- July 2, 2019
- Posted by: master
- Category: Business Setup, Legal Article
The investment field in UAE is extremely diverse. Hence, it attracts investments, whether at the level of large or medium-sized companies, as well as small and individuals, in order to enrich the commercial and investment sector in the UAE with the aim to achieve economic prosperity.
Before proceeding with article or video please read our legal disclaimer.
The UAE provides everything necessary to ensure the stability of commercial transactions by incorporating companies of different types in the country, applying tax exemption on local companies in general, except for the oil sector and other certain sectors, ensuring speedy completion of transactions and dealings with the governmental authorities and increase of electronic transactions, and providing a fast, efficient judicial system to ensure stability of the commercial and investment system.
If you wish to invest in UAE, there are generally specific options for investment available to you:
1 – Incorporation of a Local company in the United Arab Emirates:
Investors can set up a local company in UAE. The word “local” here is intended to distinguish it from offshore companies. Law No. 2 of 2015 states the types of local companies that can be incorporated by individuals and corporations inside the country.
The said option will be the best for you if you wish to practice commercial activities, in particular, general trading, contracting, buying and renting real estate, as well as dealing in the local market, supplying products and goods, dealing with the Municipality and governmental entities in supplies and others. Such activities are not available to offshore companies in general.
Herein below, we detail all information about incorporation and establishment of local companies and their advantages and disadvantages in two sections; the first section discusses the local commercial companies, while the other explores the local professional companies due to their different nature.
2 – Incorporation of Offshore Free zone company in UAE:
You can incorporate an offshore free zone company in UAE. The advantages and characteristics of free zone companies match the international concept of offshore companies. Such company type is called “Free Zone Company – FZC” in several economic regions concerned with free zones.
A free zone may be independent from the place of the country territory such as the zones allocated for manufacture, importation and re-exporting, e.g. Jebel Ali zone or in the country if they include service industries such as Dubai Internet City.
This company type will suit you are looking to set up a company which is involved in industrial and re-export business . Moreover, this company type often requires a large capital but exempted from taxes completely with the ability to transfer full profits in foreign currencies.
This company type is also considered suitable if you are looking to provide a service activity as an individual, since you can establish the company at a lower cost and then starts to conduct your business.
3 – Opening a Branch of a Foreign Company in UAE:
You can open a branch for your foreign parent company which is incorporated and operating abroad to provide your services in UAE using the same trade name as a branch of the foreign company.
This company type shall suit you if you want to provide the same services using the same trademark of the parent company. However, there are many obstacles in the incorporation of these types of companies, such as the inability to practice certain commercial activities, such as opening restaurants, cafes, as well as general trading of products and other activities. Accordingly, you should consider the incorporation of a local company to provide services through its trademark license.
Therefore, we will discuss below in detail setting up a foreign company branch in UAE and its advantages and disadvantages.
4 – Establishing a Foreign Company Representative Office in UAE
Foreign companies that do not wish to open a branch in UAE may open a representation office in UAE to market their services and products, to improve relations with customers, to facilitate signing of agreements and contracts and to study the local market without practicing any commercial or service activities. The branch role will be restricted to the marketing and public relation activities.
This introduction outlines the available choices of investment in UAE. You can get more details from our published detailed articles on companies and their types, incorporation, advantages, disadvantages and commercial practices. You should note that the word “disadvantages” is intended to mean that that the company or any other commercial entity is not the most suitable (according to the investor’s point of view) for the investor’s goal or there are controls and restrictions that are considered by some people as disadvantages compared to other forms. However, all such disadvantages are subject to the investor’s evaluation and point of view.
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