Company Formation in Dubai: What You Need to Know

Posted by John Lewis on December 3rd, 2019

What is Financial Action Task Force compliance and how does it help? We have highlighted a few of the important points on why choosing Dubai as an investment destination is a good idea.

Foreigners are welcome to start their businesses in Dubai with the advantageous facilities available to foreign investors in the country. The first Free Zone in Dubai started in 1985 with Jebel Ali Free Zone. This worked as a template for other free zones; giving various organizations and foreign entities the opportunity to start operations and enjoy seamless company formation. Dubai offers tax-free income to foreign investors, making it an extremely attractive destination for investors.

Company formation in the mainland is not ideal choice, as entrepreneurs will only have 49% ownership with the rest of the shares belonging to a local as required by the law.

Complete business ownership

The best feature for forming companies in the free zones is the fact that as an owner, you will have 100% ownership of your company. This is not a possibility in the Mainland, where it is imperative to coordinate with a local.

In Mainland Dubai, you will have to have a local sponsor who will hold 51% of the company shares, leaving the owner with a paltry 49% ownership. All this can be avoided when foreigners choose the Free Zones for company formation Dubai offers special economic zones and this is the opposite of what most countries do, which is discussed in the next point.

Tax exemption

When foreign investors are looking for beneficial and lenient regulations in terms of tax, there is no place better than the UAE. Free Zones are available all across Dubai and in other emirates as well.

All Free Zones companies are exempt from taxation. This means that not only does it allow the owner to keep 100% ownership of their business, but also the income and profits for the company are exempt from tax. The time period for this exemption is set to 50 years.

FATF compliance

Concluding that the UAE is a tax haven for foreign companies for underhanded activities is and incorrect perception. In fact, the UAE is in compliance with the FATF (Financial Action Task Force) that works diligently to tackle money laundering and terrorist financing.

FATF was started to set standards and also to promote effective implementation of legalities to combat illegal financial transactions, money laundering activities, terrorist financing and any other threat that could upturn or threaten the international financial system.

Anonymity

One of the best factors of running your own business in Dubai is that fact there is anonymity, as directors and shareholder information is neither shared or stored on public records.

These are the main reasons why foreign nationals and investors find it difficult to resist the opportunities for company formation. Dubai has a very strong economy and infrastructure, and companies that are looking at world-class offices, facilities and amenities will rest assured knowing that they can get these and some more in Dubai. So, starting a business venture in Dubai is a financially and opportunistically sound idea.