.
6. Costs of setting up a company in Dubai
In the UAE, the first step is to determine the type of company you want to set up. Then, the type of activity for which you wish to obtain a business licence and how many residence/work permits you will require.
The cost of setting up an offshore company starts from USD 3-4000, while a company set up in a free trade zone starts from usd 8000 per year, for which a local visa has to be renewed every two years from year 0.
If you need an accurate quote, contact us online or by phone and we will provide you with a written quote within 1-2 hours after discussing a few questions.
7. Summary
For much of the world, the UAE's free trade zone means tax optimisation. For many expatriates and Hungarians alike, it is a great way to get the tax advantage. The unpaid tax can be spent by the company on further improvements, discounts and competitive advantage. As individuals, we can use unpaid taxes to live a much better life. However, it is advisable to stay within the legal framework, and we can help you do that.
