- within Wealth Management, Privacy and Law Department Performance topic(s)
The intention of this article is to give practical advice and information to entrepreneurs wanting to relocate in the UAE region. Besides the initial excitement of relocating to a business friendly jurisdiction which is also vibrant and packed with expats, there are some key matters an entrepreneur must consider prior to their decision.
Lets dive in! What better way to start talking about this amazing jurisdiction than from our experience during our UAE office set up in Abu Dhabi, in the ADGM region.
Dubai & Abu Dhabi corporate world is better that you anticipated!!!
What an amazing experience we had setting up our office in the UAE region, Everything is in order, there is structure and regulations which are rigorously followed by everyone.
A. Company Formation
1. Set up - composition
Depending on whether you are setting up a company in a freezone or in a financial district different rules apply. You must be briefed about these rules prior to setting up your company. For instance local parteners may be needed for some type of companies engaging in certain activities in one region whilst different rules apply to exactly the same type of companies in a different region / emirate.
2. Selection of Company Activities
The activities of the company must be defined and specified during its incorporation. Unlike Cyprus companies, UAE companies must declare in their articles which activities they can be offering. There is a cap up to how many activities a company can perform and this cap is low, usually up to 5 activities per company depending on the jurisdiction.
3. Company address
Office premises must be authorised by the regulator. You can not work from your place of residence unless the place you reside is recorded as an office by the local district. Therefore expect some costs in this regard.
B. Banking
Banking is relatively straight forward but not an effortless s task. The local banks would require you to physically visit the banks prior to the bank account opening which takes different time depending on the bank.
What is striking though is that banking activities should fall within the business activities and codes of the company stipulated during the incorporation phase. In other words if a company was created to provide audit services, its sales invoices should state this and the bank code used by its clients to settle these invoices should also include this code. The bank is actually checking the articles of the company and the payment codes used by its clients to settle their bills.
C. Taxation
1. Corporate Taxation
Taxation was introduced in the whole UAE region, not just Dubai. At the time of this article publication corporation tax is at 9% for services within the UAE which are also called qualifying services.
Corporate Tax Returns
Corporate tax returns are mandatory for all UAE companies whether free zones or mainland companies. In the event the free zone company is considered a small entity for corporation tax purposes this must be elected and stipulated in the tax return.
2.Personal Taxation
There is no such thing as a personal taxation in the UAE and salaries reported in the financial statements of companies are tax allowable for corporation tax and tax free for individuals. Anti tax avoidance schemes have been introduced by the government so that companies do not exploit this measure.
3. VAT
VAT applies to the majority of goods and services with the exception of specific niche industries. VAT is a highly complex area and the need of an expert is required. Feel free to contact our VAT partners who can assist you in this regard.
Statutory Audit
Statutory Audit requirements apply usually to large companies, companies operating in the mainland and off course listed companies. Purpose audits are common int he UAE and this are not mandatory but optional in cases where for instance a merge or a valuation should take place and one of the parties would seek an independent audit opinion about the venture.
Free zone companies are widely exempted from audits. However with the introduction of Corporate Tax some free zones require statutory audits being contacted. Feel free to contact us and we can advice you on the matter.
More about Berkley Ltd
Berkley Ltd is n audit and assurance firm regulated in the ADGM (Abu Dhabi General Market) licensed number 17269. It comprises of 6 partners with big 4 audit experience servicing International Clients from all over the world.
Our services comprise of statutory audit engagements, tax consultation and advice and filings in the entire UAE region. Learn more about us by visiting our website.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]