Company Formation and Residence Permit in Dubai

Advantages and Disadvantages of Doing Business in Dubai

For example, there are many advantages:

• No tax on dividends;
• Income and payroll tax – 0%;
• VAT outside the Gulf countries – 0%, within the country – 5%;
• Fast and inexpensive registration for a residence permit;
• A 3-year residency card;
• Ability to obtain residence permits for other family members;
• No strict requirements regarding the length of stay in the country;
• Simple and clear reporting;
• A favorable business environment (modern technologies, government support, absence of corruption).

After weighing all these factors, it will be easier for you to make a choice.

Choosing the Company Type

There are two main ways to register a company in Dubai. It can be a local mainland company or a resident of a Free Economic Zone.

Local Company (Mainland)

This format is a good starting point if you don't plan to operate outside the domestic market. Previously, there was a mandatory requirement for a local partner who had to own at least a 51% share, but this rule is no longer in effect today. However, you will still need to find a local agent who will represent the company's interests before the authorities.

One of the advantages of this business structure is the simple procedure for opening a bank account. In this format, you can conduct various types of activities and work both domestically and internationally. This format also has its disadvantages:

• Having a physical office is mandatory;
• You need to contact various institutions to register;
• Submission of audit reports is required;
• A license can only be obtained for a single type of activity.

Companies Located in a Free Economic Zone

If you plan to conduct your business remotely or export to other countries, the Free Zone (FEZ) format is your option. In the Emirates, there are more than 50 Free Zones, most of which have narrow specializations and offer different ways of working. It is important to understand that if a resident is registered in a specific Free Zone (FEZ), they must operate within that zone.

• Challenges in opening an account;
• Only two visas are issued when renting a co-working space (you can get more visas by renting additional seats);
• Difficulties in re-registering a business in an EU state.

However, there are also many more advantages:

• 100% ownership by a foreign investor;
• Fast, cheap, and easy registration;
• It is possible to arrange health insurance for company employees;
• Flexible conditions for leasing office spaces;
• Some zones have no strictly regulated minimum registered capital;
• A wide range of business support services from the Free Zone - FEZ administration.

Choosing a Free Zone for Company Registration

Registering a company in a Freezone is ideal for organizing a foreign investor's business. There are more than 50 such locations in the Emirates, and each has its own internal governance structure:

• Registrar
• Immigration authorities
• Police
• Customs
• Medical institutions, etc.

Some Free Zones - FEZs even have their own courts that operate according to the legal norms of another state. There is no single body or law that regulates the work of all such zones. Navigating this diversity is not easy, but we will help you. We recommend paying attention to a few key factors.

Choosing a Company Activity

A specific zone may specialize in an area such as media, internet technology, logistics, education, etc. For example, the economic capital of fashion and design in Dubai is the Dubai Design District, also known as d3.

License Types

Licensing is a crucial stage of setting up a business in an Arab state. It indicates what type of activity the company is engaged in. It is important to clearly define your direction here. If regulatory authorities find a discrepancy between the actual activity and the one specified in the license, you could face large fines or your account being blocked.

Office: An office space lease agreement will be required when registering a company and opening a bank account. Sometimes bank representatives also request photos of the office or even visit in person. By default, it is assumed that the company is located within the Free Zone - FEZ territory.

The number of visas a company can obtain will depend on the area of the office space. On average, there are 10 square meters of space per employee. Sometimes the company's activity determines the type of office that must be provided. If this is not provided, you can rent a co-working space, but then the number of visas will not exceed three.

In addition to business premises, companies may also need a warehouse, a retail store, and free access to an airport. All of this needs to be taken into account, as not every zone has such an infrastructure.

Get Information on Dubai Residence Permit Details

Having a Dubai Residence Visa

The owner or employee of a foreign company can obtain a residence visa. Residency requirements vary from one Free Zone - FEZ to another; for example, a deposit may be required, or health insurance may need to be arranged. You need to find out all these details and choose the most suitable option.

Budget: Cost estimation is best done at the planning stage. It is necessary to consider every little thing:

• Registration fees
• Licenses
• Rent
• Visas, etc.

To increase the number of residents, Free Zones - FEZs offer conditions that are more profitable than one another. This type of competition allows for the selection of the most advantageous offer for entrepreneurial activity. At first, it may seem that an ideal solution has been found due to low registration rates and other startup bonuses. In the future, the company may face significant internal costs. Therefore, it is best to analyze future costs, taking into account the specifics of the business and the current offers of the zone for its residents.

Registered capital: Not every zone puts forward requirements for the presence of registered capital for the company. Others do not set strict requirements for its size. However, this is a very common requirement for residents. Therefore, consider this point in advance and determine sufficient capital for your company.

Annual audit report: Providing annual audit reports is not a very common requirement in a Free Zone - FEZ. However, those who have written this rule into their statutes require it to be done through one of the approved auditors. If you miss the deadline, a large fine may be imposed.

Dubai Residence Visa

It is not possible to obtain a residence permit in the Arab state in our usual understanding. Moreover, a foreigner will never become a citizen of Dubai. For long-term residence and work, foreigners are issued a residence visa.

If a foreigner opens a business in a Free Zone - FEZ or on the mainland, they can apply for a visa for a period of 3 years. You can renew this permit multiple times, provided the conditions for its issuance are met. It is not mandatory for the visa holder to reside permanently in the country, but they must appear at least once every six months. When opening a company in Dubai, a residence permit can also be obtained for family members. However, to take advantage of such an opportunity, the applicant must prove that they can financially support all visa candidates.