It is widely known that the UAE is one of the most financially attractive locations worldwide, with a well-developed and diversified economy with excellent infrastructure and transport links and a unique low tax regime
However, it is easy to make a mistake when setting up a company and it is important to get the right expert advice and guidance.
Nicolas Rochette is the Managing Director of Alpadis Group in Dubai, where he manages the daily operations and administration of the company. With over a decade of experience living and working in the UAE, he explains the benefits of establishing a company in the UAE, the Do’s and Don’t’s, and much more.
Please tell us what you do at Alpadis Group and how long you have been in Dubai
I moved to Dubai in July 2016, but my family has had a presence here since 2010 so it is fair to say that I have had exposure to the United Arab Emirates (UAE) for the last 12 years.
Before moving to Dubai, I spent six years in Geneva (Switzerland) working in the financial services industry and when I arrived in Dubai, I joined Loggerhead Partners straight away (Loggerhead Partners in Dubai merged with Alpadis Group in January 2022) and spent the last five years in charge of the Dubai office.
Alpadis Dubai specialises in business setup, residency planning, succession and wealth planning, as well as offering a wide range of corporate services.
In real terms what this means is that we assist companies, businessmen, and families to relocate to the UAE. We advise them on the best and most efficient ways to establish themselves here and once we agree on a plan, we execute all our solutions ourselves in house.
After completing the relocation, we provide our clients with the full support they need in terms of corporate services and services to private individuals.
We understand that very often in today’s world private and corporate interest are intertwined and for this reason my team can serve both.
Please tell us a bit about Dubai, for entrepreneurs and those looking to move there
It is widely known that the UAE is one of the most financially attractive locations worldwide. It is a well-developed and diversified economy with excellent infrastructure and transport links and a unique zero tax regime (though a corporate tax of 9% will be introduced in June 2023). It offers a business-friendly environment making it both an ideal location for structuring a company and the perfect place for business owners who are looking to enter a new and thriving local market.
Being a cosmopolitan and one of the most well-connected countries in the world, the UAE has always been a great place to live in. With its unique lifestyle, vibrant social life, and tolerant regime it offers the perfect base for single individuals and families alike.
More importantly, the UAE is a forward-thinking country. It is a country that managed to grow its GDP by 50% over the past decade, when other economies were slowed down by the financial crisis. It also constantly adapts its laws and regulations to match the best international standards and meet the requirements of its mostly expat population as a tool to attract new investors and residents. More recently, its long-term planning and proactive government policy were further reinforced by an efficient response to Covid19.
Today, the UAE is shaping a comprehensive development plan for the next 50 years starting from the UAE’s Golden Jubilee in 2021 until the UAE’s Centennial in 2071 and we are all excited to learn more about this soon.
What are the main benefits of establishing a business in Dubai (or in the UAE generally speaking)?
The UAE is one of the world’s most favourable tax jurisdiction in the world offering 0% income tax and 0% corporate tax (until June 2023). Looking past the tax-free headlines, the UAE also offers a raft of favourable characteristics including access to a broad network of double tax treaties, no restrictions or levies on the repatriation of capital and profits and no foreign exchange controls.
Business owners and investors will also benefit from long term (renewable) residency visas allowing them to live in Dubai with their families.
Other than that, the UAE has now become a trading and financial hub thanks to its business-friendly environment helping hundreds of thousands of companies thrive by doing business either locally or internationally. Although Arabic is its official language, the UAE is an English-speaking environment.
Businesses will enjoy the same work environment as any other international business hub having access to professional services, a strong banking system, transport, and most modern technologies.
It’s also a safe environment both for business owners and individuals. There is no corruption, and company laws and a strong police force ensure that businesses and individuals can thrive. Additionally, there is a strong and stable government that incentivises business and growth.
What are the key processes to set up a company in Dubai?
The UAE offers three types of jurisdictions (Onshore, Free Zone, Offshore) so the first step is to carefully review each option and choose the most appropriate for your business.
- An onshore company is the legal entity required to trade directly with the local UAE market without restrictions. Onshore companies have the freedom to choose a premises in any part of the UAE, conduct a wide range of business activities and trade with local businesses inside and outside the UAE. According to UAE company law, some selected business activities require that the foreign shareholder appoint a local sponsor who will hold 51% of the company shares. However, professional activity-based businesses can be 100% owned by foreign investors but some selected business activities are still required to appoint Local Service Agent who will provide his services against a yearly fee.
- Free Zones are designated areas in the UAE where companies benefit from tax exemptions. Free Zone companies can only offer goods and services internationally and within the Free Zone where it operates.
Trading and Manufacturing companies located in Free Zones may be receive, handle, manufacture or reconfigure goods, and reexport them without the intervention of customs authorities.
There are more than 45 free zones across the UAE which allow foreign investors to retain 100% ownership and grant residency visas to investors and employees. There are many factors to consider when selecting the most appropriate free zone, including: location, cost, business activity, need for physical office space or warehouses, requirements for auditing and bookkeeping and share capital.
- Offshore companies serve as a valuable tool for asset protection, wealth management, tax planning and succession planning and remains straightforward to incorporate and maintain. Offshore companies are not permitted to rent office space nor issue residency visas.
The second step is to identify the legal type, the business activity, and the office type/space required for the business.
The third stage is to register the newly formed company with the immigration department, hire employees and apply for residency visas.
The fourth stage is to obtain residency visas.
In this process it is crucial to appoint the right service provider to avoid any issues, so the final part is choosing the right provider to help you setup your company.
What are some of the main mistakes people often make when establishing a company in Dubai?
- Choosing the wrong structure
Often business owners underestimate the limitations of each jurisdiction (Onshore, Free Zones, Offshore) and end up making the wrong choice of jurisdiction. There are geographical limitations, administrative constraints, tax constraints, and limitations on the scope of services to take into consideration before choosing the right jurisdiction.
- Not thinking of economic substance
To operate properly a company must have “adequate” economic substance (even when the company business activity is not subject to the Economic Substance Law). This is often neglected by business owners and can pose logistical issues down the road
- Not understanding the company’s obligations and running costs
Each jurisdiction has a different set of obligations which creates running costs to the company. There are ways to reduce these costs if the choice of jurisdiction is done well. Running costs can be: Echannel, Audit requirement, wallstreet payments, costs of office, etc
- Having the wrong shareholder structure
The overall cost of the structure will also depend on the shareholder structure. Some mainland companies still require a local sponsor/agent which adds to the cost of setting up the company. The cost will also vary depending on the type of shareholder (individual/corporate). The shareholding structure will also impact the running efficiency and decision-making process of the company.
- Not understanding local laws and regulations
The laws and regulations of the UAE keep evolving and it’s very important to keep track. Some Free Zones have their own set of laws and regulations that are very important to understand before taking any decision.
- Not choosing the right banking partner
Banks are an essential partner of any company. It is crucial to choose a banking partner that will be supportive of the business and provide quality advice/service. Choosing the wrong bank can substantially slow down business and create a lot of frustration.
Overall, most of these mistakes can be avoided with the right choice of service provider to assist in setting up the company.
How is it different today to form a company compared to 5 – 10 years ago?
First of all, the offering is constantly increasing and adapting to the latest changes in the business environment. New business activities are being introduced on a regular basis to meet the demand from newcomers. New Free Zones are created, and existing Free Zones get more attractive. The Department of Economy & Tourism in Dubai (DED) and the Free Zones are adapting technologically speaking to always offer faster and more efficient services, as well a maintain a competitive advantage over other jurisdictions around the world.
As a result, the overall costs of setting up a business are decreasing.
Office solutions have considerably improved as well. Some of the most renown business centres are now well established in the UAE (WeWork, Servcorp, etc) offering more flexible office solutions and co-working spaces.
The offering for entrepreneurs and Freelancers has also seen dramatic chances creating a great seeding environment for talented individuals and newcomers. Freelance licenses are now available at unbeatable prices in the UAE giving the opportunity to talented individuals to provide their services in the UAE legally. For SMEs, business incubators and accelerators are now available across multiple jurisdictions in the UAE bring fresh ideas and growth opportunities to the country.
Finally, company laws are constantly evolving always giving a little more protection to companies and their investors which in turn brings more investors that participate in creating a very diverse environment of companies from different countries around the world.
How friendly is Dubai for high-tech sectors such as Cypto / Blockchain firms?
Dubai is reacting much faster than most other countries when it comes to integrating new technologies and providing the support and infrastructure needed for high tech industries, including in the fields of Robotics, healthcare, finance, computers etc.
For example, in healthcare, healthtech was already booming before the pandemic. Now it’s turbocharged. As technology accelerates innovation in healthcare, the UAE has emerged as a major force to reckon with in the healthcare sector thanks to its visionary and proactive leadership, robust digital health ecosystem and stellar record in handling Covid19.
With regards to Ecommerce, in the last five years the UAE has created free zones fully dedicated to support the growth of the eCommerce market in the Middle East and North Africa (MENA) region. The Free Zones offer thousands of square meters of e-commerce logistics units and multi-client warehouses, end-to-end warehousing services like order management systems and streamlined customs clearance processes and offer last mile delivery services.
The UAE has understood the promise of Decentralised Finance and blockchain technologies and has moved very early to set up a regulatory framework aimed at attracting talent and companies in the Blockchain and crypto space.
The regulatory authorities for the UAE have consistently been ahead of the curve when it comes to managing and regulating Blockchain-based technologies. the UAE’s Securities and Commodities Authority (SCA) moved quickly to set up a framework that allows crypto businesses to operate in the DMCC, DAFZA and DWTC Free Zones.
In March 2021 the DMCC and the SCA signed an MoU that established a regulatory framework for businesses offering, issuing, listing, and trading crypto assets in these Free Zones. Similar regulation was introduced in the leading financial Free Zones of the UAE, DIFC and ADGM. But the authorities did not stop there. They also launched a Crypto Centre designed to create an ecosystem of crypto and blockchain entrepreneurs, investors and partners.
The centre includes a co-working space for entrepreneurs and SMEs as well as access to an accelerator program and incubator. By creating a place where entrepreneurs, corporates, investors and regulators can come together it is hoped that the Crypto Centre will drive the creation of a sustainable Blockchain and crypto sector in Dubai.
What kind of services does Alpadis Group provide in Dubai?
Our corporate team in Dubai help guide businesses as they grow and expand in the United Arab Emirates. Our experts are able to assist with a wide range of services including Company Formation, Accounting, Corporate Services, Residency Planning, and Market Expansion advisory, allowing both private individuals and corporates to concentrate on growth, confident that their corporate and personal needs are in good hands.
For more information on setting up a company in Dubai, contact Alpadis Group.