Foreign investors coming to the UAE can choose among the emirates they want to open companies in, but also among the various types of legal entities they can set up operations in. Dubai is one of the most prolific emirates of the UAE and it is also one of the reputable business centers in the world.
Those who want to open a company in Dubai can set up onshore companies with the purpose of completing activities in and outside the UAE. For this purpose, they need to comply with the requirements of the Company Law.
Below, our Dubai company formation specialists explain the requirements related to the creation of an onshore company. You can rely on us for complete assistance in registering an onshore company in Dubai.
Categories of companies in Dubai
Investors have the possibility to open three types of companies in Dubai:
- onshore companies used to operate within the local UAE market,
- free zone companies usually employed by foreign investors operating within Dubai’s free zones,
- offshore companies which allow full foreign ownership and are employed as asset, property or holding companies in Dubai.
Foreign investors may also choose to register an onshore free trade zone company in Dubai that is among the most common types of companies registered in Dubai because of the tax benefits it offers.
You can rely on our company registration advisors in Dubai for guidance on choosing the legal entity under which you can develop a successful business.
What are the available types of Dubai onshore companies?
According to the Companies Law in Dubai, onshore companies may be incorporated under different forms among which limited liability companies, private and public shareholding companies. Foreign companies also have the possibility of registering branch offices or subsidiaries as onshore companies in Dubai. All types of onshore companies have different shareholding structure and share capital requirements as follows:
- Dubai limited liability companies must have at least one UAE national partner holding at least 51% of the paid-up capital,
- free zone companies allow 100% foreign ownership.
Licensing requirements are applicable to all types of companies.
We can provide you with information on all types of entities if you are planning to open a Dubai company.
What does it mean to register an onshore company in Dubai?
Most of the times, businesspersons must choose between onshore and free zone companies when setting up a company in Dubai. There are several differences between these entities, and we mention the most important below:
- the onshore company can complete its activities on all the territory of the UAE, but also outside of it, while a free zone company is bound to operate within the respective free zone;
- a foreign investor will need a local partner or sponsor for registering an onshore company, while in a free zone, full foreign ownership is permitted;
- the registration options for an onshore company are multiple, while free zones companies must be registered under the legal structures available in those economic areas;
- from a licensing point of view, both types of companies can apply for similar licenses, however, free zone companies must complete specific activities of the free zones they are registered in.
Both types of entities have advantages and disadvantages, however, the Dubai onshore company is more suitable for large operations which can be completed in and outside the country. Also, an onshore company can take the form of a limited liability company, a legal entity popular in all countries in the world.
Foreign companies seeking to operate in the UAE can also set up onshore companies in Dubai under the form of subsidiaries and branch offices.
Registration requirements and steps for a Dubai onshore company
The opening of an onshore company in Dubai falls under the regulation of the Company Law and implies preparing several documents and filing them with the Dubai Trade Register. In order to incorporate an onshore company, a local or foreign investor must prepare the Articles of Association and appoint a local agent to complete the registration procedure with the Companies Registrar.
The following steps need to be completed upon the creation of an onshore company in Dubai:
- find a location which serves as a legal address for the onshore company (a virtual office is a good option for start);
- draft and notarize the Memorandum and Articles of Association of the company;
- set up a bank account in which the share capital will be deposited;
- file the statutory documents alongside personal information of the shareholders and company directors;
- register for taxation and apply for a VAT number, according to the new VAT legislation;
- apply for one the licenses mentioned above, in accordance with the activities to be completed.
If the company needs other special licenses and permits, these must be obtained with relevant authorities in the industry the company operates in. These must be recognized by the Dubai Government.
For guidance in registering an onshore company in Dubai, you can rely on our local consultants.
Licensing requirements for Dubai onshore companies
No matter the type of onshore company to be incorporated in Dubai, there are three types of licenses:
- the trade license,
- the manufacturing or industrial license,
- the professional license.
The Dubai trade license is issued for trading activities within the UAE market. The manufacturing or industrial license is released for onshore companies carrying out investment activities in the manufacturing industry and the professional licenses are granted for onshore companies, such as accounting services, educational and medical services.
Our company formation consultants in Dubai can offer detailed information on all licenses available for businesses in the emirate.
Please watch our video on how to open an onshore company in Dubai:
What are the advantages of setting up onshore companies in Dubai?
The registration of a company in Dubai provides many benefits to foreign investors, that is why the Emirate has flourished during the last few years. Among these benefits are:
- the simple regulatory system,
- the tax-free economy,
- the lack of capital gains and corporate tax in Dubai,
- the possibility of owning real estate,
- multiple currency available bank accounts for companies,
- the skilled Dubai workforce.
Our company formation representatives in Dubai can offer more information on the particularities of onshore companies.
Why start a business in Dubai?
Dubai is one of the most appreciated business centers in the Middle East and it also accounts for a larger percentage of the UAE’s economy. According to various reports:
- in the first half of 2019, Dubai’s economy increased by 2.1% and is expected to continue growing;
- the beginning of 2019 brought 6,500 new business licenses for companies registered in the emirate;
- wholesale and retail contribute to 25.5% to Dubai’s Gross Domestic Product every year;
- for 2020, projections indicate a growth of 3.8% thanks to Dubai Expo 2020, but is expected to decrease to 2.8% in 2021.
For onshore company incorporation, we invite you to contact our company formation agents in Dubai.