Taxes in Dubai and UAE

Taxes in Dubai and UAE

UAE have based their foundations, on being one of the famous ‘tax havens’. Like many other Middle East countries, Dubai and UAE in general earn its revenue mainly through the oil industry and offers tax-free living to attract global companies and talent to diversify and enrich their economy further. Therefore, everyone thinks that in Dubai you do not pay taxes; but is it really like that? Is it really tax-free in the UAE? Yes, it is but only in certain circumstances!

However, in order to have a business in the UAE you need to pay an annual license fee (whose value depends on the type of business); and there are a number of other fees: the company may need resident visas for the entrepreneur, his or her family and their employees.

Most customs duties are very low and may even be excluded for certain categories of products like in the case of materials to be used for the production of goods to be re-exported. But in other cases they reach 100% of the value of the product (alcoholic beverages, energy drinks, tobacco).

Starting from 1st January 2018 the United Arab Emirates introduced VAT for the possible economic impact due to a depletion of oil resources: a true revolution in the economic and financial landscape. The VAT is set at 5%. Basic foodstuffs, education and health are exempted.

At present, companies with an annual turnover of between AED 187,500 and AED 375,000 can choose whether to register or not, while those with less than AED 187,500 will remain exempt for now. The change has far-reaching implications for companies that will need to make use of professional figures or service companies for their management. This will be also the occasion for whom want to open his own accountancy firm in Dubai and in UAE.

Taking a look at neighboring countries (in particular Qatar and Saudi Arabia), you can see that businessmen opening activities there need to consider the cost of setting up the companies, the possible share capital to be paid, the mandatory office that will pay 10% and 20% of taxes respectively on all that is generated with foreign countries. And even if all the generated income is foreign, a certified auditor needs to be accounted for.

So today opening a business in a Free Zone is still your best bet (not requiring the visa requirement, physical office, accounting records, share capital to be paid). Contact us for more information about best solution for you.

How to set up a company in Sharjah Media City Free Zone (Shams)

How to set up a company in Sharjah Media City Free Zone (Shams)

All UAE’s free zones serve up a host of benefits – 0% corporate and personal tax, 100% company ownership, 100% repatriation of capital and profits, no currency restrictions, and 100% import and export tax exemption, to name just a few.

As well as the benefits offered above, some Free Zones also boasts world-class facilities and extra advantages. Take Shams, for example: located in Sharjah, it’s a hub for the media, trading and creative industries – and offers a number of specialised business services and facilities to help its inhabitants grow both locally and internationally.

There are a number of steps that need to be undertaken, some complex, some less so. Usually the first thing to do is choose your business activity. From here you’ll need to decide on your company name, complete and file your registration paperwork with the relevant authorities, open a bank account, and apply for any visas that may be required.

However, the specifics of this process will depend on the type of licence you are applying for and the kind of business you wish to run. That’s why before starting any of these steps, the first port of call should always be to a company setup expert who will guide you through every part of the process, ultimately ensuring the entire application requires little more than a few hours of your time.

Setting up your own business has never been easier. We take care of it all so you can focus on what matters – building your business. For more information about company formation in the UAE mainland or free zones contact us.

1. Straightforward setup: Sharjah Media City’s incredibly straightforward two-step setup process makes it hugely popular with businesses of all sizes. Moreover you don’t need to be in the UAE to start the process; not only, even though you’ve never been in UAE you can apply for a company here.

2. Open to a broad range of business activities: Shams is open to a broad range of business activities – over 200 in fact, including bookkeeping, HR, plumbing, publishing, hospitality and wholesale.

3. Flexible office options: As Shams is a relatively new free zone, it currently only offers flexi-desk packages – these allow entrepreneurs use of the free zone’s state-of-the-art business facilities on an ad-hoc basis. A whole free zone city is currently under construction and when complete it will feature a range of physical office spaces as well as studios, showrooms and other creative units. The finished project will also include a residential boulevard, community plaza and a series of restaurants, shops and hotels.

4. Set up with multiple shareholders: While you have the option of applying for a flexi-desk package alone at Shams, you certainly don’t have to. It is possible to establish your business with multiple shareholders – up to a maximum of 50 – which can be either individuals, corporate entities or a combination of the two.

5. Apply for multiple visas: Sharjah Media City’s flexible visa options make it easy for solo entrepreneurs and beyond. Currently under the free zone’s flexi-desk package it is possible to apply for up to six visas, for you, and your shareholders or employees.

6. Easy to sponsor dependants: As well as applying for employee visas, it’s also very straightforward to sponsor your dependants for their visa applications as well. Whether you require a visa for a spouse, child, maid or driver, the process is four straightforward stages: entry permit, status adjustment, a medical fitness test, then Emirates ID registration and visa stamping. 7. Easy to arrange your corporate bank account: Once you’ve received your licence and established your business in Shams, you’re ready to set up your corporate bank account. The application process is quick and simple. Free zone staff can advise on the best bank to suit your needs – and can even arrange meetings in-branch for you, should you wish. A company formation specialist can also provide the same service – or alternatively, you’re welcome to approach any local or international bank on your own.

Setting up in Sharjah Media City

So you’re sold on the benefits of setting up your business in Sharjah Media City – what next?

There are a number of steps that need to be undertaken, some complex, some less so. Usually the first thing to do is choose your business activity. From here you’ll need to decide on your company name, complete and file your registration paperwork with the relevant authorities, open a bank account, and apply for any visas that may be required.

However, the specifics of this process will depend on the type of licence you are applying for and the kind of business you wish to run. That’s why before starting any of these steps, the first port of call should always be to a company setup expert who will guide you through every part of the process, ultimately ensuring the entire application requires little more than a few hours of your time.

Setting up your own business has never been easier. We take care of it all so you can focus on what matters – building your business. For more information about company formation in the UAE mainland or free zones contact us.

EChannel system Dubai UAE

What is the E-Channel Immigration System and how will it affect your company?

The country’s rapid expansion from a population of just one million in 1980 to around nine and a half million today has been largely underpinned by rising numbers of expatriate workers. Such is the influx of foreign workers in recent years that today approximately 90% of the UAE’s population is non-Emirati, according to the CIA’s World Factbook.

The UAE economy has also been bolstered by a huge rise in the number of overseas travellers visiting the UAE on tourist visas. Dubai alone attracted 14.3 million visitors in 2015, making it the fourth most visited city in the world, behind only London, Paris and Bangkok. This is up five million since 2010 when 9.3 million overseas arrivals came to the city.

The UAE has adjusted its immigration policies and procedures over the years to cope with this increase in demand for visas and to ensure a smooth application and issuing process. The latest changes – in the form of E-Channel immigration – look set to make the process even easier, cutting down admin time and paperwork for both businesses and individuals.

What is the E-Channel immigration system? 

Launched as part of the UAE 2021 vision under the slogan ‘Smart Services with Future Vision’ – the E-Channel Immigration System is a new, unified immigration system that has been implemented in six out of the seven Emirates. Dubai and Abu Dhabi continue to use their own independent immigration systems for the time being.

The most noticeable change to the current procedure is that now both businesses and individuals can apply for visas, residence permits, and entry permits through a single online portal – instead of visiting a typing centre or immigration office.

The new system – known in Arabic as the ‘Tahaluf’ system – removes the need for hard copy documents and aims to ensure that all applications are processed more efficiently with improved integration across the Emirates.

Once registered on the E-Channel portal, individuals and businesses can apply for their visas, or entry permits (residence, visit and tourist) – and for those of employees or relatives. The whole process, including payment can be carried out online and where applicable permits can be printed at home.

Registration fees vary depending on the Emirate you are in but are in the region of AED 7,500 with a refundable deposit component of approximately AED 5,000. Registration must be renewed annually at a cost of around AED 1,000.

How to register in the E-Channel portal

The online E-Channel immigration portal has been designed to be incredibly easy to use.

If you are a free zone incorporated entity, it is the free zone’s details which must be used for log in purposes. In this case, you must register to the E-Channel portal via your agent and/or free zone appointed and authorised typing centres.

Otherwise, to get started, visit the E-Channel website and select either individual or establishment services.

Next click on the ‘Registration’ button. You will be asked to input your email address – instructions on how to set up your account will be sent here. Once you have received your confirmation message from the Ministry of Interior (MOI), simply select the ‘Complete Registration’ link to continue creating your profile.

Once set up on the E-Channel immigration system portal, you can start using online services right away.

Benefits of the E-Channel system

The biggest benefit of the new E-Channel immigration system is its efficiency. The MOI calls the new system ‘…a pioneering step to ensure speedy process and accuracy in the visa and residency services.’ And it’s difficult to see how this won’t be the case. For the first time, license applications, visas, amendments, upgrades, renewals, and most other associated activities can now be managed from a single portal – with the whole process entirely online. The MOI is naturally confident that this will result in faster, more efficient processing. As well as freeing up your time, the E-Channel system is also designed to lower your administrative burden – removing the need to visit immigration centres to fill out excessive paperwork. Any required documents such as passport copies or ID cards can be simply scanned and uploaded to the portal with no need to produce hard copies. By the end of 2018, the E-Channel system is expected to have reduced the need for in-person visits to government centres by up to 80%.

Alcohol trading license in UAE

Alcohol trading license in UAE

Dubai being an Islamic State does not support the consumption of liquor but as the economy of this State is heavily dependent on tourism, it cannot apply a complete ban on the sale, purchase or consumption of alcohol.

Dubai unlike Sharjah is not a dry State but it has regulated the consumption and the transactions that take place for alcohol. Out of the few taxes that are imposed by this Emirate, one is imposed on Alcohol. Since the year of 1965, Dubai levies 30% tax on alcohol.

Import, export, manufacture, purchase, consumption or sale of liquor to third parties is all regulated by the Liquor Control Law No. 999 of 1972. This law requires a license to be obtained before indulging in any of the activities mentioned hereinabove in regards to liquor. There are also a number of provisions namely relating to the consumption, advertisement, and sale of alcohol in Dubai (e.g. Penal Code, advertisement laws, taxes and tariffs laws, etc.)  Liquor licences in Dubai are issued by the Dubai Police General Headquarter (‘DPGH’).

There are 4 types of liquor licenses.

  • Type A: Licence to import liquor.
  • Type B: Licence to sell liquor to third parties from a shop or warehouse.
  • Type C: Licence to serve liquor within a hotel, club, or restaurant.
  • Type D: Licence to purchase liquor.

In addition to the above licence types, Article 2 of the Liquor Control Law states that the DPGH may, on the basis of an application, grant a person a licence to export liquor outside the Emirate, subject to a specific quota restraint.

So, if you wish to obtain alcohol trading license in the UAE, you have two options to do that:

  1. Type A: you can open the liquor shop with ware house where you will store your imported products. In this case the best option for you will be license registration with RAK freezone and obtain the approval from RAK Tourism Authority. This solution is pretty expensive, since the approval from RAK Tourism authority costs more than 1 million USD.
  2. Type B: You can register whole sale import/export liquor trading company which will allow you to import and to sell your product to hotels, restaurants, etc. In this case the best option for you will be liquor license with Fujairah freezone with an investment of about 55,000 USD

Please feel free to contact us for further guidelines, requirements and assistance.

It is illegal to advertise the sale of alcohol beverages in Dubai.

Disclaimer: The information presented in this article does not constitute a legal advise.

Company formation Dubai & UAE

Company formation in Dubai is a relatively simple and speedy process with strong incentives, notably in the form of the UAE’s free zones.  There are other options as to the type of business you can set up in the UAE (for example, onshore or offshore), but free zones are particularly popular with foreign entrepreneurs and with good reason. Among the incentives they offer are 0% corporation and personal tax, 100% company ownership, 100% repatriation of capital and profits, no currency restrictions and 100% import and export tax exemption.

So why to setup a business in UAE now?

According to the IMF, the UAE is expected to lead economic growth in the Arabian Gulf in 2017, increasing by 2.5%, significantly ahead of the region’s biggest economy, Saudi Arabia, which is forecast to grow at 0.4%.

So how do you go about it?

While the technical, administrative and financial aspects of company formation in Dubai can seem daunting, by following a simple step-by-step process with the right support, it is far more straightforward and affordable than you might think. We have helped numerous companies establish themselves in various free zones and can break the process down into the following six steps.

1. Choose your business activity

The nature of your business can have a bearing on which free zones you can or should set up in. For example, some free zones only allow certain types of activity, such as media, medical or transport, and aside from the restrictions, it often makes sense to set up in close proximity to businesses in the same sector. Look at transport links too. If your business relies heavily on import and export, you will probably want to choose one of the free zones situated near an airport or port.

The final decision can be taken later in the preparation process, but establishing your business activity will certainly give you a steer and can help to eliminate some options early on. However, there is no need to pigeon-hole your business, as it is possible to have multiple business activities listed under one trade licence.

2. Choose your company name

The UAE has some strict naming conventions, so before you commit to a company name, make sure it conforms. Any names that include offensive language are forbidden, as are any company names that refer to Allah, Him or indeed any other religious, sectarian or political groups such as the FBI or Mafia. If you choose to name your business after a person, that person must be a partner or owner of the company and their full name must be used – no initials or abbreviations.
A business set-up expert will be able to give you chapter and verse on all the naming conventions. You can save a lot of time and effort by running your proposed name past them to check whether it passes and if it doesn’t they can help you come up with something that does.

3. Finalise all incorporation paperwork

You will be required to complete an application for your chosen company name and activity, to be provided along with copies of shareholders’ passports to the relevant government authorities. Some free zones will require additional documentation, such as a business plan or Non-Objection Certificate (NOC) – a letter from a current sponsor confirming that you are allowed to set up another business in the UAE. While perhaps the most arduous of all these steps, the paperwork does not have to be too taxing providing it is undertaken with expert help. Your business set-up partner can advise you on the paperwork required and help you complete it.

Some free zones will require additional documentation, such as a business plan or Non-Objection Certificate (NOC) – a letter from a current sponsor confirming that you are allowed to set up another business in the UAE.

4. Receive your license notification

This is the easiest step of all. Once your application has been processed, the government will issue you with your company licence. At Virtuzone we notify our clients when their documents are ready to be collected.
5. Process your visa (if needed)

And so to the final step of company formation in Dubai. As well as applying for your own visa, many free zones allow you to put in applications for staff and dependants – the exact number you can submit will depend on which free zone you choose to set up in. So, if you are looking to obtain visas for a spouse, child, maid or driver, it is best to seek expert advice to ensure that firstly, it is possible to do so in your chosen free zone, and secondly, that both you and anyone you are hoping to sponsor for a visa meet all of the entry criteria. Assuming this all checks out, the process is made up of four simple stages: entry permit, status adjustment, medical fitness test, then Emirates ID registration and visa stamping.

For some free zones / activities you may not be required to apply for a visa (NO visa package) saving money and time.

6. Open a bank account

Once your paperwork has been returned, you will have all the documentation you need to open your corporate bank account. The UAE is home to many banks, both local and international, including Emirates NBD, Abu Dhabi Commercial Bank and the Commercial Bank of Dubai, along with global names such as HSBC, Citibank and Barclays. You can either approach the bank of your choice or ask your business set-up partner to arrange meetings with a number of institutions to help you choose the most suitable option.

With some banks you can open a corporate bank account also without having the resident visa.