Holding companies are legal entities incorporated by local or foreign investors with the aim of possessing shares or other assets in other companies. The UAE allows the incorporation of holding companies in all its Emirates. Under the Dubai Company Act, foreign investors are allowed to register holding companies under different forms. However, a Dubai holding company is not allowed to carry out business activities such as providing services or manufacturing goods. The main advantage of the holding company is that it lets its owner in control of other companies.
| Quick Facts | |
|---|---|
| Legal entities used |
Limited Liability Company, Joint Stock Company, Partnership, Free Zone Company |
|
Incorporation method |
With the Department of Economic Development |
|
Incorporation time |
Between 1 and 3 weeks |
| Advantages |
No minimum share capital for LLC |
| Precautions |
Restricted for manufacturing and sell of goods and services |
| Shareholding structure |
At Least 2 Shareholders |
| Minimum Capital |
USD 1 |
| Taxation |
No corporate tax |
| Control | 100% ownership in Dubai Free Zones |
| Accounting and Reporting | Standard accounting rules |
| Number of double taxation treaties | 123 |
Our company formation specialists in Dubai can help foreign investors interested in setting up holding companies in mainland or one of Dubai free zones.
Table of Contents
Requirements for opening a holding company in Dubai
All Dubai-based companies, including holdings, must comply with the regulations imposed by the Company Law. However, holding companies must ensure the following:
- it must appoint a management board which will be in charge of creating a policy for the organization of the subsidiary(ies);
- the management board must also supervise the activities undertaken by its subsidiary or subsidiaries;
- the shareholders of the holding company must appoint a director in every subsidiary company;
- the holding company must ensure that the subsidiary (ies) have the necessary capital to carry out their operations;
- the holding company must impose the limits on the risk a subsidiary can take (foreign currency, market, and even industry risks);
- the holding will make the decisions with respect to the contracts and arrangements made the subsidiary.
If you want to open a company in Dubai and decide for a holding, our local advisors can take you through all the incorporation steps, including the preparation of the documents needed to register such an entity.
Types of holding companies in Dubai
One of the greatest advantages of setting up a holding company in Dubai is that the local Government allows for a wide variety of legal entities to be incorporated as such. There are two large categories of holding companies in Dubai:
- the onshore holding company,
- the free zone holding company.
In order to register an onshore holding company, a foreign investor must have a local partner who will own 51% of the company. Holding companies in Dubai free zones, however, are allowed to have 100% foreign ownership. If you need assistance in setting up a holding company in Dubai, you can request the services of our company registration agents.
Activities completed by Dubai holding companies
The main purpose of establishing a holding company in Dubai refers to owning shares and/or controlling the assets of a subsidiary company. The owners of a holding company can be natural persons, however, most of the times, other companies have a substantial interest in registering such entities with the purpose of controlling one or more businesses.
Usually, the holding company will engage in commercial activities, will not sell or produce any goods or deliver any services.
Those who want to set up holding companies in Dubai will register them with the Department Economic Development following which they can develop their activities just like any other business form.
The functions of holding companies in Dubai
Like any other Dubai company, the holding company must have a director or a management board depending on its type. The company management must set out the regulations of the holding company and supervise its activity. Considering holding companies may also open subsidiaries in Dubai, the management is also in charge of their supervision. The management must also ensure the holding company has the necessary capital to operate.
The advantages of holding companies in Dubai
Taxation is perhaps the best advantage of opening a holding company in Dubai: the Government levies low corporate tax of 9%. Also, the following types of entities can be used to set up holding companies in Dubai:
- limited liability companies,
- joint stock companies,
- partnerships,
- free zone companies.
There are no minimum share capital requirements for opening limited liability companies, while for joint stock companies the minimum amount accepted is 10 million AED.
How do Dubai holding companies operate?
No matter if established in a Dubai free zone or not, there are few aspects to consider when it comes to their operation. The principle under which a holding company is that it will not be liable for the subsidiaries’ obligations and debts, therefore all its assets are protected. However, the holding company will be in charge of ensuring the cash flow of its subsidiaries. It must also make sure the subsidiaries remain solvent. It is also important to note that where a holding company has control over several businesses, each business must keep its assets and operations separate.
The holding company will be deemed responsible for its subsidiaries’ debts and obligations in the limit of its contribution to each business. This is why the holding company will usually take the form of a limited liability company in Dubai.
You can rely on our company registration services in Dubai if you are considering opening a holding company here.
Why open a holding company in Dubai?
Compared to other jurisdictions, the UAE offers many advantages to foreign investors. Those who decide to set up holding companies in Dubai can have several benefits, among which:
- the holding company is an excellent tax optimization solution, as it is not imposed with any tax in Dubai;
- the Dubai holding company can also be a good asset protection solution for foreign entrepreneurs;
- through a holding company, a local or foreign investor can benefit from enhanced privacy;
- the holding company also offers streamlined management procedures with respect to the subsidiaries.
From a taxation point of view, the Dubai holding company will benefit from several advantages, among which the free repatriation of profits and the lack of corporate tax.
Our local agents can offer more information about the taxation system in Dubai and its free zones.
For more information on Dubai holding companies, please watch the video below:
FAQ on the holding company in Dubai
1. Can I open a holding company in Dubai if I am a foreigner?
Yes, you can open a holding company in Dubai even if you are a foreign citizen.
2. Is it hard to register a holding company in Dubai?
No, the registration procedure of a holding company is the same as for any other business form in Dubai. However, if you are a foreigner you will need to appoint a local agent to complete the company registration formalities.
3. What is the minimum share capital for opening a holding company in Dubai?
There are no share capital requirements for setting up a Dubai holding company.
4. How long does it take to register a holding company in Dubai?
The holding company can be registered in a few weeks.
You can contact our company formation agents in Dubai for more reasons to open holding companies in the UAE. You can also rely on us for assistance in incorporating a holding company in the Emirate.