Why set up a company in Dubai? Tax advantages, stability, influence

Are you considering setting up a company in Dubai? This approach is attracting more and more entrepreneurs and companies looking to diversify their activities and take advantage of a favorable tax environment.

The United Arab Emirates, and Dubai in particular, offer a business-friendly environment characterized by economic stability and modern infrastructure. The United Arab Emirates, and Dubai in particular, offer a favorable business environment characterized by economic stability and modern infrastructure. Understanding the specifics of setting up a business in this emirate is crucial.

Why set up a company in Dubai? Key advantages and tax benefits

Dubai has established itself as a key location for international business, and this is no coincidence. Several major advantages attract entrepreneurs from around the world, with a particular focus on taxation:

● Significant tax advantages and direct impact on your profits: One of the main attractions is the particularly advantageous tax regime. In most free zones, companies benefit from total exemption from corporate tax and personal income tax. This represents a unique opportunity for tax optimization for your project, allowing you to maximize your profits and reinvest them. Imagine the growth potential for your business with significantly reduced tax burdens. Although corporate tax was introduced in the United Arab Emirates in June 2023, with a general rate of 9% on profits above AED 375,000, it is crucial to note that Freezone companies can still benefit from 0% tax rates if they meet certain conditions, including not generating significant income from the Mainland. This is a strong argument for the profitability of your project.

● Access to a dynamic international market: Dubai is a gateway to the markets of the Middle East, Africa, and Asia. Its strategic location and state-of-the-art logistics infrastructure facilitate international trade. For a company with global ambitions, it is an ideal base.

● Possibility of 100% ownership: Contrary to popular belief, it is now possible for foreigners to own 100% of their company's capital in most Free Zones and, since a major reform in 2020, also in many activities on the Mainland. This autonomy offers considerable flexibility in managing your company, allowing you to retain complete control.

● Regulatory stability and modern infrastructure: The country offers a stable political and economic environment. The infrastructure is first-rate, whether in telecommunications, transportation, or banking services. Regulations are clear and constantly being modernized, providing a secure framework for your activities.

The different business structures in Dubai: Strategic choice

Choosing the legal structure for your company is a fundamental decision that will depend on the nature of your business and your long-term goals. In Dubai, there are three main types of companies to consider, each with its own tax characteristics:

Freezone Company (Free Trade Zone)

Free zones are special economic zones offering unparalleled tax and regulatory incentives. They are ideal if your business is primarily focused on international markets. Each Freezone is dedicated to specific activities, so it is essential to choose the one that best suits your project. Opening a company in a Freezone is often faster and simpler, and above all, it can guarantee you 0% taxation on your company's profits if your business is 100% international and you meet the economic substance requirements.

Mainland Company (Onshore)

A Mainland company is registered with the Dubai Department of Economic Development (DED). This is the preferred structure if you intend to target the local Emirati market. Mainland companies can operate anywhere in the Emirates and open offices in any emirate. They are subject to corporate tax of 9% on taxable profits above AED 375,000. This remains a very competitive rate compared to many Western countries.

Offshore Company

An offshore company in Dubai (often referred to as an International Business Company - IBC) is not permitted to do business with residents or companies in the United Arab Emirates. It is mainly used for international tax planning, asset holding, or confidentiality purposes. It does not entitle the holder to a residence visa, but it does offer total tax exemption, making it a powerful tool for international tax structuring.

The main steps in setting up a business in Dubai

Although the authorities facilitate the creation of a real estate company in Dubai, it requires a methodical procedure. Here are the key steps:

●Identify the type of company and location: This is the first strategic decision. Your choice between Mainland, Freezone, or Offshore must be aligned with the nature of your business and your objectives, taking into account the tax implications of each option.

● Choose and register a trade name: The name must be unique and comply with the naming rules of the Emirates. It must be approved by the relevant authorities.

● Gather and submit the necessary documents: Generally, this includes a copy of the shareholder(s)' passport(s), passport photos, a detailed business plan, proof of address, and sometimes bank references. The exact list will depend on the type of company and the area.

● Obtain the required licenses: Each activity requires a specific license (commercial, professional, industrial, tourism, etc.). Obtaining this license is a crucial step in order to operate legally.

● Open a local business bank account: This is an essential step for the financial management of your company. Emirati banks are subject to strict anti-money laundering regulations, which can make the account opening process longer than elsewhere. It is recommended that you seek professional assistance with this process, as a stable bank account is the lifeblood of your business.

Timeframe and importance of professional support

The time required to set up a company in Dubai can vary, ranging from 2 to 6 weeks, or even longer, depending on the complexity of the structure, the speed with which documents can be provided, and the time needed to obtain the necessary approvals.

It is strongly recommended that you use a specialized local firm. Experienced professionals can ensure the process is secure, avoid costly mistakes, and significantly speed up the process. Their expertise covers:

● Handling administrative formalities.

● Legal and official translations.

● Obtaining the appropriate licenses.

● Choosing the right legal and tax structure for your project in order to maximize your tax benefits.

● Assistance with opening bank accounts and obtaining residence visas.

● Consulting services in corporate law and local taxation, ensuring full compliance and optimal use of benefits.

Precautions and advice for a successful implementation

To maximize your chances of success, keep these essential tips in mind:

● Carefully research local regulations, particularly tax regulations: Each area and each activity may have specific requirements, and tax rules may vary. Constant monitoring is necessary to remain compliant and continue to enjoy the benefits.

● Choose the structure that is best suited to your project and target market, with tax benefits as a priority: Don't rush into a decision. It is crucial to thoroughly analyze your short- and medium-term needs, focusing on the structure that will offer you the best tax optimization.

● Seek assistance from French-speaking lawyers and specialists: The language barrier and the complexity of certain procedures can be a hindrance. A firm that speaks your language and understands your expectations will greatly facilitate the process and help you take advantage of all tax opportunities.

● Plan ahead for opening your bank account: This is often the longest and most demanding step. Prepare all the required documents and be transparent with the bank. An operational bank account is essential for managing your company and accessing its financial flows.

If you would like to know the costs of setting up a company in Dubai, please click on the link above.

Conclusion: Dubai, a hub of opportunities for your business, especially from a tax perspective

Setting up a real estate company in Dubai is an exceptional opportunity. This emirate offers a dynamic economic environment, legal stability, and state-of-the-art infrastructure.

By understanding the different types of companies, following the key steps in the creation process, and surrounding yourself with a team of skilled professionals, you will maximize your chances of success and maximize your tax benefits. The value of seeking professional guidance is undeniable when it comes to navigating the specifics of Emirati law and optimizing your structure, thereby ensuring the sustainability and profitability of your project.