Businesses operating as LLCs ( Limited Liability Companies ) located in UAE can function as three distinct forms. Although the legal structure of the companies remains the same, their scope and area of operations can be totally different.
The best regulated form of business is a Mainland Companies that can operate and trade within UAE borders, as well as Free Zones and internationally. Unlike Free Zone companies, which can operate only inside Free Zones and outside UAE, they can conduct unlimited activity in all emirates. Such a company requires a commercial license for commercial trade or a professional license for personal business activity of professional nature. Currently, in most business areas, it is not necessary to have a local partner. Some strategic industries were left out and will still require a local shareholder, but at present they are exceptions.
Free Zone companies operate in special zones located on UAE territory. Each Free Zone has its regulations pertaining to creating limited partnerships, conducting business activity, issuing business licenses, keeping accounting records, and conducting audits. After setting up this type of company, it is possible to file for a residential visa and a UAE identity card ( Emirates ID ). Such a company can conduct business activity in all Free Zones and outside of UAE. Shareholders of such a company can file with the authorities of a given Free Zone for a certificate of tax residency and file their tax report (PIT) there.
The third type of companies set up in UAE is an Offshore company. Shareholders of these companies are not considered UAE residents. They do not receive a residential visa and or an UAE identity card ( Emirates ID ). But having such a company has certain advantages. An Offshore company does not need to have a physical office in UAE, but also the persons outside UAE can be 100% shareholders and in UAE their personal data are not public. This type of company also does not pay corporate income tax (CIT) in UAE, but it can open a multi-currency bank account for international business activities. These types of companies are useful especially for international trade, creating holding companies, registering copyright and patents and for international consulting services. Such a company is a legal entity created to conduct activity outside of the registered jurisdiction and place of owned assets. These types of companies registered in UAE do not receive a permit to lead business activity, only a certificate of registration. This means, such a company cannot trade with entities in the United Arab Emirates or in Free Zones.
It is hard not to appreciate the recent changes in UAE’s legal climate when it comes to planning a business, as they significantly facilitate access to global markets and allow for profound optimisation of the allocation of financial assets. For more details on the individual companies go to the FAQ tab on our website.
