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How can I create an onshore company in the UAE?
Sovereign PPG serve to provide the security and support in Company Formation and Local sponsorship to make the process easier. We can simplify the time-consuming process of company set up in addition to providing advice on what corporate structure best suits your requirements. Forming a company within the UAE can seem daunting, there are a multitude of options at your disposal and it can be slightly confusing knowing which entity fits your needs.
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[av_row row_style=’avia-heading-row’][av_cell col_style=”]Considerations[/av_cell][av_cell col_style=”]UAE (LLC)[/av_cell][av_cell col_style=”]Branch[/av_cell][av_cell col_style=”]Freezone Company (FZCO)/ Freezone Establishment (FZE)[/av_cell][/av_row]
[av_row row_style=”][av_cell col_style=”]Ownership[/av_cell][av_cell col_style=”]Must be 51% owned by a UAE national or UAE owned company.[/av_cell][av_cell col_style=”]100% foreign ownership. It is not a separate legal entity.[/av_cell][av_cell col_style=”]100% foreign ownership.
- FZE: One Shareholder
- FZCO: Two to five Shareholders
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[av_row row_style=”][av_cell col_style=”]Restrictions on Trading[/av_cell][av_cell col_style=”]May trade within the UAE within the scope of activities it is licensed for.[/av_cell][av_cell col_style=”]Unless the parent company is a UAE company, a foreign branch cannot trade.[/av_cell][av_cell col_style=”]May not sell goods and services directly to the UAE.
Requirement to appoint distributors or agents to conduct such activity or to set up separate trading entity (LLC).
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[av_row row_style=”][av_cell col_style=”]Local Service Agent[/av_cell][av_cell col_style=”]n/a[/av_cell][av_cell col_style=”]A local service agent is required for a foreign/freezone brand. No such requirement for an LLC.[/av_cell][av_cell col_style=”]Not required. The Freezone Authority performs this role.[/av_cell][/av_row]
[av_row row_style=”][av_cell col_style=”]Procedure for Establishment[/av_cell][av_cell col_style=”]Set up process can be quite lengthy and departmental approval is required.
Corporate documentation has to be notarized and attested up to the UAE Embassy level at the country of origin and translated into Arabic.
[/av_cell][av_cell col_style=”]Requires Ministry of Economy approval in addition to other departmental approvals.[/av_cell][av_cell col_style=”]Administratively well organsied.
Application procedures are accomplished smoothly. However certain documents must still be consularised up to the UAE Embassy level.
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[av_row row_style=”][av_cell col_style=”]Capital Requirement[/av_cell][av_cell col_style=”]No capital requirement unless a specific activity requires a certain level of capital.[/av_cell][av_cell col_style=”]There is no capital requirement for a branch.[/av_cell][av_cell col_style=”]The minimum share capital required for a FZE/FZCO depends on the freezone in question.[/av_cell][/av_row]
[av_row row_style=”][av_cell col_style=”]Juridical Nature[/av_cell][av_cell col_style=”]The LLC is a separate legal entity distinct from its shareholder. The liability of members is limited to their shareholdings in the capital. It is the most common corporate entity for trading in the UAE.[/av_cell][av_cell col_style=”]A branch office is not independent from its parent company. The parent company is liable for its acts.[/av_cell][av_cell col_style=”]An FZE/FZCO has a separate legal entity distinct from its shareholders. The liability of its shareholders is limited to their capital contribution.[/av_cell][/av_row]
[av_row row_style=”][av_cell col_style=”]Sponsorship of Employee[/av_cell][av_cell col_style=”]The LLC is able to sponsor employees on its own account.[/av_cell][av_cell col_style=”]A branch is able to sponsor employees on its own accord.[/av_cell][av_cell col_style=”]Freezone Authority will act as sponsor for employees. Secondment agreements and bank guarantees are required.[/av_cell][/av_row]
[av_row row_style=”][av_cell col_style=”]Attestation/Translation[/av_cell][av_cell col_style=”]Corporate documents must be notarized and attested up to the UAE Embassy level at the country of origin of the foreign entity. It must then be attested by the UAE Ministry of Foreign Affairs and Ministry of Justice and translated into Arabic.[/av_cell][av_cell col_style=”]Attested and notarized documents up to the UAE Embassy level are sufficient. UAE MOF attestation is required. No Arabic translation is necessary if it is a foreign branch but not for a branch of an LLC.[/av_cell][av_cell col_style=”]Attested and notarized documents up to the UAE Embassy level are sufficient if the shareholder is a foreign entity. UAE MOF attestation is required.[/av_cell][/av_row]
[av_row row_style=”][av_cell col_style=”]Taxes/Benefits[/av_cell][av_cell col_style=”]No corporate taxation is currently imposed. However, VAT and Excise Tax is applicable.[/av_cell][av_cell col_style=”]No corporate taxation is currently imposed. However, VAT is applicable.[/av_cell][av_cell col_style=”]Depending on the freezone and subject to other tax laws, no corporate taxes are currently imposed.
The application of VAT varies depending on the freezone.
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[av_row row_style=”][av_cell col_style=”]Management[/av_cell][av_cell col_style=”]Must have a General Manager resident in the UAE or can have a Board of Directors.[/av_cell][av_cell col_style=”]Must have a General Manager resident in the UAE.[/av_cell][av_cell col_style=”]Must have a General Manager resident in the UAE or alternatively at least one of the Directors must be a resident of the UAE.[/av_cell][/av_row]
[av_row row_style=”][av_cell col_style=”]Advantages[/av_cell][av_cell col_style=”]An LLC is not subject to trading restrictions. The shareholders liability is limited to the amount of its capitalization.
Flexibility to do business in any part of the UAE with local and government authorities.
Office premises can be located anywhere in mainland UAE.
Unlimited visas for the company dependent on the size of the office space, however employees who work remotely are not attributed to office space
Wider variety of business activities to choose from
Fewer nationality restrictions with regards to shareholding and visas in comparison to freezones.
[/av_cell][av_cell col_style=”]A branch is not subject to minimum capital requirement.[/av_cell][av_cell col_style=”]An FZE/FZCO can be 100% foreign owned.[/av_cell][/av_row]
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For more information on company formation in the UAE, please contact us on So****@************up.com
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